Over the past couple of years, one of Adam Leitman Bailey, P.C.’s existing sponsor-developer clients experienced a slew of complaints and threatened litigation from disgruntled unit owners in its newly constructed Brooklyn condominium. The issues complained of by the unit owners ranged from hardwood flooring defects (i.e., the hardwood floors had not been properly acclimated prior to installation, resulting in separation of floorboards, cupping, etc.) to leaks and water infiltration damages from improperly installed roofs/waterproofing, as well as other ancillary punch list issues. The firm’s sponsor-developer client attempted to settle these issues with the unhappy unit owners on its own before realizing that it was in over its head and needed the expertise and assistance from its outside legal team at Adam Leitman Bailey, P.C.

Jumping into action, Adam Leitman Bailey, P.C. attorney Rachel Sigmund McGinley reviewed the offering plan for the new condominium to verify the sponsor’s obligations with respect to the alleged defects, as well as the respective purchase agreements, punch lists, and related documentation by and between the sponsor-developer client and each of the complaining unit owners. Among other things, Adam Leitman Bailey, P.C. required that the unit owners obtain and provide repair proposals for each of the alleged defects in their units, including at least three proposals from reputable flooring companies for flooring replacement work, as a starting point for negotiations of the ultimate settlement amount with each unit owner.

Ultimately, Adam Leitman Bailey, P.C. was able to negotiate settlement agreements with each of the complaining residents’ respective attorneys, benefiting the residents and condominium as a whole, in addition to the sponsor-developer, as all were able to avoid costly and time-consuming litigation. The consideration for the individual settlements was (a) sponsor’s performance of the necessary repairs, (b) payment in lieu of repairs, or (c) a combination of both, in exchange for a full release of all potential claims, damages, etc. based on alleged defects and/or allegedly outstanding punch list items.

Adam Leitman Bailey, P.C. also made sure that each of the settlement agreements was confidential in nature, which served to substantially (if not entirely) eliminate the risk that any particular deal struck between the sponsor and an individual owner would become an established precedent for all other units.

Rachel Sigmund McGinley of the Condominium and Cooperative Representation group at Adam Leitman Bailey, P.C. represented the sponsor-developer in this matter.