Fortress Real Developments’ (FRDI) was advised the process of lender/investor’s receiving legal advice from arms-length 3rd party solicitors was the following: Selling Brokers/Agents would meet and review the merits, terms and risk of the investment with the lenders/investors. If they deemed the lender/investor suitable and the lender/investor wished to proceed with the investment the Selling Broker/Agent would then send a request to the Borrower Brokerage to arrange a Legal Advice call/meeting with one of the 7 solicitors familiar with the loan package. The Borrowers Brokerage acted as a facilitator to set up the meeting or call time and location.
FRDI was advised that each solicitor who gave advice to lenders/investors was provided with each lender/investor’s loan package to review prior to providing advice. FRDI further understands these solicitors reviewed the merits, risks, disclosures with each lender/investor. Solicitors maintain records of each communication with lender/investors (either by video recording, audio recording or their own notes) of the information discussed and questions asked and answered during the meeting/call. Solicitors also provided each individual a “Certificate of Independent Legal Advice”, a copy of which was also filed with the Borrower Broker.
Solicitors were paid for their services by the borrower or from proceeds of the loan funded by syndicate lenders/investors. This is standard industry practice for real estate and mortgage related transactions. This is not just the practice with syndicate lender/investors in to Fortress projects. In a review of assorted land loans, construction loans and mezzanine contracts, they all required that the borrower pay the lender/investor’s legal related fees. This common practice is also prevalent in bridge loan contracts, and many other forms of private lending & other syndicate mortgage loans unrelated to Fortress or BDMC.
Additionally, the lender/investors each executed a disclosure package, in which the form asks “Fees and charges payable by the lender/investor and fees and costs payable by the borrower”. In each case the fees are shown as a cost to the borrower and additional commentary is outlined similar to; No fees will be paid by the lender/ investor. All fees will be paid out of proceeds raised from the lenders/investors