My attorney saying not to purchase this property? Risky he said?

Question

So i have a gentleman who has given me a couple awesome deals so far he inherited and now wants to sell me another one. Its a cell phone tower in are area that has 80 year lease still on it. So i would pay and receive money a month for it and the numbers are great. So we did all the title work and my attorney said not to buy it because the other family members need to have first oppurtunity to buy it first as well as the people that own the cell phone tower on the land. He said yea its not illegal to buy it but i would be buying a lawsuit? also pretty much would be giving to me for the price. My attorney said he wouldnt do it though? Whats anyones thoughts?

Stanley Bronstein · Answer

In my experience, some deals need to die. In my opinion, it's not always a matter of attorneys being deal killers and deal makers.

I'm reminded of a deal I worked on more than 10 years ago where my client let $750,000 earnest money go hard on a $10,000,000 deal that had all kinds of environmental issues. I pleaded with him many times to kill the deal and NOT let his earnest money go hard. The broker told him to keep going and he did (possibly because the broker wouldn't get paid unless the deal went through, whereas I was getting paid my legal fees either way).

I had him sign off in my files that he was going forward, against my advice.

He wound up having to kill the deal later over those very same environmental issues that I had warned him about, as no commercial lender wanted to fund his deal (because of those environmental issues). He eventually got some of his earnest money back, but he wound losing almost half a million.

Many years later he told me he wished he would have taken my advice and not the broker's.

Evan Wiesner · Answer

Something to consider.... almost all cell tower agreements can be canceled by the company leasing it with 60 days notice. Every really successful investor of these towers evaluates the property independently. They don't all tell me that the property has to make money on its own, but they all understand the risk.

Location, improvements by the company, and need are just some things you need to evaluate if you're going to have any reasonable expectation that the company will keep that lease. They are extremely unilateral leases so please be careful.

Ned Carey · Answer

@Joshua D. some attorneys are deal killers and some are deal makers.  Find an attorney who does these types of commercial transactions.

This is a commercial transaction and all commercial deals mean a significant amount of due diligence.  Find an attorney or commercial broker who can help you with he due diligence.

Nik S. · Answer

@Nik S.

Also when doing the title search, a deed restriction was such agreement.... doesn’t make sense, the whole clear title situation. Keep us posted!

Nik S. · Answer

@Joshua D.

I believe he is simply stating that yes you can purchase it...but expect the other members of the family to form a lawsuit against both you & the “seller”.  So buyer beware and he doesn’t want anything to do with it. If the agreement on the property is that they have first right for purchase, then they have first right to purchase. I don’t think you can sneak around this once they find out. Sounds sticky and your money could be at stake. Risk is only worth so much. Consult another attorney for a second opinion to make your final decision! Good luck.

Michael Noto · Answer

From what I am understanding your attorney is telling you after doing a title search that the title is not clean and there are obstacles to purchasing the property with clean title. Not sure what this new lawyer is going to tell you that is any different once they do their own title search. Am I missing something?

Stanley Bronstein · Answer

We need more information in order to formulate an opinion.

Who is the landlord on the Cell Phone Tower agreement? Is it an individual, or is it a partnership, or an LLC or a Corp? If it's an entity, does the gentleman have authorization to sell, or does he need approval of his partners or shareholders?

Also, I highly suspect that the cell phone industry will be quite different 80 years from now than it is today.

A lot of whether or not you should consider buying the deal depends on the price. Is the price discounted enough to take the future risks into account?

Joshua D. · Answer

@David Wright 1. Not all real estate stuff and very little investing experience. 2. Very little experience.

But i did talk to a friend and i think im going to get a 2nd opinion on it all from a very experienced real estate attorney a friend told me about today. Thank you very much for the response and any other suggestions you have i would love to hear.

David Wright · Answer

@Joshua D. - I have a few questions before I give you my opinion.  1.  Is your attorney a real estate attorney and does he have investment experience himself.  2. How much experience do you have in these type of transactions?

My attorney saying not to purchase this property? Risky he said?

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