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Seller Beware - Individual Principals of Condominium Sponsors Held Liable to Unit Owners for Breach of Contract Claims Based on the Principals' Certifications in the Offering Plan

Recent Supreme Court case law in certain jurisdictions (most notably Kings County) specifically holds that a Unit Owner may seek damages for breach of the purchase agreement against the individual principals of the Sponsor based upon their certification in the Offering Plan and the incorporation of the terms of the Offering Plan into the purchase agreement, even though those principals were not parties to the purchase agreement. In other words, courts are holding that the required Martin Act certifications in the Offering Plan automatically establish privity of contract between the principals of the Sponsor and the Unit Owners under the purchase agreements notwithstanding that the purchase agreements themselves are only between the Sponsor entity and the Unit Owner.

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