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WitHout reCourse: Harvey, tHe real estate laWyer
to say if true, ridiculous to say if not), those who had something to spring on you or your client at the last minute, those who would suddenly become unavailable, those who, in order to gain an advantage if you disagreed with them, would threaten to speak, or would actually speak, to a very old friend who was partner in your firm and senior to you, those who believed that their effectiveness was directly proportional to their decibel level, those who wouldn’t show up “at the table” to talk, and those who pounded it when they did (also, etc., etc.).
The closing of houses went a long way in teaching the young lawyer how best to cope with all of the foregoing tactics. It still did not, how- ever, involve the intricacies of “big boy,” sophisticated commercial transactions; it was still not real real estate. (It should be noted at this point that, even when I was handling incredibly sophisticated transac- tions involving many hundreds of millions of dollars, my mother would put in a call to Kathy to express delight if she learned that the American residential home market had heated up: “Harvey must be very busy doing a lot of closings now!”)
Residential sales presented in microcosm everything that truly commercial real estate transactions did, with the sole, critical exceptions that (1) the properties that were involved were not income-producing, (2) the amounts of money changing hands or at stake were not enor- mous, (3) the structuring and interplay of financial layers within the transaction at large (multiple lenders, tenants, partners, and so on) were not present to challenge the practitioner, and (4) one or more of the par- ties involved lacked sophistication.
I, it turned out, would be one of those parties: One of my first clos- ings was for my friend Peter Nadel, by now a partner, who was selling his house in Lynbrook and buying one in Scarsdale (that’s what new partners did). At that time, it was the custom for buyers to show up at
pal and interest). Great leverage therefore leads to great results—but only up to a point. At that point, the expenses and debt service might easily start to overwhelm the borrower’s operating income and raise the prospect of a default. As most lenders don’t want to foreclose their mort- gages, the borrower now has a new, less desirable, form of leverage, the one that is described as what the “other person” has in the first sentence of this note.
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