Adam Leitman Bailey, P.C. Obtains Condo Deposit Refunds for Two Clients Totaling Over $10 Million, Including Interest
In 2017, in matters relating to two different clients, and separate condominiums offered to the public by two different sponsors, the attorneys at Adam Leitman Bailey, P.C. showed how reading the fine print in a condominium offering plan can assist in helping a purchaser terminate a contract to purchase units that were not yet constructed when the contract was signed — and not incur any penalty for doing so.
In each case, the client came to Adam Leitman Bailey, P.C. well AFTER having signed agreements to purchase two units from the sponsor of a condominium before the new building was constructed. Each client wished to get out of the contracts entered into for the units the client had agreed to purchase. However, as is typical in such cases, the purchase agreement for each unit under contract expressly barred the purchaser from reneging on the deal unless the sponsor failed to construct the building and the units in a manner “comparable to the currently prevailing local standards and substantially in accordance with the Plans and Specifications” filed with the Building Department and other appropriate governmental authorities.
In the absence of evidence of any materially defective construction, a client who nevertheless wishes to get out of his or her contract normally has little recourse and will either be forced to close on the unwanted unit or attempt to negotiate the return of at least part of the six to seven-figure deposit that was paid to the sponsor’s escrow agent upon execution of the contract.
However, fortunately for these two clients, they had chosen the right law firm. Due to the expertise of the Adam Leitman Bailey, P.C. attorneys handling their cases, both clients, for different reasons related to the particular buildings and offering plans involved, received, from their respective sponsors, a complete refund of the contract deposits (plus interest) each had paid for the units contracted for under their purchase agreements; a total of $7,750,000.00 for Client A, and a total of $2,355,748.59 for Client B — $10,105,748.59 in all.
Client A’s Case
Client A had contracted to purchase two units from Sponsor A; one unit on the 32nd “floor” and one unit on the 27th “floor” of a building that was yet to be built. Before signing contracts for the two units, Client A was shown videos that presented virtual reality depictions of the unobstructed views that would be observable from each unit upon completion of the building’s construction. However, when Client A visited the two units upon completion of the building, the views from the 27th “floor” unit were entirely obstructed by neighboring buildings and the views from the 32nd “floor” unit were marred by the mechanical structures on the rooftops of those same neighboring buildings. In short, the unobstructed views Client A had expected were non-existent.
In addition, Client A learned from the sponsor’s selling agent that the 27th “floor” and the 32nd “floor” were so designated by the sponsor as “marketing” floors only, but were actually the 17th and 22nd of 69 “construction” floors of the building. Needless to say, Client A was outraged at the deception and came to Adam Leitman Bailey, P.C. to find a way to rescind the contracts and get a refund of the money paid to the sponsor.
At first glance, the sponsor’s offering plan had clearly disclosed that the building’s actual “construction” floors above the 10th story level had been given “marketing” floor designations, and Client’s A’s prospects for rescission of its contracts and recovery of its deposits appeared bleak.
However, a closer reading of the offering plan showed that the sponsor had also represented that the building “will include 79 stories above grade” (i.e., above ground level)(emphasis added). In actuality, as previously noted, the building had only 69 stories “above grade.” Accordingly, the sponsor’s clear misrepresentation of the number of stories to be built, coupled with the blatant deceptive marketing of the views that were promised, provided the grounds for demanding rescission of Client A’s contracts. After some attempts by the sponsor to placate Client A with a substitution of units for the ones originally contracted for, the sponsor agreed to a full rescission of both contracts and fully refunded Client A’s deposits (with interest).
The Adam Leitman Bailey, P.C. attorneys who represented the clients in this matter were Adam Leitman Bailey, John M. Desiderio, and Vladimir Mironenko.
Client B’s Case
Client B’s case was similar in that there was no evidence of material construction defects in either the condominium building itself or in the units that Client B had contracted to purchase. Accordingly, Adam Leitman Bailey, P.C.’s attorneys reviewed the sponsor’s offering plan very closely hoping to find some provision that could possibly provide ground for rescission.
Initially, the offering plan appeared to provide all of the requisite disclosures mandated by the New York Attorney General’s regulations. Therefore, Adam Leitman Bailey, P.C.’s attorneys determined to search beyond the letter of the regulations and reviewed the many policy memoranda that the Attorney General has issued over the years regarding the contents of offering plan disclosures.
As a result of reviewing a 1988 Attorney General’s Policy Memorandum entitled “Air and Development Rights,” Adam Leitman Bailey, P.C. was able to opine that the sponsor’s offering plan violated not only the Attorney General’s required disclosures but also the mandate of a 1988 court decision on which the Attorney General’s 1988 memo was based.
In short, the sponsor had failed to properly disclose all of the information that the 1988 policy memorandum required regarding the possible future use of air rights by either the sponsor or by an adjoining building upon the sale of the sponsor’s air rights. Such information, if disclosed, could have affected Client B’s decision to sign his contracts had the requisite disclosures been made.
Upon Adam Leitman Bailey, P.C.’s demand for rescission of Client B’s contracts and refund of his deposits, the sponsor entered into negotiations and agreed to rescind the contracts and fully refund Client’ B’s deposits.
The Adam Leitman Bailey, P.C. attorneys who represented the clients in this matter were Adam Leitman Bailey and John M. Desiderio.
Commentary
Despite the difficulties that these cases initially presented, Adam Leitman Bailey, P.C. was able to obtain extraordinarily successful results. These case studies show that, no matter how bleak a client’s position may appear when first examined, Adam Leitman Bailey, P.C. attorneys go above and beyond to search out all possible legal grounds that may assist the client in obtaining a successful resolution of a problematic situation.