Certified in successive offering-plan amendments that there had been no material change affecting the property, while construction and design defects were, it was alleged, known and either ignored or inadequately remedied.

No tribunal ever decided this.

Kerusa Co. LLC v. W10Z/515 Real Estate Ltd. Partnership · 12 NY3d 236 (2009) · Court of Appeals · Index 12 NY3d 236

No court has decided whether this conduct occurred. This decision resolved a procedural question. Nothing here is a finding that anyone did anything.

Outcome

Sponsor prevailed

Filed

2003-05-22

Last decision

2009-04-02

Elapsed

5.9 yrs

Brought by

unit owner

Posture

motion to dismiss

What the court held

A purchaser of a condominium apartment may not bring a claim for common-law fraud against the building's sponsor where the fraud is predicated SOLELY on alleged material omissions from the offering-plan amendments mandated by the Martin Act (General Business Law art 23-A) and the Attorney General's implementing regulations (13 NYCRR part 20). Absent the Martin Act, the sponsor would have had no duty to make those disclosures at all; allowing the claim would create a backdoor private action to enforce a statute under which no private right of action exists. Pleading each element of common-law fraud does not change this. Active concealment remains actionable, but only where the concealment is something other than the omission itself — the Court noting that the complaint did not allege, for example, that drywall was painted over to hide water damage or walls built to hide leaking pipes.

“we hold that a purchaser of a condominium apartment may not bring a claim for common-law fraud against the building's sponsor when the fraud is predicated solely on alleged material omissions from the offering plan amendments mandated by the Martin Act”
12 NY3d at 239

Outcome in full

The sponsor defendants prevailed, with costs. The Appellate Division's order — which had permitted the purchaser to replead common-law fraud — was REVERSED insofar as appealed from, the motion to amend was denied, and the certified question was answered in the negative. Court of Appeals, unanimous (Read, J.; Judges Ciparick, Graffeo, Smith, Pigott and Jones concurring; Chief Judge Lippman taking no part). finding_against_role recorded as unit_owner because the purchaser was the losing party — but the substance of the loss was jurisdictional, not exculpatory: no court has ever determined whether the sponsor concealed anything.

The harm continued while the case ran

Alleged construction and design defects — holes in the concrete structure, a persistent water condition in the cellars and elevator pits, inadequately insulated pipes that froze, and construction-period flooding — with claimed water damage, systems failures, condensation and mould. None of it was ever adjudicated. The purchaser was left, as to the offering-plan theory, with no cause of action at all.

What it cost

Not disclosed. No decision in this case states a figure, and we publish no estimate. Why costs are mostly blank.

What would have prevented this

The gap is not that New York failed to require sponsor disclosure. It required it — and then made the Attorney General the only party who may enforce it. A purchaser who reads an amendment certifying that nothing material has changed, and who later finds that plenty had, has no remedy under the statute that compelled the certificate and, after Kerusa, no common-law substitute for it either. The most economical fix in the whole legislative package is also the smallest: a private right of action, or a statutory rescission remedy, attached to a materially false offering-plan amendment. Note the asymmetry recorded in the opinion's own footnote — the BOARD's parallel action against these sponsor defendants settled in January 2006 after negotiations begun under the aegis of the Attorney General. The AG's office did engage. It engaged for the board. The individual purchaser had no such route and, this Court held, no claim.

Sources

Read in full and verified 2026-08-04.

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