Excited... but need some ADVICE!

happy? a drop of 57k all depends on the offer price..

but bullish!

The attorney will conduct due diligence on the building investigating relevant litigation involving the coop, review the financial statements to evaluate its fiscal condition, review the offering prospectus and amendments to make sure there's nothing unusual and to alert you to any special conditions in the building, take a look at the building's financing and possibly insurance, be sure a proper title search is conducted... A complete understanding of the building's maintenance history and upcoming capital projects and Local Law compliance should also be part of the due diligence. You should know what you are getting yourself into.

Are you going to have financing for the purchase? If so, the lender will also conduct some due diligence on the building.

It's all pretty standard fare for a seasoned RE attorney. Not a lot of creativity typically needed--just thorough attention to detail.

Congratulations on finding an attorney you trust! That is the first and most important step. Kylewest gives a good overview the role of the attorney in the early stages of a deal.

I would only say that the primary role of the attorney is not, in my opinion, to do diligence. Due diligence is critical, to be sure. The attorney, though, should be spending his time and talent fighting tooth and nail to get you the best, most specialized and most broad protections he can get you in the purchase agreement. A "GOOD" lawyer, as you put it, should be driving the seller's lawyer absolutely nuts demanding conditions to closing, representations, warranties and obligations that survive the closing and give you the absolute most comfort that the market can bear. He should be ensuring that you don't have to close unless every dew drop on your new apartment's windowsill is in its proper place, your bank funds the mortgage in the right way, and the board approves you without any conditions.

I exaggerate for the sake of rhetoric, of course, but you get the idea. The lawyer negotiates the contract. The rest is... well, it's important, but the contract negotiation is the heart of the deal.
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Marco Santori is a lawyer in New York City, but he isn't your lawyer, and you should not rely on this post for legal advice. If you have any other questions, feel free to email at MSANTORI@NMLLPLAW.COM

Thank you both for the very informative comments! I will definitely use them to my advantage as best I can.

Are there any specific questions (or demands) I can ask my lawyer, so as to make sure things are being done as thoroughly and completely as possible?

Much appreciated!

I disagree that you can rank a contract over due diligence. Best contract in the world isn't worth anything if what you are buying isn't what you think. Before caring about contract terms, you have to be sure that the building and apartment are in fact what you want and that you know what you are getting into financially. In terms of contracts for most sales, there really isn't that much to "fight tooth and nail" about. Fight too much and you disgust everyone and ruin the deal. Things you can expect to have your attorney get for you in the contract:
mortgage contingency clause, particular pets allowed as condition of sale, board doesn't require special conditions for approval like 2 years maintenance put into escrow, timing of closing if that is important to you, particular fixtures to remain if you care, that things work, perhaps that seller hasn't done anything in apt that violates building codes and that all work was approved, that seller not aware of any issues that require abatement (like mold or asbestos).... It's early and I haven't had my coffee, so maybe there are a couple of others. But be aware that the more you deviate from standard terms, the more contentious it all becomes and the more a deal is likely to fall apart. The mortgage contingency clause is the most important thing out of all of these for the vast majority of buyers.

On another note, too many attorneys skip checking into the building's Local Law compliance and the most recent cycle--Local Law 11--can cost you a FORTUNE in facade repairs if it hasn't been completed. I'd want to know the details of the building's compliance.

It is a fairly standard transaction. If you are buying a a co-op more complicated, but it is pretty straightforward. Of course lawyers need to make it seem all dramatic and complex, but that is how they justify their existence. As mentioned: mortgage contingency is important. Otherwise you need to understand what is going on in terms of how much your putting down and what you need to do according to the contract. I find it slightly amusing that lawyers, who go to law school, are the one's that everyone turns to to read financials and the minutes of meeting.

Don't sweat it - basic stuff.

If you are a first-time buyer, someone (it could be your good attorney, it could be your good broker) should be explaining to you the basics of your transaction: here is the building's offering plan, let's see what's in it, oh, there's an engineer's report on page XX, you might want to look at a couple pages of that....

Here are the building's financials for the past year, here's how we calculate XX ratio, here's what it means. We're drawing up your contract, you have an XX day financing contingency, that means you need to do X, Y, and Z by the named date.

In other words, you are looking for good, explanatory bedside manner.

ali r.
DG Neary Realty

...unless every dew drop on your new apartment's windowsill...

That's a good one, Marco.

If the building has an underlying mortgage, please make sure you know the terms so it doesn't come back to bite you. (I am assuming there's no ground lease. If there is, walk away.) Check all major capex items (LL 11 compliance, elevators, boilers, roof, windows, electrical wiring) and find out when they were last updated. Check the reserve levels against annual costs to see if they're sufficient. If possible, get reps re mold, asbestos, and bed bugs.

@kylewest:
THANK YOU for that very specific rundown. I will mention all those things to my attorney. According to my lawyer friend who recommended her and who had her represent him when he bought his condo, "she's a real shark" ...but at the same time, I don't think she would do anything that would put the deal in danger. Can you think of any other important points to hit on?

@Ottawanyc:
Yes, it is a co-op. I actually just received the Sales Requirements.
When you say this: "what you need to do according to the contract" what are you talking about exactly? Before closing or after?

@front_porch:
Yes, both my broker and to some extent my lawyer have been very helpful. But also, I don't think they want to burden me with info that I don't need to worry about that and they can handle themselves (again, justifying their existence). But I really would like to know all the ins and outs of it myself, and so I come here :)

@REMom:
Very good advice, thank you.
When you say this: "Check all major capex items (LL 11 compliance, elevators, boilers, roof, windows, electrical wiring)" ...HOW exactly do I check all those things? Just by asking the sellers broker? Just by looking at the elevator, windows, etc. myself? Do I hire I specialist to come in and inspect each one??
When you say this: "Check the reserve levels against annual costs to see if they're sufficient." ...Where is this information located?
I will definitely get those reports. Do I request these to my lawyer, or broker?
Also, any other reports I should get?

Also, forgot to mention:
NO ground lease, and what terms should I look out for in the building's underlying mortgage? (I believe it DOES have one)

I'm assuming you have absolutely no intentions of renting this co-op at anytime in the future. Is that correct?

Daniel, you worry me. First, this isn't television. You don't need a "real shark" of a lawyer for a RE transaction. It is about as dull as law gets for most residential purchases and is very proforma. And you do not personally check these things such as LL11 compliance. That is what the lawyer is being paid for. If you approach this with the lousy attitude that all the broker and lawyer are doing is "justifying their existence" you are going to alienate everyone who may well be doing a good job of getting you what you want. Take a step back, inhale, let people do their jobs, and just ask questions about things you don't understand or are worried about (like, what happens to my deposit in escrow if the board let's me in but not with my 4 grate danes).

I get that you are out of your element here. It shows when you write something like, "I believe the [building] DOES have [a mortgage]." Of course, the building has a mortgage. 99.5% of buildings have mortgages. Your lawyer will look at its terms, when it has to be refinanced, and explain to you what the likely scenarios are for you in terms of what impact it will all have on your monthly expenses, resale, etc. In terms of capital projects and expenses, all you do is ask your lawyer what s/he learned about these things. It isn't magic.

As for the brokers as a source of info, realize that NOTHING that they say has any meaningful legal affect--in RE if it ain't in writing, it doesn't count for anything. The only source of information upon which you should rely for things that materially matter to you is your own attorney and the contract of sale. A broker saying the building is in great shape is meaningless since in fact the building may need new everything. that's why your lawyer will review board minutes, financial statements, capital plans, and make inquiries of the managing agent if more info is needed. You now have a lawyer involved. Don't go and gum up the works by running around to the brokers and managing agent yourself asking the same or half-baked/understood questions.

"great danes"

If everything was recorded correctly on ACRIS, then the building had a $900,000 mortage from 1983 with the sponsor. If that's still the principal amount, then about $21K per average apartment, which isn't bad.

The canopy out front is in good shape, and somebody's paying attention to planting, which're good signs.

It's a semi-fireproof building (note the fire escapes and open stairway) but that's neither here nor there, except that the co-op's fire insurance may run a tad higher.

The great advantage is that being only six stories, there's much less of a Local Law 11 compliance burden.

kylewest and Ottawaynyc make interesting points about due diligence. A lawyer can certainly do your due diligence for you, and an experienced lawyer will be able to assist an inexperienced buyer in identifying and understanding those issues that it might expose. That said, there's no reason you can't do it yourself. As Ottawanyc suggested, there's nothing about me being a lawyer that makes me superhuman when reading board minutes and financial statements. My experience helps, to be sure, but you as the purchaser can certainly take that into your own hands.

kylewest is right that there are limits to what you can demand as the purchaser. Those limits are defined by how badly the seller wants to do this particular deal, and how willing he is to take on risks that the purchaser would otherwise bear. Nonetheless, there is no such thing as a standard transaction. I would caution you to be wary of any professional who says your transaction is just like the last transaction he did, and just like the next transaction he'll do. This usually indicates that the professional will not fight to give you the upper hand in the deal and will not want to upset anyone along the way.

Look, nobody wants a lawyer that's going to kill a deal with all his "fighting tooth and nail". By the same token, nobody wants a lawyer that's going to go with the flow of the transaction and bend to whatever the other side wants. A good lawyer pushes your terms as far as he can in your favor and makes the other side bend. A bad one pushes too far to the point where the other side breaks, and walks away from the table.
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Marco Santori is a lawyer in New York City, but he isn't your lawyer, and you should not rely on this post for legal advice. If you have any other questions, feel free to email at MSANTORI@NMLLPLAW.COM

concur kyle west, on the you worry me comment; op comes across like an out of his/her element greenhorn. guess i don't get how someone makes such a significant purchase without doing the tiniest bit of due diligence prior.

Just chill out. You hired a lawyer and let them do their job. Hopefully she will not need to be a shark, but can instead walk you through the contract as you seem to want to have a good understanding (which is great). In this case maybe best to appreciate that a good lawyer is one who can give you comfort in moving forward and letting you know what is expected of you under the contract.

But seriously go have a drink and relax. And remember if your lawyer screws up you can go find a lawyer with the reputation of some other predatory animal to sue her for negligence.

You asked what a good lawyer should do. My list was basically a list of all the information my lawyer provided me from the financials and minutes from meetings. She gave me a summary of the mortgage terms. She gave me a list of major capex and when it had been done and what was planned. She told me how much was in the reserves and how much had been spent annually on capital expenditures. Anything that wasn't readily available in the financials and minutes, she asked the managing agent.

OK, let's see:

@renterjoey:
No, no plans to rent this out.

@kylewest:
Don't worry... it wasn't me who said the lawyer was a shark, that was my friend who recommended her. And honestly, I don't really think there is any need for "sharkness" here, but I like the idea of having that type of person, if necessary.
And I also know that I don't have to do all those things myself -- I just like being aware because I'm a curious person, and also, I'd like to know what THEY are doing, and getting it done.
And surely, I am letting the lawyer do all of the legwork. Of course, I have not contacted anyone myself. But I thank you for the helpful insights. And no, I don't have 4 great danes :)

@NWT:
Thank you :)

@MSantori:
You provide a nice contrast to what kylewest said. I think both of you are right. As a purchaser (a new purchaser, but one who is informed nonetheless) I think there should be a balance between what I would like to know myself, and also what I will let others take care of. For me personally, the very technical stuff (like LL11 compliance, etc.) I will let the lawyer handle, for instance. Other things, like which lighting fixtures stay in the apartment, are good to know myself (and then pass along to my attorney so that she can amend the contract if necessary). Sound good? :)

@romary:
Please enlighten me. What sort of due diligence should I do? (keeping in mind, of course, that you don't know exactly what I've done already).

@Ottawanyc:
Thanks for the level-headedness. What you describe sounds like my lawyer. I think that when I said things like "shark" and "tooth and nail," people just assumed the worst. This is not the case.

@REMom:
Yes, and I thank you for that, I think I will do the same with my lawyer :)

Best to all! :)