A Real Estate Accountant's Thoughts on Lorterdan v WTBS
© Jeffrey A. Thomas, Mill Creek, WA
I've been working in real estate investment in a variety of positions (fiance and accounting related) since 1984. I am not a lawyer and I do not intend this to be a legal commentary, only the views of one person with a related background on the deal itself. I've been reading through some of the available documents and thought I would add my thoughts on the matter.
That said,
This deal has "fail" all over it.
If I was Lorderdan's Controller I would have told the boss that if he signed this agreement I would start looking for another job. For that matter I would have told the Watchtower the same thing. I do not understand why Lorterdan would agree to sell the land for roughly half its value, with the rest coming in two years later on what amounts to a contingency basis, with a requirement that they buy the property back if the contingency isn't met. My experience with these deals is that if somebody wants to get out of the later part of the agreement, they put their lawyers and accountants on it until they find a way to kill the deal.
That may be what has happened here. I do not undestand why that second payment has been characterized as a consulting fee. While referencing Lorterdan's expertise in zoning and tax issues in the town of Ramapo, the agreement does not require any specific performance that I can find. It reads more like a contingent payment. If that is what they wanted to do, they should have written the agreement that way. The land would not actually change hands, Lorterdan would escrow the money, and if the deal falls apart the seller gives the buyer their money back and you both go about your business. I also cannot find a statement from Lorterdan that they engaged in any consulting work and are therefore due some or all of their fee.
It is possible that contract language in NY doesn't mean what it means in Washington State. Reading it in plain language I would expect that Lorterdan would have had to do something to earn a "consulting fee."
I have not been able to find out very much about Lorterdan itself. A google search reveals some sketchy articles, but I can't find a company website for them. Seems odd for a large company that engages in "consulting" work and extensive real estate construction and development, which is what some of the articles claim.
On the other side of the coin the WTBS seems to have been playing a foolish game of their own. They engaged Lorterdan to do some sort of consulting work, did they not think that Lorterdan was going to see all those filings with the city council and not have good reason to believe that the Watchtower was proceeding with its development plans? There is also the question of why did they have a similar deal on a piece of land a few miles away? On the surface it looks like they were trying to lock in the best deal and may have been dealing in bad faith.
Or maybe they weren't very smart.
My spidey sense (which admittedly isn't worth a lot) tells me that both sides were angling for some sort of advantage and the mess blew up in their faces instead. If we can get a look at discovery documents (may not be possible, I don't know) that may reveal what the two sides were thinking. As of now, examined dispassionately, I can’t see any reason for structuring this deal in this way.
About fifteen years ago I provided accounting services for a shopping mall that ended up in court over a similar problem with a lease. That ended with the judge saying, in effect, "you guys wrote a lousy document and want me to fix it. I'm just going to cut the baby in half and you can live with the piece I hand you."
And now the part the apostate crowd will love. There are now doubt valid legal reasons for this, perhaps BOTR or somebody can explain the legal manuvering, but it looks fun to a layman. In its complaint, paragraphs 2, 3 and 4 read as follows:
“Upon information and belief. the religious organization {earlier referenced to the WTBS-JAT} is a New York Corporation with its principal office and place of business located at 25 Columbia Heights, Brooklyn, New York 11201
The Defendant Watchtower, is the recognized legal organization in use by Jehovah’s Witnesses and a non-profit organization founded over 100 years ago
On its website, Watchtower promotes the virtues of honesty, forgiveness and altruism, as those amongst its very foundation. In particular Defendant’s website declares that ‘being considered trustworthy is something to be proud of.’”
In its response to the court, the Watchtower denies all three of those statements. Are they saying they aren't really JW's legal entity? Are they denying that they are honest or denying that they promote Christian virtue? Might be fun to ask the JW at your door about that.