As the luxury market continues to get flooded with new development, so do the cases involved with faulty construction. Under today’s law in New York City, buildings that are 5 stories or less usually get longer warranties and protections than larger buildings. The developer is not obligated to provide these protections. Of course, developers will try to make the most profit that they can, which often involves hiring inexperienced contractors, and using materials and tools that may not be top of the market. Stuart Saft, a co-chair of Holland & Knight’s condo development and conversion team “…estimated that 10 percent of new buildings — residential and otherwise — wind up in litigation.” This stems from either low quality workmanship, or unforeseeable outcomes that comes with new development.
“Sometimes, however, developers have an incentive to go to court. “Sometimes the insurance kicks in once there’s a lawsuit,” said attorney Debra Guzov, founder of eponymous law firm Guzov LLC, who has seen an uptick in cases — though nowhere near as many as she saw during the financial crisis. “That brings people to the table.”” Many new constructions are not tested properly, and over time, faults begin to come out. Many high end condos see flooding from faulty sprinkler systems, frozen and bursting pipes, and even cracking cement. In lucky cases, the condo owners’ insurance pays for the damages, while in other cases, the condo faces high assessment charges to fix the unforeseeable damage. “In 2015 and 2016, for example, the Setai Wall Street board assessed owners for $3 million to pay for repairs.” Many condo owners decide that they would rather sell and cut their losses, rather than stay and continue to fight with the developers and insurance companies.
“Still, the pressure in today’s hypercompetitive market to make each building more iconic than the last — along with the often-conflicting imperative to save as much money as possible — can lead to a finished product that doesn’t quite match what’s promised in marketing materials.” This is when the litigation comes in. Not only does this cause a headache for the purchaser, it can leave a lasting effect on the property. A quick google search on the building can show the ongoing litigation, which surely drives away other potential buyers. The developer needs to find the happy medium in which they can find the materials needed for the constructions, while still keeping a margin of the profits that they need. Until that can be reached, litigation will continue and money will keep adding up.
 Solomont E.B. and Brenzel K. (May 2018), When luxury leaks Retrieved from The Real Deal https://therealdeal.com/issues_articles/when-luxury-leaks/ Accessed on May 1, 2019