Developers see things that others do not see. For example, people see an empty lot with a decrepit old building as an eyesore, while developers see a bustling shopping center that will serve the community. Successful developers have vision, which allows them to view the future. In this way, developers are innovators.
Nonetheless, the real estate industry can be choppy. Its ups and downs are well-documented. Often, when a developer purchases property, the property is ripe for the developer’s plans. However, due to economic, social, and other factors, the project sometimes loses its vitality. Yesterday’s bustling shopping mall may be today’s ghost town.
When involved in any phase of large-scale real estate acquisitions, developers and investors need to be aware of the risk involved and how to manage that risk. Being proactive by addressing these issues at the negotiation stage is ideal. But disputes arise all the time, so strong representation is crucial.
Real Estate Contracts
Before they begin a project, developers need to think through various possibilities: What if certain projections don’t materialize? What if there’s a significant change in the neighborhood? What if another development in the same general location produces the same product? What if some shopping mall tenants aren’t able to fulfill their obligations?
Asking such questions before drafting a contract is helpful because it allows the developer the flexibility to change plans before it completes construction. It may also allow a developer to finance itself differently, based on potential changes.
A developer that purchases a property needs proper representation. First, the parties perform proper due diligence. Once completed, the two sides draw up a purchase and sale agreement that contains the parties’ names, addresses, liabilities, payment terms, representations, warranties, etc. Aside from having counsel negotiate the contract, counsel would represent the client if a dispute arises.
When things don’t go as planned, developers may face foreclosure due to unpaid premiums. In such situations, developers need strong representation to handle loan workouts, collection matters, trustee actions, deficiencies, and bankruptcy. Often, these matters require litigation.
Title and Easement Disputes
Title and boundary disputes arise when parties disagree about who owns property and what area the property covers. An easement dispute is similar. An easement, or the right to use another’s land for a specified purpose, can significantly alter an owner’s or developer’s property rights. Generally, the property deed will delineate easement rights, but sometimes the easement right is in a separate document. Furthermore, there are easements by law and easements due to continued use when a property owner did not step forward to protest use of the property. Developers or other parties of interest may want to litigate such matters in court.