The AG secured $230,000 from a condo sponsor. The structural gap remains.

On May 29, 2026, the New York Attorney General announced a $230,734 settlement with Craig Nassi and 135 Carlton Ventures, LLC, sponsor of a condominium at 135 Carlton Avenue in Fort Greene, Brooklyn. The AG found that Nassi's company marketed the building as newly constructed when it had only been renovated, concealed structural foundation defects, and performed work without filing plans with the Department of Buildings. Residents were evacuated under a DOB emergency order. The AG announcement directs $200,000 of the settlement to the residents forced out of their units. That payment, and what it does not cover, is the point of this post.

The Martin Act's scope: fraud in the offering.

The Martin Act (New York General Business Law Article 23-A, enacted 1921) authorizes the Attorney General to investigate and prosecute fraud in the offering and sale of real estate securities in New York State. The AG's Real Estate Finance Bureau administers the Martin Act for condo and co-op transactions, reviewing the offering plans that sponsors file with the Bureau before selling units in a new or converted building.

Material misrepresentations in an offering plan are actionable under the Martin Act. So are false statements in marketing materials and representations made during the sales process. Executive Law Section 63(12) provides a parallel grant of authority: the AG may pursue any persistent fraud or illegality in the conduct of business, giving the office a second statutory basis when conduct falls outside the narrower Martin Act definition.

Both statutes were used at 135 Carlton. The offering plan described the building as newly constructed. According to the AG's press release and complaint, structural work was performed without DOB filings or a licensed engineer of record. When the foundation problems came to light, they were not disclosed to buyers or remedied by the sponsor. The AG filed suit in November 2024 and reached a settlement in May 2026.

What happened at 135 Carlton Avenue.

The foundation problem at 135 Carlton came to light around 2020, when workers on neighboring properties uncovered conditions at the site. A large portion of the building's foundation lacked adequate structural support. The Department of Buildings issued emergency work orders and directed residents to evacuate.

According to the AG, Nassi performed structural work without engaging a licensed engineer or filing plans with the DOB. Statements made under oath about hiring a structural engineer were alleged to be false. The four-unit condominium had been sold to buyers who paid for what the offering plan represented as new construction.

After the evacuation, the building's board of managers, the four unit owners acting in their collective governance capacity, became responsible for the emergency repairs. They funded that work through whatever reserves the building held or through special assessments while the legal process moved forward. The AG's lawsuit took approximately eighteen months from filing to settlement.

The gap between the settlement and the repair bill.

The settlement was structured as an Assurance of Discontinuance, the standard vehicle for Martin Act civil resolutions. An Assurance of Discontinuance is not a court judgment. The settling party does not acknowledge the allegations. The dollar amounts reflect a negotiated outcome, not a court-determined measure of actual damages.

Foundation remediation in a New York City residential building is not a $200,000 problem. Depending on the scope of the deficiency, structural repairs can range from several hundred thousand dollars to well over a million, particularly when DOB emergency orders require foundation shoring, pile work, or a phased rebuild of load-bearing components. None of the $200,000 is earmarked for the building's repair bill. It compensates the residents who were forced out of their units for their individual displacement costs. The four unit owners, acting through their board of managers, absorbed the cost of the structural work from approximately 2020 onward, years before the settlement payment arrived.

Where the Martin Act's jurisdiction ends.

The Martin Act is an offering-stage statute. Its purpose is to require accurate disclosure in the documents and representations that create the sale. Once the offering plan is effective and units are sold, the AG's Martin Act authority over the building's ongoing operations is limited. The Real Estate Finance Bureau can review offering plan amendments and pursue post-offering fraud, but it cannot direct a board of managers, replace a managing agent, compel reserve contributions, or adjudicate disputes between unit owners and the board. Those governance functions have no state regulator in New York.

This boundary is described in more detail at How to write an AG REFB complaint: the REFB complaint is the right tool for offering plan violations. It is not a building governance mechanism. New York has not created one.

The REFB reviews hundreds of offering plan submissions and amendments each year. That review evaluates whether a disclosure document is complete and follows the required format under the Bureau's regulations (13 N.Y.C.R.R. Parts 17-25). It does not require the sponsor to provide an independent engineering certification of the building's physical condition. When a sponsor represents that a building is new construction, the REFB review process determines whether the representation is present in the plan, not whether it is physically accurate.

The reserve fund gap that no settlement can fill.

New York State does not require condominium boards to maintain a minimum reserve fund. The Condominium Act (Real Property Law Article 9-B) sets no floor for reserve accumulation. Proposed legislation, including Assembly Bill A8945, would require capital reserve studies and 30-year funding plans for condos and co-ops, but as of the date of this post that bill has not advanced out of committee.

The consequence at a building like 135 Carlton: when emergency repairs become unavoidable, the board of managers must draw down whatever reserves were voluntarily accumulated, levy a special assessment on unit owners, or obtain building financing. If reserves are thin, unit owners who paid a premium for what the offering plan described as new construction personally fund the correction of a structural failure they did not cause and could not have identified from the offering plan documents.

Florida enacted mandatory reserve funding requirements after the 2021 Surfside collapse, requiring associations to fund reserves for load-bearing walls, roofs, and other structural components on a scheduled basis. New York has no equivalent requirement. The site's comparison of Florida's post-Surfside regime to New York's current framework covers this gap in detail.

What the LLC Transparency Act changes, and what it doesn't.

Since January 1, 2026, the NY LLC Transparency Act requires every LLC organized or doing business in New York to file beneficial ownership information with the Department of State. This includes sponsor LLCs. A future case involving an entity like 135 Carlton Ventures, LLC would have a filed beneficial ownership record identifying the natural persons who controlled it, available to civil litigants through discovery.

Before the LLC Transparency Act, plaintiffs suing a sponsor LLC frequently encountered a discovery obstacle: the LLC's true ownership was opaque, complicating attempts to pierce the corporate veil or identify the individuals responsible for the building's condition. Civil discovery now has a documented starting point.

What the LLC Transparency Act does not change: the offering plan review process, the absence of mandatory independent engineering certification before plan approval, or the lack of a post-closing governance regulator for condominiums. The identity of the people behind a sponsor LLC is now more traceable. That traceability helps litigants who are already in court. It does not prevent a sponsor from misrepresenting the physical condition of a building at the time of sale.

Bottom line.

The AG's enforcement action at 135 Carlton Avenue worked as the Martin Act was designed to work. The office identified pre-sale misrepresentation, built a case, and secured restitution. The limits this settlement exposes are not failures of the Martin Act. They are the statute's boundary. What lies beyond it: no minimum reserve fund requirement for New York condominiums, no mandatory independent physical inspection before an offering plan is approved, and no post-offering governance regulator. The unit owners at 135 Carlton absorbed years of repair costs and displacement that a complete pre-sale inspection regime might have prevented. The LLC Transparency Act gives future civil plaintiffs a cleaner path to the people behind a sponsoring entity. The offering plan review process still does not require sponsors to verify what they represent about a building's condition.

Primary sources: AG press release, May 29, 2026 · Martin Act, GBL Article 23-A · Executive Law §63(12) · 13 N.Y.C.R.R. Parts 17–25 (REFB regulations) · NY Condominium Act, RPL Article 9-B · Assembly Bill A8945 (reserve fund study requirement)

Companion resources: How to write an AG REFB complaint · The NY LLC Transparency Act and sponsor disclosure · Florida vs. New York: condo transparency after Surfside · Sponsor control period abuses · Offering plan red flags guide · AG complaint tool