Adam Leitman Bailey, P.C.’s Careful Due Diligence Catches Misleading Listing Revealing that Private Terrace is Actually Shared Space
Due diligence review is usually the final hurdle for Purchasers to gain comfortability with a deal. The due diligence period (normally 5 business days) reveals the important financial, physical and intangible aspects of living in a unit and building. At Adam Leitman Bailey, P.C., our due diligence review, among other items, involves a deep dissection of the building’s financials, Board meeting minutes, future budgets, offering plans, house rules and our proven due diligence questionnaire.
Questionnaire
Adam Leitman Bailey P.C.’s proven due diligence questionnaire reveals so many of the nuanced items involved with a specific purchase. Whether revealing closing costs, lot-line windows, major remedial work, sublease policies or insurance coverage it is imperative that each purchaser becomes informed. Many times, especially in smaller buildings, where there are no meeting minutes or detailed financial statements, completing a due diligence questionnaire becomes the centerpiece for informed decision making.
Adam Leitman Bailey, P.C.’s questionnaire most recently revealed to prospective purchasers that a “private roof space” (as advertised on the listing) was in fact a shared space between two units. Upon a multitude of follow ups and review of the respective cooperative documents, Adam Leitman Bailey, P.C. was able to counsel the clients on the legal realities of such a designation and provided a multitude of options on how to proceed with this knowledge.
Financials Review
Understanding building financials has only been heightened since the start of the pandemic. Individual unit owners have lost jobs and their ability to pay common charges/maintenance, commercial spaces have gone vacant, and supply chain issues along with inflation have further raised building costs. Understanding not only the building’s tendencies when addressing financial shortfalls, but the future financial issues facing a building is key for any substantial investment.
In a recent due diligence review, Adam Leitman Bailey, P.C. was able to project there would be a maintenance increase by nearly 4.5 percent based a vacant commercial space and growing arrears for Unit owners. While management was unable to confirm during the initial review, we were able to prepare our client for the reality that the current maintenance would increase in the coming in the coming months.
Meeting Minutes Review
Before the pandemic, Board meeting minutes reviews were traditionally conducted in person at the office of the managing agent. Computer transcription and pictures were generally not allowed to preserve items sensitive to that respective Condominium or Cooperative. Since the start of the pandemic, many boards have allowed electronic review or review after execution of a nondisclosure agreement. That said, some Boards and Managing Agents still require in-person review. In response, the Adam Leitman Bailey, P.C. team requests review of meeting minutes as soon as we receive a deal sheet and have a fully vaccinated transaction staff in case review is required to be in person.
The ebb and flow of pandemic restrictions has forever changed the way that real estate attorneys have gone about completing due diligence. In what has been a historically competitive real estate market, with Sellers sending out multiple contracts and soliciting multiple offers, completing a thorough and timely due diligence review is key to getting a deal into contract.
Jason E. Rogovich, Esq., of the Transactional and Banking Departments at Adam Leitman bailey, P.C. handled both due diligence reviews and contract negotiations. The firm looks forward to helping guide prospective purchasers through this unconventional yet opportune time to buy.