My sister and I bought a co-op about 10 months ago, and hired an attorney from a firm our broker recommended who seemed to have done his due diligence. Now, however, we’ve discovered several issues that we think he should have caught. Not long before we bought the apartment, the board had such serious disputes over elections that it did not meet or function for a while; the building’s roof needs substantial repairs (and did for at least a year before we purchased); and about six months before we purchased, a board member was removed for violating her fiduciary duty. Shouldn’t our lawyer have turned up these kinds of issues, and is there anything we can do at this point We would really like to get some of our money back, since we are no longer sure what we paid for.
It’s possible that your attorney did overlook key information and that you have grounds for a claim — and some reimbursement — here, but it’ll be tough to turn up concrete proof, say our experts.
“In representing a purchaser of a cooperative apartment, an attorney should review the cooperative offering plan, amendments thereto, at least two years of financial statements, as well as the board minutes going back at least three years,” says Jeffrey S. Reich, a real estate attorney with Schwartz, Sladkus, Reich, Greenberg, Atlas LLP. “However, even performing proper due diligence may not have turned the writer’s attorney on to the stated issues unless they were disclosed in the board minutes, a footnote to the financial statements or an amendment to the cooperative offering plan.”
In other words, in order to figure out whether this information was available to your attorney and he just ignored it, you’ll have to review your board’s minutes, financials, and amendments that were available at the time to see if any of these problems were disclosed on paper, says Reich.
If the building’s problems were, indeed, evident in the paperwork, you may have a claim, though Reich notes that in this particular case your damages — i.e. the difference between what you paid for the apartment, and what you would have paid had the building’s problems been disclosed — might be tough to quantify. “I would imagine that it would be difficult to establish this value differential,” he says. Even if it seems unfair, you may not have much recourse this time around.
Virginia K. Smith is the senior editor at BrickUnderground.com, the online survival guide to finding a NYC apartment and living happily ever after. To see more expert answers or to ask a real estate question, click here.