There’s a certain allure to being the very first owner of a condo in a brand new building. Imagine waking up each morning to a shiny new space that’s free from the dents and dings of previous owners. Then there are the tax-abetments that come with a new development purchase across the five boroughs. But tread carefully, new doesn’t always mean perfect. The adage Caveat emptor rings true with all real estate purchases in NYC, and new developments are no exception. Construction defects in a new development are not as rare as you might think. Developers, concerned about their bottom line, will sometime cut corners, and this mightn’t be noticeable until you’ve moved in.
Thankfully, there are some simple steps you can take to protect yourself against this possibility. As well as some legal rights to help fix it if do end up with a shoddy new development.
How to Avoid Buying a New Construction with Defects and What to Do If You Have Them
Table of Contents
Understanding the Root of the Problem
Before we jump into what to look for and how to manage construction defects, it’s good to have an understanding of how the problem arises in the first place. Pretty much all problems start at the builder/developer stage. To save on costs, they hire the cheapest contractors and use the most inexpensive materials. To save on time, they omit having inspectors check that the job’s specifications match the work being done. All of this is a recipe for water and air leaks, poor soundproofing, and a host of other problems. The simple truth is that a lot of buildings these days are not built to a high standard.
This is in stark contrast to buildings in earlier times. About 70 years ago, buildings weren’t built as fast as now, and they tended to build them well. Some of the best buildings in the city were built between 1900 and 1945. It’s hard to say whether this was due to a different mindset, cheaper labor, and materials, or a combination of the two. Either way, developers tended to take pride in building something to last. They used solid brick, concrete floors, and a level of craftsmanship that you don’t see anymore. Mainly because to do so now is too expensive.
Still, one can point out that building regulations today are a lot more exact then they were before. However, the problem is that developers are working with smaller profit margins, with some getting downright greedy. Burdensome building regulations don’t necessarily mean better oversight. Many developers are eager to make their money and then get out ASAP. The last thing they want to is slow down construction by having third-party inspectors verify that the work is being done right.
So, with that said, what are the most common construction defects?
Top Construction Defects to Look Out For
As mentioned, the worst defects don’t usually become apparent until sometime after you’ve moved in. Knowledge is power, and if you want to avoid ending up with shoddy construction, then do your research and know what to look for.
Leaks in the façade or windows
Leaks are by far the biggest complaint made against new developments. These tend to occur in two main areas, the façade, and windows. These are usually due to complex wall designs and windows that while aesthetically pleasing come with thousands of components. All it takes is for a few of these to fail or be improperly installed, and you could have serious water leakage next time it rains. If these are to be installed right, then they need to be done by trained professionals. They also need to be regularly maintained by having the seals and gaskets cleaned at least once a year. Before buying new construction, you should inquire about how the windows were installed. Ask also if they were properly vacuumed post-construction to remove any debris that might have settled there.
Badly installed plumbing
Plumbing is another major issue and one you really wouldn’t think you’d have to worry about with new construction. If the pipes were incorrectly installed, they can cause serious issues leading to mold that is incredibly expensive to repair. There’s even a chance of flooding if the storm drain system wasn’t properly connected to the sewerage system. This is a difficult area to assess, so when viewing a property turn on all the taps and flush the toilet. Ask detailed questions about how the plumbing was installed and who did the job. A quick google search of the contractors and developers will tell you if anyone’s had trouble with them before.
Wood floor problems
Tile cracks or scratches are very noticeable, but wood floors are a little trickier to assess. Most problems with wooden floors are due to inferior materials and/or not letting the material acclimate to the building before installation. Wood will contract over time, which is why they have to be first acclimated to the site before installation. They should also never be installed if damp or wet. If badly installed, gaps will appear, allowing water to seep in and make the wood warp and go moldy. Small gaps the size of a dime is not of concern but gaps the size of a quarter are.
Poorly installed ventilation
Poorly installed ventilation can affect both individual apartments and public areas. Complaints about second-hand smoke seeping into an apartment are very common with complaints about cooking smells not being completely unheard of. New high-rises present a particular problem as they are prone to something known as the stack effect. This is when odors rise from one apartment to another when the heating has been turned on. This is hard to completely avoid, but it’s made far worse when there are clogged air ducts that weren’t cleaned upon completion. In extreme cases, the operation of the elevators sliding door can be affected and even make it stop working altogether.
Poorly installed soundproofing
Noise is a part of life in NYC with neighbors clomping around and sirens blaring outside. Soundproofing can mitigate this, but some developers choose to cut corners. Part of this problem is that it’s hard to know how much insulation is needed. What makes for good insulation in Brooklyn might be inadequate for an apartment in Harlem. If this becomes an issue, the best way to deal with is by having a good relationship with your neighbors. But if you’d rather avoid the possibility of noisy and uncommunicative neighbors then ask about the level of soundproofing.
Useless warrantees
Warranties usually come as riders on properties, but many times they can be completely useless. A lot of times, they guarantee a sum that is much less than what it would cost to fix a problem adequately. You can protect yourself against unpleasant surprises like this by having your lawyer gather as much information as possible on the warranties that will be issued. This isn’t always provided in the offering plan which should raise your suspicions if it’s not. Try and find out if the developer or contractor has used the same types of warranties with other buildings, and to what effect.
How to Protect Yourself When Buying a New Development
If you want adequate protection against ending up with defective construction, then do your due diligence. The more you can monitor the construction and see who’s behind it, the less chance you have of being bamboozled. Start by going over the offering plan. This will state the standard of construction to be achieved and should include a certification from the sponsor and architect that there is no misrepresentation. There should also be a punch list detailing who’s responsible for paying the costs of any shoddy workmanship. Look closely into what the associated costs are of any said repairs. Have your attorney go over the offering plan extensively and do your research to familiarize yourself with each part.
Next, you’ll want to hire an engineer to inspect the building and apartment. Have them inspect the site along with your broker at the start of construction, mid-construction if developers allow, and finally when completed. Get out there yourself when you can and see the site for yourself. Know what to look and note down all the problems and what advice your engineer gives. The $1,000 or so in engineer fees for this might seem steep at first, but when dealing with something as important as a real estate investment, it’s well worth the price.
If any issues are found, have your real estate agent renegotiate the contract, so you don’t have to close until it’s in move-in condition. Holding up a closing might be what’s needed to force the developer’s hand to do the required repairs. Developers have investors to please and bills to pay so they may be willing to compromise if you hold up the closing. It’s easy to blame the developer, but they aren’t always the bad guy. Determine who’s responsible and hold their feet to the fire before signing anything. If you close without resolving the issues, then you have little bargaining power left.
How to Handle Construction Defects in a Property You’ve Already Bought
Even if you did your homework and closed on a property that was in good condition, there’s still a chance that some defects won’t manifest themselves for days, weeks, or years after the closing. If this happens, then it’s important that you understand your rights and what you can do about it.
The first thing to do is find out if other residents are suffering from the same problems. There’s always strength in numbers, and if there are problems in multiple units, then that suggests larger issues with the building. Next, you’ll want to pull up your offering plan and take a look at the notice provisions. This will state the time limit on bringing defects to the attention of the developer.
If it hasn’t been long since the developer first started selling units, then they might still control the building’s board as they hold most of the units. When that’s the case, meet with your group of disaffected tenants and retain a lawyer to represent the group. If the building is resident controlled, then the board can go through its usual lawyer. Just make sure this lawyer is well versed in condo and construction defect law. This will be especially important if things move beyond complaints to actual litigation. You could even conduct a letter-writing campaign to the Attorney General’s Real Estate Finance Bureau and state your grievances. The AG’s office will have the most leverage when the developer is still selling units. Regulators can hold up additional sales until the issues are fixed, which is sure to motivate the developer into action.
However, if a lot of time has passed, then you’ll have less luck with the AG. The developer has a better defense now by arguing that the defects are due to neglect by the tenants rather than shoddy construction work. If this happens, then you’ll need an engineer’s report on the specific causes of the problems and the costs of repairs. Their final report will inform you on what your next options are.
Consider the legal costs, is it worth it?
At this point, it’s wise to stop and think about the potential costs ahead. If you go down the legal path, then you can expect to start ratcheting up a lot of lawyer’s fees. If the expected costs of taking legal action are more than the costs of repairs, then it may be better to let it go. As painful as that is, it’s certainly less painful than paying $200,000 in legal fees to get $100,000 worth of repairs done.
Try and reach a settlement
If you decide on legal action, then the first thing you’ll want to determine if the likelihood of the suit surviving the first motion to dismiss. New York law favors developers so unless you have a strong case, you may be thrown out on the first motion. But if the lawsuit makes it to the second motion, then that’s usually where settlement talks begin. Developers don’t like getting dragged through the mud of a lawsuit, with all the damage to their reputation that does. If the developer is open to dispute resolution, then it’s well worth hearing them out.
Your lawyer might be able to work out a settlement, but if not, then you may have to jointly hire a mediator to help. They can review documents, inspection reports, and the evidence you provide and work with both sides to find a solution. Hopefully, you’ll reach an agreement with the developers where they agree to reimburse you for the costs of repairs.
Final Thoughts
New York City is a fantastic place to invest in, but if you want to get your money’s worth, then you will have to do your research. Buying a new development should be no different from buying any other type of property. Sure, you can’t exactly inspect it if it’s still in the early building phase, but you can at least keep an eye on it. If you don’t wish to end up with construction defects, then do your work early and know what you’re getting before buying. This will be possibly the biggest investment of your life, so don’t just rely on glossy brochures that the developer hands out. Go see it for yourself and make sure the developer is building what he said he would.
