No Contract? No Problem. Condo Unit Owners Can Still Sue Architect
Bucking a trend to the contrary, a recent decision finds condo unit owners can sue an architect for construction defects—even though they had no direct contract with the architect.
An individual purchasing a condominium unit from a sponsor/seller inevitably has a contractual relationship with that sponsor, generally through the contract of sale, as well as the offering plan. This contractual relationship allows for a direct right of action for breach of contract between the two (although the documents may limit or waive certain rights). There are also various warranties that come into play between the sponsor and the purchaser.
But does the purchaser also have any right to sue the architect who might be responsible for design errors resulting in the defects? Traditionally, the answer has been no, at least not for breach of contract. After all, there was no contract between the architect and the purchaser. Even courts that were willing to consider whether there was the “functional equivalent of privity” (i.e., a relationship so close that it is as though they had a contract) generally found that there was none between purchaser and architect. When a sponsor hires an architect, the identities of the purchasers are almost never known.
The reason the courts are loathed to extend these contractual rights to purchasers is that the law is deeply concerned that the legal consequences of wrongs be limited to a controllable degree—ensuring that defendants are not liable to an unlimited, undetermined group of plaintiffs they never knew existed, let alone made contractual promises to.
Brooklyn Condo Owners Sue Architect
Yet, in a recent case in Brooklyn, a lower court upheld the right of eight condominium unit owners to pursue their claims against the architect. The court reasoned that since there were only eight units in the building, the architect would not be subject to unlimited liability. Moreover, it stated that when the architect entered into its contract with the sponsor, it was aware that it would be required to design premises for the benefit of these “finite” eight purchasers. Even though they were not identified by name, they were deemed to possess the “functional equivalent of privity” with the architect so as to permit a claim for breach of contract.
Ultimately, the court fell back on what it viewed as the public policy: “Society as a whole benefits from being able to hold architects, sponsors and all those significantly involved in the housing stock in our communities, liable for failing to properly plan, advertise, and inspect the housing stock they assist in construction and selling.”
Read more articles authored by attorneys in our Construction Law and Cooperative and Condominium Law Practice.