Condominium Law: Choosing Between Limited and Unlimited Warranties

New York condominium plans require certain elements to protect the interests of both the developer or sponsor and the purchaser. They include:

  • Rights and obligations of all parties involved
  • A complete description of the building
  • Financing information
  • Purchase process
  • Operating agreements
  • Certifications
  • Warranties

The latter is especially important. All new condominium units must be covered by a construction warranty. If the buildings are five stories or less, the Housing Merchant Implied Warranty law requires the following warranties to be provided:

  • The condominium building will be free of construction defects for one year from the date of the warranty
  • The property will be free of material defects that make it unfit or unsafe to live in for six years from the date of the warranty
  • There will be no installation defects in the heating, cooling, electrical, plumbing, and ventilation systems for two years from the warranty date

There are two types of warranties: limited and unlimited.

Limited Warranty

Limited warranties only address certain types of defects, structural components, and other conditions. For example, the developer or sponsor may indicate that they will not cover conditions such as:

  • Normal wear and tear
  • Purely cosmetic defects, such as smudged paint
  • Defective items that are covered by manufacturer warranty, such as smoke detectors
  • Damage or losses due to incidents that could not have been reasonably foreseen, such as flooding or fire

A warranty may also be limited by the amount of time that the building is covered.

Unlimited Warranty

As its name suggests, when an implied warranty is unlimited, it places no specific time limit on its pledge that the unit will be free from defects and in good structural condition. While they don’t typically cover wear and tear and may even be voided if certain basic conditions (e.g., required maintenance) aren’t met, practically all other conditions will be addressed at no cost to the property owner.

Both options have advantages and disadvantages. Limited warranties may represent less expense to the new owner, but some defects can be difficult to detect and can come to light after the warranty expires. Unlimited warranties offer the occupant peace of mind and can add value when the property is placed on the market, but they also represent added cost for a new buyer.

At Rosen Law, LLC, we can assist you in determining what type of warranty should go into your condo offering plan. Our experienced construction law team has worked with many New York sponsors and developers to compile warranty packages that provide the right amount of coverage to new condominiums. For more information or to schedule a case review, please call  (516) 437-3400 today.

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Rosen Law LLC

Our attorneys, admitted to practice law in New York, Florida, New Jersey, Connecticut, Pennsylvania, and Georgia, practice within a wide range of legal areas including business and real estate litigation, Fair Labor Standards Act litigation, complex real estate transactions, preparation of condominium offering plans, business sale and purchase transactions, construction law and litigation, New York City tax abatements, estate planning, probate and probate litigation and much more.

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