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New York Commercial Litigation Stems From Defective Construction

New York has always been in-demand as far as real estate goes, but when property prices started to soar a few years ago, the rush to build new structures to meet the rising demand was feverish.

The problem, however, is that it now appears many of those jobs weren’t done correctly. In what appears to be a repeat of the last housing boom, it seems many construction companies were more concerned with meeting deadlines and cranking out more buildings, as opposed to ensuring they were erecting a quality product.

Among the growing number of complaints:

  • Balconies that are cracking;
  • Concrete flaking from the exterior walls;
  • Basements prone to flooding due to inadequate drainage-sewage connections;
  • Inadequate insulation;
  • Water filtration problems;
  • Malfunctioning elevators.

The problems are most noted in residential properties, but are being found in many newer commercial properties too.

We’ve seen this before. Just after the collapse of the housing market eight years ago, developers were in a bind. They had to finish projects and they didn’t have enough capital to do it. In order to finish the work, they cut corners. In some cases, they abandoned the projects altogether. Because these structures were shoddy, it inevitably led to a number of lawsuits from jilted buyers.

However, these lawsuits largely tapered off at the height of the recession, when new construction slowed to a trickle.

But then, the market started another upswing, and developers once again picked up the pace. The problem is, even though the cost of land and construction are still high, the profit margins on these projects tend to be narrower than before. That has translated to shortcuts. In some cases, that involves materials that are less expensive, and reduced quality. However, some are slashing costs by hiring subcontractors who are not qualified for the job.

Some of the complaints are more cosmetic. For example, a hardwood floor was promised, and a laminate was installed. But in other cases, the corner-cutting may put people in danger. For example, a property without sprinklers or self-closing doors in the fire stairs – faces major safety violations. In one case, chipping concrete was reportedly falling from the side of the building onto the sidewalks – and pedestrians – below.

For building owners, these concerns are especially serious because liability for any resulting injuries could be transferred to them if they accepted the end product.

Pursing commercial litigation for construction defects, however, is sometimes problematic, particularly when companies form limited liability corporations, which then quickly dissolve after the units are sold. Still, it may be possible to hold individuals or entities liable for damages.

Plaintiffs have a number of legal strategies they might pursue. They could file a lawsuit for certain kinds of fraud or breach of contract. They may even be able to make a case for negligence.

Part of the trouble, though, is the time it takes for some of these problems to manifest. The statute of limitations on these lawsuits is between three and six years. That’s why it’s imperative for buyers to contact an experienced legal team as soon as problems become apparent – despite the perceived stigma of having a property that is defective. The window of time in which to ensure builders fix the problem may be narrow.

The Law Offices of Ira S. Newman provides litigation representation in New York City, Long Island, Great Neck and throughout the area. Call 516-487-7375 or send us an e-mail.

Additional Resources:
New, but Far From Perfect, March 6, 2015, By Ronda Kaysen, The New York Times
Nevada, Other States Target Construction-Defect Lawsuits, Feb. 25, 2015, By Kris Hudson, The Wall Street Journal
More Blog Entries:
New York Commercial Lease Agreements Require Careful Review, Feb. 22, 2014, New York Commercial Litigation Lawyer Blog