Due Diligence During COVID-19 – What’s A Purchaser’s Attorney To Do?
When purchasing a cooperative or condominium unit, it is common for the purchaser’s attorney to perform some due diligence on either the cooperative corporation or the condominium association. The due diligence usually involves reviewing the building’s financials, governing documents, and board minutes. The financials, and most of the governing documents, are usually e-mailed to the purchaser’s attorney for review. However, when it comes to reviewing board minutes, this task is more commonly performed in person at the managing agent’s office. Now that managing agent offices state-wide are closed to non-essential employees, how can a purchaser’s attorney complete this final phase of the due diligence process? The purchaser’s attorney can request that the managing agent e-mail him/her copies of the minutes as a way to bypass the customary in-person review. However, boards and their managing agents are reluctant to release such minutes as they contain sensitive and confidential information.
So as not to unreasonably delay the due diligence process, we have advised boards and their managing agents to find an accommodation that we believe would be acceptable to all those involved.
We would suggest that the managing agent (i) scan the minutes to one file so that it’s one large pdf document; (ii) using Adobe, password protect the document so that it can only be read by the individual with the password; (iii) using Adobe, restrict access to the document so that it cannot be edited, copied or printed; and (iv) have the password expire after a short period of time. In addition to the technical encryption process outlined above, we would suggest that the managing agent present to the reviewing attorney a non-disclosure agreement for signature, prior to e-mailing him/her the file.
Should you need our assistance in drafting a non-disclosure agreement suitable for your particular building, please contact me at your earliest convenience.