Painful transactions: the very opposite of that famous Tolstoy quote: every happy family is alike, but every unhappy family is unhappy in its own way.
If a transaction is a lawyer-trauma, it’s often because of a combination of the same old behaviours.
Here’s my advice to borrower’s lawyers. Many of you are truly excellent and I salute you. You make my day. This is for the ones who make it painful. You know who you are.
- NFI: it is very rare that there is any explanation at all about the transaction at the outset; the property, the deal, the issues or indeed anything at all which could lead to an understanding of the transaction. We invariably have to piece it together without any signposts from the initial email infodump. Send us your report on title, or even a summary of the issues. What have you got to lose? You will be saving precious time otherwise spent answering our numerous queries, trying to work out what is going on and what the issues are.
- The information dump: no, we don’t want each and every email ever written to anyone ever, together with every document with the property name on it in your inbox, relevant or not, sent as a separate annexure. We can waste a day simply downloading, before we see that half of it is irrelevant. When the attachment box contains more words than the email, you know you’re in trouble. The unwillingness of some lawyers to act as some sort of filter is a massive timewaster. Allied to:
- Irrelevant information: no, we don’t need to see the local search you got in 2016 when you bought the property or planning permissions that were never implemented and never will be and yes, we really do need a new local search because the one you have sent is now three years out of date and is effectively useless. And whilst we will try and download the planning information from the online register, if there is one, it would really help if we don’t have to trawl through hundreds of items filed at the local authority to find the documents we actually need. And yes, in case you thought that we asked for the sheer joy of it, we do need some of those optional enquiries in the local search. Which ones? The ones you should have already done, obv.
- Non-disclosure: actually yes, we really do need to see all your specific property enquiries and anything that you have come across post-purchase which may be relevant to a lender, so that we don’t ask you the same questions you have already asked the vendor. We’re trying to save time, not to catch you out. Think of it like a purchase for the bank, only more so. Seems that some lawyers can’t quite get their heads round that one.
- Tell us everything relevant at the start: The opposite problem to the infodump; the reticent lawyer, clam-like, answering only exactly what’s asked as if words were rationed. Please do tell us about the mezz, or the director or investor loans – when there were meant to be none – and not five minutes before drawdown, requiring a raft of new documents at short notice, assuming that the non-disclosure doesn’t actually kill the deal. Do tell us about that rights of light/defective title policy you got at the beginning of the transaction. Don’t make us wait. We will find out, so much better just to disclose at the outset.
- Being told that the lender will need to take a “commercial view”: this usually happens where the ball has been dropped. What you sometimes say: “your client will have to take a commercial view“. Er, no, they don’t. What you’re really saying: “ please can you play this down” and “damn, I didn’t flag that on purchase and my client will go ballistic”. If a ball has been dropped or a view taken that is problematic for a lender, speak to us. There is generally a solution. We have no interest in killing your deal, by the way. We all earn less that way, no-one is happy and your client won’t want to come back. Repeat business is our lifeblood.
- Point scoring: please don’t bother. It’s boring and no-one wants to see lawyers sparking off each other. Lawyers are such keyboard warriors. CC or even BCC emails to clients, purporting to demonstrate that the ball is not in your court, are mostly unnecessary and you will end up making more work for yourself and everyone else. That email to your borrower client invariably triggers a call from the borrower to a broker or bank, a call from the bank to the bank lawyer, a call from the bank back to the broker and/or borrower and then a call from the bank back to me and then a call from me to you. Exhausted? Me too. Better to involve the client only where necessary and just get on with the job. Resist the temptation to copy in the clients to every email. Risk not using the “reply all” function occasionally.
- “My client needs to complete by the end of the week”: yes, but you might want to mention to your client that there are still numerous things you need to send us and the CP checklist is still incomplete. And if you turn it around quickly it might even happen.
- What’s outstanding? : please don’t ask us that every day, when we have been sending you a CP checklist and it seems that you can’t be bothered to go through it and would like us to make it easier for you by listing everything in an email. Read the checklist, that’s what it’s there for.
- Talk to us, we don’t bite: well, not unless we are bitten first. Please just pick up the phone if you think that there is a problem. Call us back if we call you. Yes, very old-school. Jaw jaw is better than (email) war war. Lawyers unders 40? This is how the world used to work, before email.
Please, borrower’s lawyer, don’t see us as the enemy. We are on your side. Having been a borrower’s lawyer I know what a thankless task it can be. Clients who think it’s just a matter of sending over a few documents, when in reality a real estate finance transaction is akin to a sale of the property, with added documentation and a lawyer crawling over your transaction, seemingly looking for your omissions.
We are not trying to catch you out, even though it can feel that way. We’re simply checking that our client knows what it is lending on and that everything it has been told about the property is correct.
Transactions go off the rails when issues arise and lawyers get into entrenched positions. Let’s try to avoid that. It’s not rocket science. The trick is not to see it as right or wrong, or personal, just issues we need to work together to resolve.
Help us to help you.