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Private Lending (16) – Lawyers?
If you happen to be a real estate lawyer, pls don’t take offense in this episode lol we are really just sharing our own experience in this industry 😂
In our years of private lending, we’ve probably gone through about 10 batches of lawyers, and we’re really too tired to complain anymore.
First of all, they can repeatedly misspell the names of property owners, whether they’re Asian, Indian, or local names, they can misspell them multiple times! This has led us to develop a habit of double-checking title registrations ourselves 🤦🏻♀️ There was one time when we found out that the lender’s name was wrong on the title, and the lawyer actually said, “No problem, it’s a small matter, no need to correct it.”
Then there’s the fact that everything is done by assistants, nothing is right, the lawyer basically does nothing, and in the end, it’s us checking every document and then telling the assistants how to fix them, and finally, it’s done, and the lawyer signs. We’re like, shouldn’t the lawyer pay us for our work? 😂
And then there are those who are completely unreachable on the day of closing, they don’t answer calls or reply to emails, and they just keep us the client in the dark and guessing all day. We don’t know if the private mortgage was discharged property on that day or discharged at all, and had to be on standby to recalculate everything in case the closing didn’t go through and we didn’t know about it till days after, which happened quite a few times!
And then there’s the constant asking for progress on our end since we didn’t hear anything for a long time since we sent the lawyer our instructions, and they only send us the documents a few days before closing to review, and, lo and behold, they’re missing things, and we have to tell them what documents are still missing. The other party is still an assistant, and we still have to tell them how to prepare those documents.
But what really makes us feel so frustrated is that they can even get the numbers wrong! They write the principal incorrectly, they calculate the interest incorrectly, so every time we have to write down the instructions and numbers and send them to the lawyer, and even highlight the key information in bold and red. And even then, when reviewing the documents before closing, we still find mistakes and omissions, sigh.
So our current process is to first calculate all the key information and numbers internally, write them down, and send them to the lawyer, then when the documents come back, we check them all, mainly checking: whether the title change is correct, whether all the numbers are correct, whether the names are correct, whether the property insurance is really in place, whether the lawyer has actually closed the borrower’s credit cards, especially whether the lawyer has directly obtained the existing statement from the bank, whether the amount matches, because several times we found that the lawyer hadn’t done this at all, completely relying on the borrower to provide it, which we have no way to verify whether it’s really done for not. After getting the documents from the bank, we still have to check them ourselves, to see if there’s any discrepancy in the numbers. In short, it’s really like buying a refrigerator and also having to learn how the cooling technology works ourselves.
Even worse, some lawyers say they won’t do it when the borrower comes to sign, and then we find out later that the lawyer has poached our deal and offered the borrower a better deal, and the lawyer has become the lender themselves.
And this is all just residential property, the simplest example. When we deal with the procedures related to commercial properties, it’s even worse. The lawyers won’t say they haven’t done it or don’t know how to do it, they just say, “No problem.” And then when it’s almost time to close, the other party’s lawyer actually has to pass messages to us through brokers, saying, “What’s wrong with your lawyer? Why haven’t we received this or that, it’s almost time for closing and we don’t even have the org chart or corporate search, is this deal still on or not?” And then we have to go find our lawyer and see what’s going on. We’d be lucky if we get a response, and chances are we can’t even track down our own lawyer to give us that reponse.
In the end, when everyone was going crazy, the other party’s lawyer who were under pressure from their own clients, had to personally teach our lawyer step by step how to close this commercial transaction, and finally, the closing was done on time and no penalty costs were incurred.
In short, we just follow the “instruct, review and reinstruct” 3 step cycles on all of our deals now multiple times before a deal can be properly closed. Next time, I will be talking about some fake applications/borrowers that we have seen over the years.