A Philadelphia jury recently awarded a condominium Association over $5 million, including almost $1 million in punitive damages. The Belgravia Condominium Association sued the declarant (the sponsor/developer) and engineer involved in the construction of the condominium building. The suit, filed in 2010, accused the declarant and engineers of misrepresenting or failing to disclose information related to construction work on the Belgravia Condominium.

Generally, the award of punitive damages by a jury is uncommon, as it requires disclosure to buyers of such things structural deficiencies and other construction defects to have been done intentionally. The Belgravia was built in 1902, and was converted to condominiums in 2006 and units sold for as much as $425,000. Unfortunately, the construction/renovation was not done properly. The Association alleged in its suit that several defects that were noted by the engineering firm were not disclosed to potential buyers, in violation of the Uniform Condominium Act.

When transition of the Board of Directors took place in 2008, the building was already experiencing significant problems with the facade and iron overhangs. The Association hired its own engineering firm, which uncovered even more defects with the fire-alarm system, the brick courtyard walls, peeling paint, damaged concrete slabs, and cracks and exposed wiring on the concrete retaining walls. The cost of the facade repairs alone were likely to be over $2 million. The Association had virtually no choice but to file suit and seek to recover damages from the declarant and the engineering firm.

While this finding of fraud/misrepresentation is uncommon, Board Members should be aware of all of the Association’s rights, and consultation with an attorney is imperative. Herrick represents condominiums in Pennsylvania, New Jersey and New York in relation to construction defects and misrepresentations made by the declarant/sponsor/developer.