What are the Most Common Causes of Commercial Real Estate Litigation in Arizona?
Commercial real estate litigation can occur in many situations. However, the most common causes of commercial real estate litigation are breach of contract, commercial real estate finance disputes, commercial lease disputes, negligence or breach of duty, specific performance, boundary disputes, real estate partnerships or joint venture disputes, and property insurance and land use disputes.
Breach of Contract
A breach of contract—for both sale and lease contracts—is the most common reason commercial real estate litigation occurs. In any real estate transaction, the terms and conditions of a contract will include specific details focused on the closing date, title clearance, assets included in the transactions, or if a rental property, details relating to the security deposit, and other aspects of the lease. In a commercial real estate litigation lawsuit, the plaintiff—the financially damaged person in the contract—will bring a claim for breach of contract and will have to establish that the defendant breached its duties under the contract while at the same time establishing that Plaintiff fulfilled its contractual duties. If the Plaintiff prevails, then the plaintiff will receive compensation for the damages it suffered along with attorneys’ fees incurred in having to bring the lawsuit.
Commercial Real Estate Finance Disputes
Commercial real estate finance disputes include purchase and sale disputes, escrow disputes, rescission and fraud claims, foreclosure actions, lender liability, bad-faith lender claims, and inter-creditor disputes. Real estate finance disputes can be devastating to the company looking to expand its real estate footprint. While not always avoidable, a business can mitigate these issues by hiring an attorney to review any documents or contracts that they receive from lending institutions. Stephen Anthony has worked on these types of disputes for developers, lenders, landlords, tenants, real estate investment trusts, and other financial services for over 25 years.
Commercial Lease Disputes
Commercial lease disputes can affect both commercial landlords and tenants. Issues can range from termination and option disputes, right of first refusal disputes, complex operating expense disputes, and breach of lease. The laws and issues involved in commercial lease disputes are incredibly complex, and having an experienced attorney on your side is crucial.
Negligence Or Breach Of Duty
This type of real estate litigation also occurs many times between a property buyer or seller and their real estate agent. In most contracts, real estate agents are legally required to act in the best interest of their clients. Additionally, they should not act in the interest of the other party involved in the transaction or another third party. Many disputes occur when a real estate agent attempts to function as a dual agent. Furthermore, realtors and real estate agents are obligated to keep their clients’ private, sensitive, or other financial details confidential.
A realtor or real estate agent must also disclose any information that may be beneficial to their client. This includes informing their client of comparable purchase or rent prices or anything that could help their client. Furthermore, an agent or realtor must perform their duties and use their knowledge of the real estate market to the best of their abilities. Committing negligence in any of these matters will likely lead to financial losses or other disadvantages to their clients. If this occurs, the client should be able to sue their realtor or real estate agent.
If a reasonable realtor or real estate agent would not have performed an act or would have done that act in a drastically different manner than your real estate agent and your real estate agent’s action resulted in a financial loss for the client, negligence occurred.
When you are in a commercial real estate contract and do not perform an action that the contract specifies, the other party may file an action for specific performance. Specific performance is where a court enters an order requiring the party who broke the contract to comply with their duties and obligations as outlined in the agreement. This performance remedy requires taking an objective approach to the language of the contract. Since the remedy requires the breaching party to perform the specific terms of the contract, it is essential to know what those terms imply.
Real Estate Fraud/Misrepresentation
Commercial real estate transactions can be deceptive at times. For example, If a seller claims that the electrical and plumbing systems of the property are in good working condition, but it turns out they are not, then you may have to go to court to resolve the dispute. This could be considered real estate fraud or misrepresentation if the seller knowingly made a false statement. Another example of real estate fraud is when sellers try to sell properties to which they have no or limited rights to. As a result, the buyer may realize that they have spent considerable money on a property for which they have no legal claim. This scam is considered fraud and will lead to legal action.
When multiple individuals or entities own commercial real estate, disagreements can occur regarding property maintenance, selling, tenants, rental payments, etc. Dividing real estate is challenging, making resolving co-owner disputes complex if one owner resists giving up ownership or control. In some cases, litigation is the only solution.
Boundary disputes occur when a party does not correctly confirm their property boundaries. This issue can occur if someone uses a practical property line instead of the legal one. Thus, when you purchase a property or someone buys property next to you, you should have an attorney research the legal property line to avoid any legal issues.
Other Causes Of Commercial Real Estate Litigation
Here are some additional issues that can cause you to have to file a lawsuit:
- Breach of construction contracts or terms
- Title disputes/defects of title
- Foreclosure issues
- Office Condominium issues (e.g., a conflict between condominium boards and owners, or between condominium association and management company)
- Breach of development agreements
- Disputes involving easements or adverse possession, including quiet title actions
- Water rights
- Land use disputes
- Negligent design, planning, or construction
- Environmental and compliance issues, including cases involving indoor air quality
- Insurance disputes
- Physical damage to real estate
- Condemnation actions—governmental entity trying to take real property
- Cell phone tower litigation
- Tenant default
With over 25 years of experience, Stephen Anthony has the knowledge and expertise to assist clients with all of their real estate litigation needs throughout Arizona. Call today for a consultation.