Don’t Shoot The Messenger
Privacy is much harder to come by than it used to be. With all the major newspapers and websites featuring significant sales on a daily or weekly basis, almost every transaction of substantial proportions runs the risk of being featured in the media. For publicity shy buyers and sellers this exposure can be both unexpected and unpleasant. Frequently, the first angry phone call when such an article appears comes to the real estate agent. How could you have divulged this information, we are asked? The answer is, we didn’t!
Six or seven years ago co-op sales, which had previously been treated as stock transfers rather than real estate transactions, became matters of public record. Since then it has been an easy job for reporters to scout the transfers every day for transactions which they deem press-worthy. And since co-ops rarely permit purchases in a trust or corporate name, the reporter can see not only the price but the names of the principals as well. From there, it is a quick task to Google the names and obtain full biographical information about both the buyer and the seller. In the old days, reporters would call us about deals, when they heard about them through the grapevine. Most agents, knowing that their clients would prefer to retain anonymity, declined to speak.
Our concern, then as now, is the privacy and well being of the people we represent. But today we are cut out of the loop; the reporters no longer need us for the basic information. While most of us still prefer not to discuss our clients or our transactions, our choice to talk or not is usually more about damage control. If we know the story will be written in any case, we hope to spin it in the way which will be LEAST difficult for our client to swallow.
As agents we are still frequently asked to sign non-disclosure agreements. While these are sometimes a necessary evil, they have no impact on whether the final transaction gets press coverage or not. At Warburg, I always make sure these agreements clearly limit our responsibility once the transaction becomes a matter of public record. And I try to warn our clients and customers that, if they buy a co-op, we have no control over whether or not the press will cover their transaction.
The situation is different with condominium sales, but here too caution and care are necessary. Since condominiums DO permit purchase of the unit in a corporate name, most wealthy individuals buying condos tend to create single purpose corporations in which to hold this asset. While this provides some protection, persistent reporters (and remember, this is their job!) can obtain the details of the corporation. So it is critical for the buyer both to appoint someone else as the corporation’s manager or executive, and house the corporation at a different address. Too often, a buyer will name himself as the executive or give his office address as the corporate address. This makes it easy for anyone with a little determination to pierce the corporate veil and determine the actual owner. What we recommend to our buyers is that they appoint a fiduciary, usually their attorney, whose name and address can be used to front the corporation. That way it is very difficult for any outsider to determine who the owner actually is.
Throughout the county newspapers publish the details of real estate transactions. As real estate has become more of a national pastime, these features have grown more popular and numerous. New York, as an international epicenter with high priced, high profile transactions, makes particularly good copy. So the old rule of caveat emptor (let the buyer beware) applies here! Real estate agents cannot control either what the press writes about or what the public discovers. The names of the purchasing and selling individuals or entities, the closing date, the price, the financing – all are available on a number of public websites within days or weeks after the transaction closes. It is, in our increasingly public era, just a cost of doing business.