The Real Deal New York

Fortis not responsible for $2M in defects caused by prior developer, judge says in ruling against 20 Bayard Street residents

The company bought the condo building's unsold units in 2011 after Isaac Hager took the project into bankruptcy
By Will Parker | April 26, 2017 11:50AM

20 Bayard Street and Jonathan Landeau (Credit: Larry Ford)

UPDATED, April 26, 4:00 p.m.: A court decision in Brooklyn last week will let Fortis Property Group TRData LogoTINY get away with selling allegedly faulty condominiums in Williamsburg, for the simple reason that Fortis wasn’t the one that built them in the first place.

When developer Isaac Hager’s company went into bankruptcy at the 62-unit Bayard Views Condominium at 20 Bayard Street on McCarren Park, Fortis in 2011 swooped in and bought the 37 unsold units at the building, becoming the the new sponsor on the condo’s offering plan.

But some homeowners at the Karl Fischer-designed condo began realizing that their units were defective, with many needing repairs, even though the building was relatively new. According to a complaint brought by the condo board in 2014, frequent flooding and water leaks damaged several parts of the buildings, there was an inadequate HVAC system, there was cracking in the building’s exterior facade, as well as an inadequately installed electricity system. The cost of all these problems amounted to $2 million, the residents claimed.

Bankruptcy meant they couldn’t sue Hager, so the condo board targeted Fortis. A judge in Brooklyn, however, has ruled in favor of Fortis in what Fortis’ attorney Adam Leitman Bailey said could mean a new status quo for condo law.

Judge Lawrence Knipel ruled that Fortis could not be held liable for defects that existed before Hager’s company, the original developer, effectively entered Chapter 11 bankruptcy. The condo board can, however, continue to try suing Fortis’ principals, Joel Kestenbaum and Jonathan Landau, the judge’s order indicates.

As for Fortis, Bailey says they’ve been making repairs all the while anyway, and that the lawsuit, filed in 2014, is out of date.

“They’re angels,” Bailey said of Fortis, “and they did the work, without obligation, that was necessary to Make This A Great Place to live.”

Kelly Ringston, attorney for the condo board, said Bailey’s assertion that Fortis has made generous improvements to the building is just not true.

“Fortis has not performed any of the critical repairs to the building and left the condo owners with a nearly $3 million bill,” she said. “And the limited work that was performed by Fortis was defective and had to redone.”

Ringston and the condo board plan to appeal and Ringston said the court’s ruling was flawed and conflicts with a recent bankruptcy court decision in her client’s favor. Furthermore, she said Fortis was not just selling defective condos, but consistently made “false representations about the condition of the building” in contracts of sale.

This is at least the second legal victory for Fortis in Brooklyn in just a few years. In 2014, a judge dismissed a suit brought by the New York State Nurses Association who claimed Fortis backed out of a promise to re-hire nurses who had been laid off when Fortis acquired the Long Island College Hospital with the intention to redevelop it into a large housing complex. Fortis originally planned to open a new medical facility with NYU as its partner, but NYU backed out when nurses brought their suit.