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New Building, New Problems: Recognizing and Repairing Defects in New Construction

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April 2016

By Jonathan Barns


Identifying Problem Areas

Ask any real estate broker, attorney, contractor or developer about construction problems on new residential buildings, and you’ll likely get a different answer from each professional. But in the view of Manhattan-based attorney Adam Leitman Bailey, problems with construction often start at the builder/developer stage.

“They hire the cheapest contractors, and use the most inexpensive materials,” Bailey says, adding that the top physical problems with new residential construction are insufficient coating on the roof, and incorrectly-sized boilers that area too weak for the building’s needs. Having too few elevators installed in a building also can be a problem in some new structures. Sometimes the new building lacks adequate sound-proofing, or the sound-proofing was improperly installed. Leaks, and lack of soundproofing between floors and walls, are two of the most common problems in new construction, says [an attorney]. Non-compliance with building codes, such as insufficient fire-stopping material, also can be problematic.

According to the pros however, air and water leaks from roofs, terraces, bricks or windows are the single biggest complaint in newly constructed residential buildings. “A lot of buildings are…not built that well. There just seem to be a lot more problems,” [an attorney] says. Sometimes in newly constructed residential buildings these days, architectural details of the building are not as they were sold to be. The developer or contractor didn’t do the job right, omitting some items or substituting one element for another of lesser quality or lower design standard.

New Buildings New Problems

And while many people complain about the lack of craftsmanship in residential buildings these days, saying that back when, the buildings were built much better, is only partly true. Seventy or more years ago, residential buildings in New York City weren’t built as hastily as some are now. It could’ve been a different mindset, or maybe cheaper labor and materials, or perhaps a bit of both.

“People were proud of their product, and they built them well,” says Bailey, founding partner of Adam Leitman Bailey, P.C. “The apartments had high ceilings and used real brick. The best buildings were constructed from 1900 to 1945.”

[An attorney] also is a fan of the older buildings and their solid masonry construction, especially the prewar buildings with their concrete floors. “You just don’t see that kind of craftsmanship anymore—it’s too expensive,” he says.

On the other hand, the regulations governing building construction are much more exact than they were a few generations ago—so in a sense, residential structures are built better. The profit margins are tighter for some developers, while others just may be greedier. And increasingly complex building codes don’t always lead to improved oversight of construction projects, say the pros.

“The problem stems from the fact that nobody’s watching the construction as its happening,” says a shareholder attorney who heads the Construction Litigation Group at [a law firm]. “I’m talking about EIFS—exterior installation and finish systems.”

For example, the application of stucco and installation of brick wall systems should be certified by independent, third party inspectors, who are trained to determine if the work was done correctly. Unfortunately, developers and contractors are motivated to complete the project as soon as possible to benefit their own bottom lines, so they often have little incentive to slow down the project and compare actual specifications of the job to the work being done.

And if the sponsor is the culpable one for shoddy construction, remember that he’s a guy who wants to get his money and get out ASAP. Problems with shoddy construction, though, might not be revealed until years later. But that doesn’t mean windows don’t have to open and close properly, and that they’re allowed to leak.

Bring Your A-Team

The legal ramifications of a construction defect could be far-reaching. Since the condo association has the legal responsibility to fix common elements, problems with those common spaces could become a lawsuit the association finds itself forced to wage.

“One big problem is when the association doesn’t have money to hire a lawyer like me,” says [an attorney], who represents such clients on a contingency basis. “We win by collecting from the insurance policies of the general contractor and sponsor, and subcontractors and design professionals.”

Often, the responsibility of shoddy construction in buildings being built too quickly lies with the builder, the contractor and the subs. Apartment owners don’t get a pass, though.

“It’s easy to blame the developer, but you also have to look in the mirror,” says Bailey. “No one should ever buy any home without bringing in an engineer to inspect it. Have your attorney negotiate a contract so you don’t have to close until it’s in move-in condition.”

When hiring an engineer to inspect your future home, have them inspect the place at the start of construction, when the place is one-quarter built, and once again when the construction is complete. For $1,000 or less in engineer’s fees, you could save yourself tens of thousands of dollars in repairs.

If a buyer already has moved into a new building and then begins having leaks or other problems with construction defects, the owner should first ask the developer to fix it. If that approach fails, they may need to hire a real estate attorney and the best engineer they can to fight the developer, Bailey says.

There is no large regulatory “stick” to counterbalance the pull of the financial carrot, luring a developer to finish a job as fast as possible. Buildings and developers who construct problematic buildings in New York face fines of just $250 to $1,000. Repeat offenders can get slapped with compounded penalties. “The Attorney General could prevent all these problems by requiring developers to keep a reserve, and to personally sign off on the offering plan,” Bailey says. “These developers are hiding behind these shell companies.”

 

Adam Leitman Bailey, P.C.

NEW YORK REAL ESTATE ATTORNEYS