Sellers must ensure that they have the opportunity to review a buyer’s board package, says lawyer Ron Gitter, whose sage advice has graced this blog before and whose Web site contains much more valuable information. In the post below, he examines the pitfalls of proceeding casually and the promise of going forward with eyes wide open.
by Ron Gitter
Those of us in the biz know the drill. Once an offer is accepted, buyers go about the process of putting together their “board package.”
The purchase application, together with tax returns, copies of brokerage account statements, personal and business references, credit report authorizations and other personal data are assembled for perusal by the seller’s broker before submission of the whole enchilada to the managing agent for the co-op or condo.
But what happens if the buyer wants to submit his or her application directly to the managing agent without prior review by the seller’s broker or, for that matter, the buyer’s broker?
As it turns out, nothing happens.
There is no requirement in the standard form co-op or condo contract that obligates a buyer to submit documents to the seller’s broker for review prior to submission to the managing agent.
Although the exercise is time tested and usually works well, particularly for first-time buyers whose personal and business reference letters can often seem like postcards from camp, the buyer is under no obligation to allow the seller’s broker to review the package before it is submitted. Ouch!
But what if the buyer is much more sophisticated, or famous, or has serious privacy concerns than the novice buyer? Submitting the package directly to the managing agent is a good way to preserve confidentiality, especially if it’s a fancy shmancy board package of a high-profile buyer. Continue reading