Q. The current parking situation is less than ideal and does not reflect the image that was generally presented to prospective buyers by the sponsor’s realtors. While the condominium offering plan makes clear that each owner would not be guaranteed a parking spot, it does state that there would be 40 spots dedicated to residential use.
The board recognizes that there are less than 40 residential spots currently available today. This is likely because the original parking lot configuration contemplated the use of a valet parking attendant who would presumably double-park certain cars in order to accommodate the 40 residential spots. Because valet parking attendants were never hired (due to financial constraints), the area in the garage designated for residential parking cannot accommodate 40 cars.
The sponsor’s realtors grossly under represented the monthly maintenance to cover expenses especially considering the valet parking to be the answer to the parking questions. Parking was represented to be first come-first serve. It was learned that the sponsor’s realtors offered suggestions to circumvent the first come-first serve process. The board refused to take action to purchase parking from the sponsor prior to the sale of the commercial units. The parking shortage did not materialize until the commercial unit owners moved in and began utilizing the spots they purchased which were designated for commercial use as set forth in the offering plan.
The board has presented this issue to legal counsel to obtain an opinion concerning whether the board of managers and condominium have any legal recourse against the sponsor to remedy the parking situation. The board specifically requested legal counsel to analyze whether the perceived failure of the sponsor to provide a valet parker amounts to an actionable misrepresentation or breach of the offering plan.
After reviewing the situation, legal counsel was not optimistic of the board’s (on behalf of the condominium) chances of success and advised condo board to not pursue legal action. Counsel also emphasized that the costs of bringing a lawsuit would be quite substantial given the fact that legal costs would be incurred on an hourly basis. Moreover, even assuming a court agreed that the sponsor misrepresented the offering plan, it is unclear what damages, if any, would be recoverable by the board. The court would almost certainly not be permitted to redraw the parking configuration, as this would impact upon the property rights of the commercial unit owners.
After considering the opinion of legal counsel, the board has decided against pursing legal action against the sponsor. At this time, the board’s primary focus is on strengthening the condo association’s financial position and, therefore, does not believe pursing this type of expensive litigation would be prudent. The board notes that individual unit owners are encouraged to consult their own attorneys regarding this matter to determine whether individual suits against the sponsor might be appropriate.
—Fed Up With the Debacle
A. “The first step that the owners should take,” says attorney Jeffrey Reich of the New York City firm of Schwartz Sladkus Reich Greenberg Atlas, LLP. “is to determine whether the condominium sponsor delivered to them exactly what was promised in the condominium offering plan. That is to say, the owners should seek to determine whether the parking area that was provided would be sufficient to legally park 40 cars, if a parking attendant was in service. The owners would likely need to engage the services of an architect in order to help them with this analysis. Along those same lines, the owners should determine whether the budget for the first year of condominium operation, contained in the offering plan, provided an adequate estimate of the actual expenses of operating the condominium. If the sponsor was relying on the retention of a parking attendant to facilitate parking for up to 40 vehicles, the budget should have provided for this expense. Unfortunately, condominium purchasers can rarely rely on representations made by selling agents or any representations that are not provided in the condominium offering plan.
“If the condominium sponsor materially over-stated the parking capacity or materially understated the cost of operations, the owners would have a valid claim. It is not clear to me why counsel would have suggested that taking legal action under these circumstances would not likely be a financially sound decision. The owners are clearly entitled to the value of the parking that was promised to them. However, in lieu of commencing a lawsuit against the sponsor, it may be possible for the owners to enlist the aid of the Office of the New York State Attorney General to assist them in pursuing the sponsor with respect to these issues.”
“Finally, since individual condominium unit owners may not pursue claims relating to the common elements of a condominium (only a board of managers may do so), advising individual unit owners to pursue the parking issue with their own counsel would not be constructive advice to give.”