Know Where Your Money Is Coming From

Andrew Kirsh is a founding partner at Sklar Kirsh.

LOS ANGELES—Knowing the origin of a buyer’s capital is becoming more prevalent in the Los Angeles market, according to Andrew Kirsh, a founding partner at law firm Sklar Kirsh. Foreign buyers and foreign capital is clearly becoming more and more common in the market, and as a result, sellers are using the same type of representations more commonly required by lenders. While these so-call know-your-buyer provisions have been in place for more than a decade, seller’s have increased requirements over the past six to 12 months.

“From a legal perspective, you have Patriot Act and Know Your Buyer representations and warranties that make it clear that the people that you are transacting with are those that you are allowed to transact with or up the chain the buyer’s money comes from governments or groups that we are not authorized to transact with,” Kirsh tells GlobeSt.com in this exclusive story. “With some foreign buyers, you try to do as much diligence as you can to have the buyers represent as much as you can get them to represent of the origin of money, who the members are, and that they comply with the know your buyer or borrower requirements.”