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Cooperatives and Condominiums

By ssalkin
May 01, 2019
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Sponsors Not Entitled to Indemnification for Faulty Construction

Board of Managers of Olive Park Condominium v. Maspeth Properties LLC NYLJ 3/8/18, p. 31, col. 5 AppDiv, Second Dept. (memorandum opinion)

In an action by the condominium board against the sponsor and general contractor for breaching obligations under the offering plan and purchase agreements, the sponsor and general contractor appealed from Supreme Court's dismissal of their third party actions against an engineering firm and a security firm. The Appellate Division affirmed, holding that because the sponsor and contractor retained contractual responsibilities, they were not entitled to indemnification.

The condominium board and unit owners brought this action contending that the sponsor and general contractor had breached their contractual obligations by failing to correct defects that were their fault or the fault of their subcontractors. The sponsor and the general contractor then brought a third-party claim for indemnification against subcontractors who designed or installed various allegedly defective systems. Supreme Court dismissed the third party claim, and the sponsor and general contractor appealed.

In affirming, the Appellate Division held that indemnification is available only when the party seeking indemnification has delegated exclusive responsibility for the duties giving rise to the loss, and has not committed any actual wrongdoing itself. In this case, where the sponsor and general contractor retained contractual responsibilities, they did not delegate exclusive responsibility.

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