Selling or buying any home can have it's challenges. But working with sensitive properties, like condos in litigation, take extra skill and finesse.

We are proud of our successful experiences helping sellers and buyers on such sensitive properties. Below is important information to consider before buying or selling a condo in litigation. We hope you find these tips informative and useful. Please contact us if you'd like more information or to find out how we can help you.

Timeline for closing the transaction.

It's important to be realistic about the closing timeline for properties in litigation. A common obstacle in closing transactions at Blakeley Commons is giving enough time and space for discovery of all the contingencies involved with the status of the litigation and for those contingencies to be fully understood by the lenders and other parties involved in the transaction. Many lenders don't work a lot with properties in litigation and can be less comfortable with funding these sensitive properties. However, I have several referrals of reputable lenders who finance properties in litigation as well as have personal knowledge of their experience and capability in setting up appropriate financing.

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Negotiating due diligence and inspection timelines of multi-family buildings. >

Inspection timelines for units in multi-family buildings is usually around 5-10 days. However, the inspection - or rather investigation - of units in buildings in litigation includes much more than the health of the structure. It also includes a lot of investigation into the litigation itself, association meetings, and other legal paperwork to fully realize the impacts of the situation. Because there aren't any concrete decisions made about the items in litigation, the Seller needs to provide assurances to help the Buyer develop a level of comfort and understanding around exactly what the litigation involves and how it affects the unit being sold. The situation needs to be skillfully negotiated for both parties to feel comfortable about making decisions based on what is happening with the unit today since neither can completely know the status of the unit tomorrow and into the future.

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How to converse with lenders when discussing a building in litigation.

There is a fine line between saying just enough but not too much. Too much or too little information will scare any lender - making them uncomfortable and ultimately unlikely to want to work with the unit. You have to work with a lender willing to do research on the building and in particular the unit being sold to be compared against their underwriting requirements. Only then will a lender be able to fully realize the common interests, true appraised value (based on market conditions, comparables and terms associated with recent sales) and be in a knowledgeable position to recommend lending scenarios for a building undergoing litigation.

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Understanding Escrow holdbacks. >

Escrow holdbacks are monies that are held in an Escrow account for a period of time - potentially even past the closing date, and even potentially several years into the future - to help offset either damages assessed or funds awarded when the litigation is over. Every detail of an Escrow holdback is negotiable. From who funds the holdback and the date of the holdback's future disbursement to what bank is responsible for the holdback, which party pays the bank fees (if any), and who receives the interest on the monies in the escrow holdback account. Escrow holdbacks are a useful negotiation tool when selling units within buildings in litigation. Since neither party knows what the outcome of the litigation will be, it is important to negotiate a level of comfort that any benefits or damages assessed are appropriately distributed or offset. As an example, here's how one type of holdback might be negotiated: A unit sells for $300k and $20k of that sale price is put in an Escrow holdback account - funded by the Seller. If damages are to be paid by the owner of the unit, the $20k is used by the new owner and the original Seller is free and clear of any additional obligations. If, however the litigation results in an award to the owner of the unit, the $20k is returned to the original Seller (and in this case, funder of the holdback). Again, this is purely an example - all terms of a holdback are negotiable by both parties.

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