The report had been with our lender Bedrock a few days. Bedrock laid into the inspector for not getting up on the roofs in the rain. They used it as rationale to throw out the entire previous inspection and demanded a full re-inspection. Of course I would have to pay.
This is extremely odd especially given the short time frame. Again red flags were going off. It was even worse when they told me a commercial insurance loss appraiser was going to come on site to “re-inspect”.
Now this person’s actual job was to identify every single thing wrong with new build commercial (non-residential property). He was on site and began comparing the property built in 1970 to 2020 building code. It was beyond ridiculous. Long story short he basically recommended rebuilding the entire building including pulling the roof down to the decking using 2020 building code.
Anyone who has bought property knows how crazy this is. We met with him over the phone 3 times and eventually got to a reasonable hold back of $500k or so. More than we anticipated, but still able to close. Bedrock agreed with the amount and it was time to move on. Or so we thought.
Fast forward to a week before close. Our attorney is still barely getting a response from Bedrock’s law firm White and Williams LLP. They had been involved for about a week or two on the deal. Bedrock’s contact and our mortgage broker said they were ready to go and not to worry about it, they were just trying to stay within budget. So onward we went. The last thing that had to be done was the Friday approval (close was on Monday). Friday rolls around and after much delay we hear back late at night that it was approved pending an additional reserve of $200k. We said fine since we had 48 hours to close.
The weekend was relatively relaxing given that I was about to close my biggest deal of my career to this point. On Monday all that was left was to wire the funds and close the deal. Title is waiting for a final close statement on a few fees from Bedrock and emails them. We don’t hear back until late afternoon. Bedrock decided to meet again and add an additional $400k in reserves. At this point the deal was untenable to close (Bedrock knew this). They then said this was their final offer.
I scrambled with the broker on the deal to see if we could pull together an extension. He said he would try, but no guarantees. I then let our mortgage broker know that we were firing Bedrock. He cancelled the deal. To say this was bullying and unethical is an understatement. It was poor form and put us in a position we couldn’t get out of. At this point I had $200k in hard money into the deal. Investors don’t pay that money so it was out of my pocket. I began to be extremely stressed.
When things get under the wire I tend to shine at my best. Keeping cool under pressure and executing was what I did at my role at Google. I had to make moves FAST. First, we needed our reports from Bedrock and Williams and White LLP. They sent us a bill for $46,275 in legal fees. This is almost 30k more than would be expected. We asked for an itemized bill of hours. They said this was privileged information. Because I was paying the bill it isn’t privileged. But they also knew I had to have the reports to close. Essentially a large law firm would hold up releasing the reports we paid for AND we would have to sue them and get all new reports anyway.
There was nothing we could do, we had to pay it. Luckily things were about to get much better.