Attorney Question
An attorney we are considering retaining to represent us in buying a coop has said that he does not review financials and that we would have to go to an accountant for that. I had expected that part of the service the attorney renders was to review the coop’s financials. Any thoughts?
An attorney we are considering retaining to represent us in buying a coop has said that he does not review financials and that we would have to go to an accountant for that. I had expected that part of the service the attorney renders was to review the coop’s financials. Any thoughts?
I am an actual, on the ground, real estate lawyer and have done over 1,000 closings in NY and NJ during the last 6 years.
When I represent individuals buying a condo or a coop I let them know the limits of my expertise, as Sloper5’s attorney did. I believe in being frank with my clients and that I am not an accountant, but know what to look for in terms of the typical financial arrangements of buildings under common ownership. As part of my due diligence, I tell my clients what red flags I see, but when they are particularly concerned I advise them to spend a hundred dollars to get an accountant to review it as well.
I also think it is fair to charge my clients a fee based on my expertise and services. Thus I don’t charge as a “one stop shop” for detailed financial analysis.
If you want an attorney who has additional expertise outside of Real Estate Law, you should look for someone with a dual accounting degree or an L.L.M. (legal master’s degree) in Finance.
Good luck Sloper5! I hope by now you are well on your way to buying a great home!
Lechacal- When I state a mortgage broker/banker should be able to review financials I mean a coop with bad financials will not be able to obtain financing. The loan would not be able to get approved if the financials are in bad shape. If the financials are good enough for the bank they should not affect marketability. Anything outside of that is your own risk of buying shares in a corporation and I or the bank would hold no responsibility.
Let’s speak with an actual real estate lawyer that does these transactions before jumping to conclusions. The vast majority of RE lawyers that I deal with review the financials with the client. Hey I only do this for a living.
FYI And I am a Mortgage Banker not a broker. I am actually responsible for the loans that I make.
N attorney who has done these types of deals should have enough confidence to stand by his/her financial.s
My attorney did not advise me as to my rehabbed condos financial because I am a trained in finance and do building financial for a living.
My attorney asked me about stuff. ALmost everyone who bought into my condo had no idea that 80 percent of the revenue came from common charges when it should be about 100 percent.
The reason our building was 80 percent is because we have a sprint antenna that provides 20 percent to our budget in rent.
ANyone looking at scedule A and Schedule B can find all this info out.
If anyone would like me to review their offferigng I would be glad to for a small fee.
N attorney who has done these types of deals should have enough confidence to stand by his/her financial.s
My attorney did not advise me as to my rehabbed condos financial because I am a trained in finance and do building financial for a living.
My attorney asked me about stuff. ALmost everyone who bought into my condo had no idea that 80 percent of the revenue came from common charges when it should be about 100 percent.
The reason our building was 80 percent is because we have a sprint antenna that provides 20 percent to our budget in rent.
ANyone looking at scedule A and Schedule B can find all this info out.
If anyone would like me to review their offferigng I would be glad to for a small fee.
I should follow all of this up by asking if there is any lawyer who deals with small real estate closing who can provide a view as to how they would view their professional duties and competence in this situation. I deal with larger corporate transactions and admit I am not familiar with “on the ground” practices for these types of matters.
Adam, let me ask you a question: if you (as a mortgage broker) review financials for one of your clients and miss something important that you shouldn’t have missed, and they have some sort of loss as a result, would you expect your client to be able to sue you for professional negligence? You may be happy to cast an experienced eye over financial statements and give sort of an “as is, no promises” view, but I seriously doubt you consider yourself to be taking on the kind of professional duties that a doctor takes on when performing surgery, or a lawyer when drafting a contract, or an accountant when reviewing financial statements (or for that matter a mortgage broker when arranging a mortgage). Some lawyers may inappropriately hold themselves out as able to provide what is effectively financial advice, but they should not do so. It sounds like this lawyer is just being honest by telling the client that if he wants that kind of professional advice he should engage the right kind of professional.
BTW I deal with financial statements and complex financial issues on a pretty much daily basis and regularly have to walk the line between providing legal advice and financial advice (obviously I stay on the legal side).
As a lawyer, I also agree with lechacal. A lawyer’s training does not allow him/her to take responsibility for the financials. A seasoned real estate attorney may offer insight into the financials from mere experience, but a thorough review should be done by a professional accountant or a financial advisor. The fact that your lawyer told you so, suggests to me that he/she is honest and not just out to make a buck.
Both Adam and dylanfan are wrong. Lawyers may be able to offer valuable insight on the financials but it is inappropriate for them to take professional responsibility for doing so. Lawyers pracice law, not accounting or financial advisory work.
– an actual lawyer
Yes, Adam is right. I have done this a number of times, and my real estate attorney always reviewed the financials, as well as the offering plan, as part of her “due diligence” and advised me based on what she found, before I signed the contract.