Photo: naKornCreate/Shutterstock Litigating Fraud Claims Against a Sponsor of Real Estate Development Projects: Careful Drafting Is Still Required
Given the continued dismissal of claims for fraud which fail to meet the clear-cut pleading requirements and the ongoing development of new construction residential properties (albeit at a slightly slower rate than pre-pandemic due to supply-chain and other issues), a historical analysis of the legal standards for certain sponsor defect claims is instructive.
March 02, 2022 at 12:00 PM
6 minute read
Real Estate
At the end of 2021, the Appellate Division, First Department again was called upon to examine the legal standards for pleading a fraud in the inducement claim against a sponsor. Board of Managers of Latitude Riverdale Condominium v. 3585 Owner, LLC, 199 A.D.3d 441, 442 (1st Dep't 2021). In dismissing that claim as being duplicative of the breach of contract claim, the court reiterated that a fraud in the inducement claim is not preempted by the Martin Act where such a claim is "based upon allegations of affirmative misrepresentations, not omissions." Id.
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