Affordable-housing advocates have long argued that home ownership is an effective tool to help lift New Yorkers out of poverty. Owning a home comes with challenges, however, and a group of low-income New Yorkers is getting a hands-on lesson in confronting some of them.
Back in June 2009, buyers began snapping up units in a housing development in the Rockaways built under a city program offering low-income residents the chance to own a home. Nearly a year later, New Yorkers began closing on apartments at a similar development in the Bronx. Today the board of each co-op complex is suing the Briarwood Organization—a prolific Queens-based firm that built both projects—alleging that construction defects have left homeowners with multimillion-dollar repair bills and lowered the value of their homes. But proving their case won’t be easy.
Suing a developer over home defects is typically a lengthy and costly affair. For owners of luxury apartments with ample disposable income, or residents of large buildings who can pool their resources, spending a year litigating and tens of thousands of dollars in attorney’s fees can be an effective way to coerce a builder into making repairs. But low-income residents in places such as the Solara Cooperative in the Bronx and Waters Edge at Arverne in the Rockaways don’t have those options.
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And although the city has hailed such homeownership programs, it has been unable or unwilling to intervene in such disputes, leaving homeowners to prove their case largely on their own.
“If the city is going to [use] millions in taxpayer dollars, then they have the responsibility to ensure the money is being properly spent,” said Leonard Yarde, president of the condo board at Waters Edge at Arverne. “They do not get to walk away.”
Go-to builder
Briarwood, based in Bayside, is led by the fifth generation of the Riso family, which has roots in the community dating back to at least 1927, when it built the Riso Homes in Jackson Heights. The firm has won awards from organizations ranging from the Queens Chamber of Commerce to the U.S. Department of Housing and Urban Development. Vincent Riso, the current head of the company, sits on the board of an influential trade group, the New York State Association for Affordable Housing, and Briarwood is consistently tapped to build government-financed affordable housing in the city. The firm is involved in city-backed projects in Brooklyn and the Bronx totaling more than 600 units, according to its website.
In 2010, as work was wrapping up at the Solara project, Riso told The New York Times about the high-quality Sheetrock being used to construct the homes, the Energy Star appliances installed in every unit and the common areas decorated with work from local artists. “I was kissed by a home buyer,” Riso said. “She was crying and saying, ‘I never thought this would happen to me.’”
But in a lawsuit filed March 30, Solara’s co-op board alleged that residents had noticed major construction defects at the property. In particular, the lawsuit says, unreasonable outside noise comes into a specific apartment on each floor, and the development’s courtyard has sunk so low that the gates surrounding it no longer close.
Moreover, the board contends that subpar construction of the windows, roofs and façades caused water damage—claims that were echoed in a separate suit filed five months later by Waters Edge owners. (The legal complaints, and Briarwood’s response, can be viewed below.)
Waters Edge is part of a 308-acre urban renewal project in the Rockaways—one of the largest in city history. Briarwood was selected to build a series of homes there for low- and moderate-income New Yorkers. The developer finished the 130 units in the project’s second phase a year after the real estate market crashed, and by early 2010 was offering new buyers seven months of free maintenance and flat-screen televisions to spur sales of the last 22 units, according to news reports confirmed by Briarwood’s attorney.
Water damage
But in their suit, residents claim that water damage was caused by improperly installed roofs, windows and doors. The board made a number of other allegations, including that Briarwood installed circuit breakers and water shutoff valves for some residents in the homes of their neighbors, making them difficult to access.
In a response dated Dec. 2, Briarwood offered a 32-point rebuttal of the allegations. The firm argued in court filings that it had constructed the buildings according to code, and that any damage would have been caused by the tenants. The firm also argued that the warranties on the property have expired, making the claims moot.
In a statement to Crain’s, the Briarwood organization said that “most of the issues complained of in both actions are minor or stem directly from the homeowners’ failure to properly maintain the properties.”
Disputes over condo and co-op construction are hardly unique to affordable housing. During the most recent real estate boom, a flurry of new homes came on the market that now have water damage, according to accusations in lawsuits. “Every year you see dozens of cases at the very least,” said Marc Luxemburg, partner at Gallet Dreyer & Berkey and president of the Council of New York Cooperatives & Condominiums. “You would think that in our technologically advanced society, people would know how to build a building that doesn’t leak.”
Most cases are settled out of court after both sides have exhausted considerable resources. But at Solara and Waters Edge, the boards’ resources are limited.
If the city finds that a developer’s building is not up to snuff, there are typically several ways it can address the problem. Officials often write quality-control clauses into loans for a project that can later be enforced, and the Department of Housing Preservation and Development can inspect buildings and issue violations under the state’s multiple-dwelling law. Those safeguards work well for city-owned rental projects, but they have limited impact for condominiums and cooperatives, where the residents themselves own the property. An HPD division, the Office of Asset Property Management, in 2014 began tracking construction complaints in buildings that the city finances. Officials can use that information to try to resolve conflicts between residents and developers.
But in the case of Waters Edge, the city has said that the dispute is over design flaws, not construction. The townhouses were designed to have a rental unit on the ground floor that would provide extra income for the owner—which the city says is why some residents’ electrical boxes and water shutoff values are in their neighbor’s unit.
Tensions were exacerbated in late September, when the Waters Edge board’s attorney, Adam Leitman Bailey, was quoted in several news outlets saying racism was behind Briarwood’s failure to correct the alleged construction defects. Two months later the developer countersued the condo board for defamation.
More recently, Councilman Donovan Richards has stepped in. He held a news conference last month outside of Waters Edge, calling on HPD to refuse to give Briarwood more work if the issues are not resolved. Soon after Richards brokered a sit-down between the two sides to negotiate a resolution. So far a deal has not been reached. Meanwhile, the homeowners’ legal costs keep mounting.
Legal documents
Complaint: Grant Avenue Owners Corp (Solara Cooperative) v. Grant Briarwood LLC by crainsnewyork on Scribd
Complaint: The Board of Managers of Waters Edge at Arverne Condominiums vs Briarwood LLC et al by crainsnewyork on Scribd
Amended answer with counterclaims and crossclaims to the Waters Edge residents by crainsnewyork on Scribd
Affordable-housing advocates have long argued that home ownership is an effective tool to help lift New Yorkers out of poverty. Owning a home comes with challenges, however, and a group of low-income New Yorkers is getting a hands-on lesson in confronting some of them.
Back in June 2009, buyers began snapping up units in a housing development in the Rockaways built under a city program offering low-income residents the chance to own a home. Nearly a year later, New Yorkers began closing on apartments at a similar development in the Bronx. Today the board of each co-op complex is suing the Briarwood Organization—a prolific Queens-based firm that built both projects—alleging that construction defects have left homeowners with multimillion-dollar repair bills and lowered the value of their homes. But proving their case won’t be easy.
Suing a developer over home defects is typically a lengthy and costly affair. For owners of luxury apartments with ample disposable income, or residents of large buildings who can pool their resources, spending a year litigating and tens of thousands of dollars in attorney’s fees can be an effective way to coerce a builder into making repairs. But low-income residents in places such as the Solara Cooperative in the Bronx and Waters Edge at Arverne in the Rockaways don’t have those options.
And although the city has hailed such homeownership programs, it has been unable or unwilling to intervene in such disputes, leaving homeowners to prove their case largely on their own.
“If the city is going to [use] millions in taxpayer dollars, then they have the responsibility to ensure the money is being properly spent,” said Leonard Yarde, president of the condo board at Waters Edge at Arverne. “They do not get to walk away.”
Go-to builder
Briarwood, based in Bayside, is led by the fifth generation of the Riso family, which has roots in the community dating back to at least 1927, when it built the Riso Homes in Jackson Heights. The firm has won awards from organizations ranging from the Queens Chamber of Commerce to the U.S. Department of Housing and Urban Development. Vincent Riso, the current head of the company, sits on the board of an influential trade group, the New York State Association for Affordable Housing, and Briarwood is consistently tapped to build government-financed affordable housing in the city. The firm is involved in city-backed projects in Brooklyn and the Bronx totaling more than 600 units, according to its website.
In 2010, as work was wrapping up at the Solara project, Riso told The New York Times about the high-quality Sheetrock being used to construct the homes, the Energy Star appliances installed in every unit and the common areas decorated with work from local artists. “I was kissed by a home buyer,” Riso said. “She was crying and saying, ‘I never thought this would happen to me.’”
But in a lawsuit filed March 30, Solara’s co-op board alleged that residents had noticed major construction defects at the property. In particular, the lawsuit says, unreasonable outside noise comes into a specific apartment on each floor, and the development’s courtyard has sunk so low that the gates surrounding it no longer close.
Moreover, the board contends that subpar construction of the windows, roofs and façades caused water damage—claims that were echoed in a separate suit filed five months later by Waters Edge owners. (The legal complaints, and Briarwood’s response, can be viewed below.)
Waters Edge is part of a 308-acre urban renewal project in the Rockaways—one of the largest in city history. Briarwood was selected to build a series of homes there for low- and moderate-income New Yorkers. The developer finished the 130 units in the project’s second phase a year after the real estate market crashed, and by early 2010 was offering new buyers seven months of free maintenance and flat-screen televisions to spur sales of the last 22 units, according to news reports confirmed by Briarwood’s attorney.
Water damage
But in their suit, residents claim that water damage was caused by improperly installed roofs, windows and doors. The board made a number of other allegations, including that Briarwood installed circuit breakers and water shutoff valves for some residents in the homes of their neighbors, making them difficult to access.
In a response dated Dec. 2, Briarwood offered a 32-point rebuttal of the allegations. The firm argued in court filings that it had constructed the buildings according to code, and that any damage would have been caused by the tenants. The firm also argued that the warranties on the property have expired, making the claims moot.
In a statement to Crain’s, the Briarwood organization said that “most of the issues complained of in both actions are minor or stem directly from the homeowners’ failure to properly maintain the properties.”
Disputes over condo and co-op construction are hardly unique to affordable housing. During the most recent real estate boom, a flurry of new homes came on the market that now have water damage, according to accusations in lawsuits. “Every year you see dozens of cases at the very least,” said Marc Luxemburg, partner at Gallet Dreyer & Berkey and president of the Council of New York Cooperatives & Condominiums. “You would think that in our technologically advanced society, people would know how to build a building that doesn’t leak.”
Most cases are settled out of court after both sides have exhausted considerable resources. But at Solara and Waters Edge, the boards’ resources are limited.
If the city finds that a developer’s building is not up to snuff, there are typically several ways it can address the problem. Officials often write quality-control clauses into loans for a project that can later be enforced, and the Department of Housing Preservation and Development can inspect buildings and issue violations under the state’s multiple-dwelling law. Those safeguards work well for city-owned rental projects, but they have limited impact for condominiums and cooperatives, where the residents themselves own the property. An HPD division, the Office of Asset Property Management, in 2014 began tracking construction complaints in buildings that the city finances. Officials can use that information to try to resolve conflicts between residents and developers.
But in the case of Waters Edge, the city has said that the dispute is over design flaws, not construction. The townhouses were designed to have a rental unit on the ground floor that would provide extra income for the owner—which the city says is why some residents’ electrical boxes and water shutoff values are in their neighbor’s unit.
Tensions were exacerbated in late September, when the Waters Edge board’s attorney, Adam Leitman Bailey, was quoted in several news outlets saying racism was behind Briarwood’s failure to correct the alleged construction defects. Two months later the developer countersued the condo board for defamation.
More recently, Councilman Donovan Richards has stepped in. He held a news conference last month outside of Waters Edge, calling on HPD to refuse to give Briarwood more work if the issues are not resolved. Soon after Richards brokered a sit-down between the two sides to negotiate a resolution. So far a deal has not been reached. Meanwhile, the homeowners’ legal costs keep mounting.
Complaint: Grant Avenue Owners Corp (Solara Cooperative) v. Grant Briarwood LLC by crainsnewyork on Scribd
Complaint: The Board of Managers of Waters Edge at Arverne Condominiums vs Briarwood LLC et al by crainsnewyork on Scribd
Amended answer with counterclaims and crossclaims to the Waters Edge residents by crainsnewyork on Scribd
A version of this article appears in the February 13, 2017, print issue of Crain’s New York Business as “Buyers’ remorse”.
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