In today’s real estate market, purchasing a residential property is a big commitment. Purchasing commercial real estate, however, is on a whole different level — often requiring a larger financial investment to acquire and robust legal assistance to keep. As a result, commercial real estate disputes can quickly become contentious.
Left unresolved, commercial real estate disputes can have serious professional and financial ramifications for multiple parties, which is why most investors, developers, and business owners can’t risk conflict spiraling out of control. The best way for commercial real estate owners to protect their property rights and prevent future disputes is to work closely with a qualified commercial real estate attorney in the SF Bay Area.
At Estavillo Law Group, we understand that when commercial real estate disputes become litigious, the fallout can be felt by numerous parties. As trusted commercial real estate attorneys serving the Bay Area, we apply our vast experience, resources, and expertise to navigating commercial real estate disputes in the most productive, advantageous way for our clients. This article will explore the nature of commercial real estate disputes, including common causes, types, and resolutions.
What Are Commercial Real Estate Disputes?
Simply put, commercial real estate disputes are conflicts arising from the ownership, use, lease, development, or sale of commercial properties. These properties may include office buildings, retail space, industrial developments, warehouses, apartment complexes — any piece of real estate that is purchased to generate income.
Commercial real estate disputes often involve multiple parties, from investors and developers to tenants and contractors, and even government agencies and lenders. The disagreements typically stem from competing property rights and financial interests and can be exacerbated by the complex contracts holding them all together. Even minor commercial disputes can devolve into serious financial issues and legal challenges, which is why it’s crucial to contact an experienced attorney as soon as they arise.
Common Causes of Commercial Real Estate Disputes
Any time significant financial interests meet complex contractual arrangements, the scene is primed for disputes. Although commercial real estate disputes can result from a multitude of different issues, there are a few common culprits, including the following:
- Breach of contract. When one party fails to meet their contractual obligations — such as failing to pay rent, perform repairs, or maintain compliance with other key lease terms — a commercial real estate dispute is almost bound to arise.
- Boundary and easement discrepancies. Disagreements about access rights, shared spaces, property lines, and similar issues can trigger conflicts between neighboring tenants or property owners.
- Purchase and sale disagreements. Conflicts can also arise when a buyer or seller breaches part of their purchase agreement and may involve issues such as closing conditions, title defects, inspection results, and more.
- Lack of disclosure. Another common cause of commercial real estate disputes is failure to disclose pertinent issues with a particular property, such as significant physical, legal, or financial problems.
- Construction disputes. Construction delays, substandard quality of work, contract violations, and other construction-related issues can precipitate conflict between owners, contractors, developers, and other parties.
- Regulatory conflicts. Issues involving zoning, land use, and other regulatory concerns can cause property owners and developers to clash with neighboring property owners and even local authorities.
- Joint venture and partnership disagreements. In commercial property ventures involving partners or co-investors, disagreements over profit distribution, decision-making, and general management can result in legal disputes.
- Maintenance obligations. Especially in cases where urgent and substantial investments are required, repair and maintenance disputes can erupt into larger legal conflicts.
Even when commercial real estate owners use clear contracts and exercise due diligence, the sheer complexity and the amount of money involved with these investments tend to attract disputes. The best protection against devastating legal conflicts is soliciting guidance from a qualified legal expert.
Types of Commercial Real Estate Litigation
When left unresolved, each of the above-mentioned common causes for disputes can result in commercial real estate litigation.
Keep in mind: The risks, procedures, and legal strategies associated with each of these types of litigation is distinct. Resolving them typically requires assistance from a well-seasoned legal expert with experience in commercial real estate disputes.
Here are some of the corresponding legal actions we see in commercial real estate disputes:
- Breach of lease litigation. These are lawsuits between landlords and tenants, typically involving issues such as unpaid rent, maintenance failures, lease renewal disagreements, termination rights, and more.
- Purchase and sale agreement disputes. Breaches of sales contracts, including contingency disputes, title defects, and undisclosed property issues can lead to this type of commercial real estate litigation.
- Easement and boundary disputes. Some lawsuits arise as a result of property line disagreements, access rights, or issues with improper use of neighboring property.
- Construction litigation. Construction delays, contract breaches, payment issues, and other conflicts can quickly lead to legal action between developers, owners, contractors, and other parties.
- Zoning and land use challenges. Zoning issues, land use restrictions, permit denials, and similar issues can lead to litigation against local government agencies.
- Title and ownership disputes. These cases may involve conflicts in legal ownership claims, quiet title actions, fraudulent transfers, and similar issues that require legal intervention.
- Partnership and joint venture disputes. Litigation can help settle issues that arise between business partners or co-owners about management rights, exit strategies, and profit sharing of commercial properties.
- Foreclosure and loan default actions. After a borrower defaults on their mortgage, lenders may seek to recover property through a lawsuit. Additionally, borrowers may initiate lawsuits to dispute improper foreclosure actions.
Qualities of a Good Commercial Real Estate Lawyer
Just because an attorney practices real estate law doesn’t necessarily mean they are qualified to successfully navigate a complex commercial real estate dispute. When selecting the right attorney for your situation, make sure to look for certain key qualities, including the following:
- A deep understanding of real estate law and local regulations. Being intimately familiar with general property law, while crucial, is often insufficient to successfully resolve these cases. The attorney you choose needs to possess a deep understanding of local zoning ordinances, land use restrictions, financing laws, permitting rules, and other compliance requirements affecting commercial properties.
- Strong negotiating and contract drafting skills. In the world of real estate law, contracts underpin everything, from commercial leases and purchase agreements to easements and joint ventures. Your attorney must be skilled in drafting high-quality contracts and negotiating favorable terms that anticipate your future needs and risks.
- Experience with litigation and dispute resolution. Although many real estate matters can be settled outside of court, yours may not. You need a seasoned attorney who isn’t afraid to advocate for your needs in court, arbitration, or mediation.
- Proficiency in business and finances. At the end of the day, commercial real estate transactions are business deals. Your legal advocate should understand pertinent market dynamics, financing structures, and each party’s economic stakes.
- Excellent communication skills. Commercial real estate disputes can escalate quickly. You need an attorney who is responsive and accessible to you, and who can clearly explain the legal complexities as your case evolves.
- Strategic prowess and problem-solving abilities. Few commercial real estate disputes are straightforward. To achieve your desired outcome, you will need a real estate attorney who can bring creative problem-solving to negotiations, restructuring deals, litigation, and more.
The stakes are high in a commercial real estate dispute, and not every real estate attorney possesses the necessary skills to achieve a favorable outcome. It’s crucial to know the qualities of a top-tier commercial real estate lawyer — as well as what you can expect from them — in your search to find the best legal representative.
What to Expect from a Commercial Real Estate Lawyer
A top-tier commercial real estate attorney takes on various complex tasks for their client. In navigating your commercial real estate dispute, your attorney will provide the following services:
- Comprehensive legal guidance and risk assessment. Your attorney will carefully review every pertinent legal document, including contracts, commercial leases, purchase agreements, title documents, and more to identify legal risks.
- Contract management. All commercial real estate transactions involve contracts. It’s your attorney’s job to draft highly detailed, clear, and customized contracts, review legal documents from other parties involved, and negotiate them to achieve the most favorable outcome.
- Thorough due diligence. Your attorney should conduct thorough due diligence before allowing you to enter into a lease or close a deal. This may involve reviewing title records, zoning laws, surveys, and anything else that could impact your property.
- Resolution and litigation support. In the event of a conflict, your attorney should be prepared to advocate for your needs, whether through negotiations, mediation, arbitration, or court.
- Ongoing support. Commercial real estate attorneys need to be available to address their clients’ evolving needs with prompt communication and current knowledge of their specific legal situation.
This is not an exhaustive list of roles your attorney will play but rather a few of the most essential tasks they should take on. When meeting with a prospective attorney for the first time, it’s a good idea to inquire about the specific services they will provide for you.
Commercial Real Estate Disputes Lawyer FAQ
If this is your first time dealing with a commercial real estate dispute, it’s normal to have questions. The best way to find clarity is by speaking directly with a qualified attorney. In the meantime, check out the answers to some of our most frequently asked questions.
• How much does a commercial real estate lawyer cost?
Unfortunately, the answer is that it depends. Various factors determine the ultimate cost of working with a commercial real estate attorney, including whether they are charging you an hourly rate for ongoing services or a flat fee for the completion of a single task, such as drafting a simple contract. When anticipating your costs, you should also consider an attorney’s retainer fee, as well the potential cost of litigation.
• When should I hire a lawyer for a commercial real estate dispute?
Simply put, you should contact an attorney as soon as the possibility of a dispute arises. Early legal guidance is critical to accurate risk assessment, evidence preservation, understanding your rights, and more. This is especially true in cases involving breaches of contract, property rights, and significant financial losses.
• What laws govern commercial real estate disputes?
Numerous laws and regulations inform commercial real estate disputes. These may include state property laws, title laws, zoning and land use regulations, landlord-tenant laws, and even federal laws. The specific laws affecting your case will depend on the nature of your commercial real estate dispute.
Estavillo Law Group: Trusted Commercial Real Estate Lawyers in the SF Bay Area
If you’re on the verge of a commercial real estate dispute, you need to know the stakes are high. Failing to mount a robust legal strategy could be extremely costly, which is why you should contact an experienced real estate attorney immediately. Fortunately, you don’t have to look too far: The trusted real estate lawyers at Estavillo Law Group have the expertise, resources, and experience to navigate your situation. Ready to get started? Contact Estavillo Law Group online to schedule a meeting with a top-tier legal representative today.