The Real.Est List
As 'young' condos spar with developers, suing may be a PR blunder
It's no secret that a many of the city’s "young" condos feel more like battlefields than the Shangri-la's they were intended to be.
Buyers who signed up (and mortgaged up) for a life of luxury are instead brawling with developers—or in some cases, the banks who took over semi-finished projects when developers went bankrupt—to force them to deliver the promised goods.
David Kuperberg, the founder & CEO of Cooper Square Realty--which manages around 40 condos that sprung up in the last five years--has seen the carnage first hand.
“Anything built in a heady economy is under pressure to get opened quickly,” he says, “and mistakes are made because there isn’t enough high quality labor.”
Asked to name the most common flaws, he pointed to defective finishes, including bad tile work and buckling floors, as well as firestopping that isn’t up to code and widespread complaints about leaky exteriors.
Then there are the amenities.
“A lot of these buildings were loaded up and sold on sexy amenities that were not delivered,” says Kuperberg. “Fancy health clubs and gyms, clubs, concierge services and restaurants that are supposed to be opened are not. In some cases the lobby isn’t even completely finished.”
Yet suing one’s developer could be a PR mistake, he says.
“You may be hurting your property values, because buildings get bad reputations, so there’s a bit of a catch-22,” says Kuperberg, whose firm is hosting a panel on April 8th on alternatives to publicly flogging one's developer. Board members from New York City condos opened within the last five years are invited to attend.
Given his close-up view on the triage going on in newish condos around the city, BrickUnderground asked Kuperberg what he would want to know before buying into one.
“I would make sure the board had hired an inspector to check that the building is in accordance with code and with the offering plan,” he says. “I would want to know who is in control of the board. I would want to know about reserves, and about foreclosures—they are a real time bomb.”
He says he would also make his contract contingent on at least 50 percent of the building being sold and closed—with his deposit fully refundable if that mark is missed.
“I wouldn’t want to be in the first 50 percent to close, and I think in many buildings you would want to see 70 percent because of Fannie Mae guidelines,” he says.
What would it take to get him to buy a brand new condo unit?
“I would look mostly at one thing – the reputation of the developer,” he says. “But even the best developer can’t help but have construction mistakes—you couldn’t get A-level crews with all the work going on at once.”
Case in point: “We had a building built by a terrific developer and when the subcontractor installed the heating and a/c units, they forgot to take out the packing screws. Every single unit significantly leaked.”