All Forum Posts by: Dan Biber
Dan Biber has started 1 posts and replied 21 times.
Post: How to verify rentroll in multi-family property due diligence ?
- Developer
- Atlanta, GA
- Posts 21
- Votes 14
Great question. We ask for several items from the seller in form of a due diligence checklist that's part of the PSA as an exhibit.
1. IRS 8825 form. Shows what they've reported to IRS in prior years, which should match up with P&L for those same years.
2. Certified rent roll. Seller certifies it is correct and you could have an "hold back escrow agreement" holding back a certain amount of $$ in escrow after closing to protect buyer in case of false representations and warranties from seller. Can't really sue the seller since most commercial real estate is held in single purpose entities that get dissolved soon after closing.
3. Copies of monthly bank statements showing exactly what has been deposited.
I would find a way to contact the previous mgmt company and find out what happened. Typically, seller going to in-house and going through the efforts while the property is already under contract is certainly suspicious.
Good luck,
Dan Biber