December 10, 2013: The Devil's in the Deal Sheet: A simple document can create major problems...
Getting the Party Started
Those of you who have bought or sold an apartment know that the initiating act of a transaction is the issuance of the deal sheet by the seller’s broker. Information is collected from both sides, including the names of the attorneys selected by the parties. Once the details are confirmed, the deal sheet goes out and the fun begins. Based upon recent experiences, however, I thought it worth mentioning that the terms of the transaction outlined in the deal sheet are often inaccurate or fail to include material information.
Trust but Verify
The seller’s broker may rely solely on the seller to provide basic information about the transaction, such as current carrying charges, assessments, whether or not there is a flip tax, inclusions and exclusions, and other important details. Often relevant information is not verified with the managing agent. Sometimes the seller gets it right and sometimes not so much. As a result, it is incumbent on both attorneys to check deal details with their clients and the managing agent, before things get out of hand. Nothing is worse than the parties realizing an important detail is incorrect, right before the contract is about to be signed.
Due Diligence Documents
When the transaction commences, the seller’s broker will deliver the offering plan and amendments to the buyer's attorney, together with the most recent financials for the co-op or condo in question. Although it’s rarely done, the seller’s broker should also deliver the purchase application package and generic questionnaire. By delivering these additional documents, most of the information in the deal sheet can be verified and mistakes avoided. There is plenty of time to obtain these documents after the seller signs the listing agreement, yet in most cases, the buyer’s attorney has to hassle the managing agent to get these documents.
Residential Reality: Confirm Everything
With the level of deal activity these days, things are rushed beyond belief. Start the deal off right, by simply confirming that the points in the deal sheet are correct.