In the New York City residential real estate world there are about 50 firms and sole practitioners that handle about 95% of all transactions. Unlike other forms of law and even other types of real estate law, residential legal representation is neither a very exciting nor very lucrative endeavor. This is because the deals have been standardized reducing the amount of legal advice needed to contract and close a deal. Most sales in the United States do not use lawyers to oversee a simple real estate transaction, while in NYC 99.9% of all sales have legal representation.
So what makes a good New York City real estate lawyer? In my opinion, after selling over 2,000 properties, it’s keeping everything smooth and simple with the transaction. Whereas, the legal undertaking of residential real estate sales is fairly simple and well templated while the brokering, lending and closing are more difficult. All involved parties can run into issues with a co-op board, the bank underwriter and even better the personal emotions that can get involved as a result of a major economic transaction. Selling or buying in NYC will most likely be the single largest financial endeavor you undertake and the enormity of the undertaking can lead to a stressed scenario for all involved.
Now, let me jump to another story. When I was 21 years old, I started a job as a line cook at Cafe des Artistes on the Upper West Side. Being new to the business, I asked the Chef for advice on how to be successful in the kitchen. His answer was simple, “don’t cause drama.” He went on to tell me there were a hundred things that could go wrong every day, and most of them do. If I wanted to be an asset to the kitchen, then don’t be another.
This is what I feel about a lawyer on a sales deal. A great one is a lawyer you do not hear from or barely see. The deal just moves along smoothly. There won’t be any awards, trophies or slaps on the back. You won’t even realize you had a great lawyer until months later and your close friend starts telling you about the horror story they endured. But some lawyers don’t like to be the modestly paid stealth like facilitators we need. Some like to jump in and try to add value or find an issue that can be exploited. Many times this happens with lawyers who are not focusing at least 75% of their business on residential transactions. They may try to push a position that can save you a hundred dollars but create tension that causes not only pain but a material expense due to their associated complications.
I’ll provide two recent examples: A lawyer representing a $3 million condo seller for my sell in Chelsea wanted to push off the closing for their client. The seller wanted a little more time as they had a delay in their purchase. This caused tension with the buyer because the closing went well beyond the expected date. Because of the delay, the buyer lost their rate lock and with the new rate this buyer was no longer approved by their bank and received a bank letter rejecting them from the new project. Since this deal had a funding contingency in it the sale was canceled and the buyer received their full deposit. The seller had a hard deposit on their New Jersey purchase and it ended up costing them their 8% deposit which translated into $140,000. This could have been avoided with some common sense and more effective communication. This lawyer charged $8,500 for both deals and neither ended up closing.
My second example: My colleague marketed a $3 million loft in TriBeCa last year. It was a hot market and he had lots of offers. Three times the seller’s lawyer sent out a contract and each was at the asking price. One of the contracts was for all cash and zero contingencies. Additionally, the building was a condo so no board issues – easy. But none of the three deals ended up in a contract as a result of difficult negations with the seller’s attorney. None of those deals should have been lost because the negotiated issues were related to closing dates, deposits, and other standard stuff. But instead, they all died. Then the loft sat for a few months, in the interim, the condo had an assessment, the market softened and the listing became stale. It finally did end up selling, with that same lawyer representing the owner but with a sale price of $2.55 million which translated to a $450,000 loss.
Selling and buying can be difficult and everyone wants to make their deal the best ever. But at the same time, you need to protect yourself from undue harm. Your lawyer should not be looking to make a name for themselves on your deal, they should keep things smooth and moving along. My advice is to hire a simple and well-experienced broker, banker and lawyer.