Generally what information do you need from a client in a real estate workout situation?
Minneapolis real estate attorney John Koneck describes what information a client should give to their attorney in a real estate workout.
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The question is what information do I need in a real estate workout situation? And whether I’m representing a borrower or a lender, the information is the same, and it falls in three main categories. The first one relates to me as a lawyer, the second one relates to the property, and the third one relates to the parties. First, me, as a lawyer, I need to know all the parties involved and the property involved because I have to make sure that I and my law firm don’t have any conflicts of interest in handling this matter. So that’s the first reason I need information. And the kinda information that I need.
Second, the property. I want to know as much as I can about the property. That means the environmental context or the environmental issues relating to the property, the improvements on the property, what kind of buildings, what kind of properties. Any issues relating to access, things like that. And finally, ownership of the property. Who owns it, what easements are there, all those sorts of things.
The kinds of things that I will ask for to get that information are appraisals, environmental reports, engineering reports, marketing brochures relating to the property, things like that. The third kind of information I need relates to the parties themselves. I need to know what kind of organization they are, whether a borrower or a lender, because depending upon what the lender it is, it will determine how I foreclose and what rights I have, what courts I have to go into to seek relief if I want to go to a court. I need to know about the borrower because it’ll tell me what kind of liability the members of the borrowers might have. It will tell me who I need consents from in order to take action on behalf of the borrower. It will tell me if the lender has to go through any special processes in order to foreclose based on what kind of entity it is.
I also want to know not just about the organizational nature of the borrower and the lender, but whatever dynamics are going on. Personality dynamics, personal dynamics because often they control whether a workout will be successful or not. And ten finally, as it relates to the parties and the properties, I want to know what kind of problems there are. Are there environmental problems? Are there people problems? Whatever. Because those are all the kinds of things that make a workout either harder or easier to do.