The Market

Broker alters financial package, puts deposit at risk

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By Teri Karush Rogers  |
August 1, 2011 - 7:07AM

Over on, a co-op buyer is shocked to discover that his broker--accidentally or on purpose--omitted a "large liability" from a revised financial package presented to the board.  Now the co-op board is asking questions--and so is the buyer.

Being turned down is the least of his or her concerns. Worse is the prospect that the seller could argue that the buyer submitted a fraudulent application and keep the deposit if the deal falls through.

The StreetEasy commenters find the situation grave, to say the least, and recommend that the buyer speak to an attorney immediately as well as the management of the brokerage firm.

So did a closing lawyer we checked with. 

"I've never heard of this happening, and I am appalled," said Manhattan attorney Rachel Mulcahy. "Consulting a lawyer and speaking to the brokerage management is the way to go."

Lessons for other buyers? 

"The bottom line is that it is the buyer's responsibility to check the application," says Mulcahy. "Many buyers abdicate responsibility to brokers and attorneys, and many of my clients never read the contract, even though I tell them to repeatedly.  Bottom line is it's the buyer's money AND they're signing legal docs.  They need to check everything they're signing or submitting."

Just in case something goes awry anyhow, make sure you have an electronic trail showing that you submitted all the necessary information and any mistakes happened on the other end.

"Send all items via PDF over e-mail (password protected, of course)," suggests a StreetEasy commenter. "Even if a form has to returned with a wet signature, send a PDF version via e-mail as well. And obviously read what you sign."


Teri Rogers Headshot - Floral

Teri Karush Rogers

Founder & Publisher

Founder and publisher Teri Karush Rogers launched Brick Underground in 2009. As a freelance journalist, she had previously covered New York City real estate for The New York Times. Teri has been featured as an expert on New York City residential real estate by The New York Times, New York Daily News, amNew York, NBC Nightly News, The Real Deal, Business Insider, the Huffington Post, and NY1 News, among others. Teri earned a BA in journalism and a law degree from New York University.

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