At the height of the housing boom, some builders attempted to recapture profits lost in the price they paid for their properties by cutting costs spent on labor and materials, and many others could not find good contractors or obtain low prices for building materials. At the same time, finding competent and affordable contractors and workers became extremely difficult as New York bustled with a building boom that included building two major league baseball stadiums, rebuilding Ground Zero, and planning to build the Freedom Tower, the largest building in the world, in addition to thousands of condominium and rental units, all at the same time.
To make matters worse, many neophyte builders entered the builder business as the entrance requirements are still very low: other people’s money. To give every incentive to builders to cut corners, the then-New York State Attorney General, Eliot Spitzer, decided to deplete the resources of the New York State Law Department’s Real Estate Finance Bureau, while turning the attention of his office to Wall Street and other various extracurricular activities.
The other governmental body most responsible for policing the actions of builders, the New York City Department of Buildings (DOB), watched many of its most talented personnel leave for the money in the private sector, and the agency never had enough staff members to adequately inspect all of the condominiums being completed in the city. In addition, weak laws and regulations allowed builders to self-certify many aspects of the building process, without governmental supervision, and provided inadequate legal remedies to the victims of shoddy construction. As a result, scores of condominium buildings were built that were later found to require major repair and renovation after buyers had paid many millions of dollars for the privilege of discovering the construction defects present in their new homes.
Even in the best of building times, untested, newly constructed buildings are never entirely free of defects that require correction or repair after construction is deemed complete. While the better builders fix these problems, scores of less responsible builders seemingly try to thwart the efforts of homebuyers to compel their sponsor to deliver the dream home promised in the offering plan and the marketing materials.
Although the “Oscar” for Outstanding Achievement in Bad Home Building could go to many entities, the culprit that is single-most deserving of the award is the New York State Legislature for enacting Article 36-B (Sections 777 et seq.) of the General Business Law, the statutory “Housing Merchant Implied Warranty.” This statute overturned a 1988 decision, Caceci v. DiCanio Construction Corp., of the New York Court of Appeals, in which the highest court in the state rejected the age-old doctrine of caveat emptor (“buyer beware”) and provided all buyers of newly constructed homes with a common law warranty for damages arising from a builder’s failure to construct a house free from material defects and in a skillful manner.