Co-ops and Condominiums

Condominium board brought an action against the sponsor contending that the sponsor miscalculated the reserve fund and performed shoddy repair work for which the board is entitled to damages. The court held that the sponsor had correctly calculated the reserve fund and that the sponsor was entitled to a reserve fund credit for elevator modernization. The court also held that the board was not entitled to damages for repair costs following the sponsor's work.

The sponsor was obligated to establish a reserve fund in the amount of 3% of the total price of the units, defined as the "last price which was offered to tenants in occupancy prior to the effective date of the plan …." The aggregate price to tenant offerees was $83,172, 200, while the aggregate price to non-tenant offerees was $92,348,000. During the period in which tenant occupants had an exclusive right to purchase apartments at the insider price, one of the tenant occupants declined to purchaser. After expiration of the exclusive period, but before the effective date of the plan, sponsor declined to permit that tenant to purchase at the insider price but offered the apartment to that tenant at the outsider price. The board contended that because sponsor had offered the apartment at that higher price to a tenant in occupancy prior to the effective date of the plan, the outsider prices should be treated as the "total price" on which the reserve fund should be based. Sponsor also claimed a credit against the reserve fund contribution for total modernization of the passenger elevator system, while the board contended that no credit should be due because sponsor had to make improvements to correct code violations. Finally, the sponsor contended that it was not liable for the repair costs requested by the board because the offering plan made it clear that sponsor would not be obligated to correct, repair, or replace defects relating to the construction of the units or the common elements, and that the units were sold as is.