Strategies for Resolving Commercial Real Estate Disputes

Deals in California commercial real estate transactions can move fast, and money is often on the line. One missed clause or a misunderstood lease term can turn into months of friction and unexpected costs, often leading to property disputes, and may require navigating the litigation process.

At Estavillo Law Group, we bring over 75 years of combined experience in Real Estate and Foreclosure law to help you cut through conflict with practical steps. We deliver big firm experience without the big firm fees, keeping overhead down while pushing for strong results in our legal services.

In this guide, we share clear, workable approaches to resolve commercial real estate disputes. You will see how planning, clean contracts, and the right dispute process can save time and protect relationships. If something is already off track, we walk through legal options and other options to get it back in line.

Commercial disputes often arise from high-stakes transactions that involve many different parties involved, including lenders, owners, tenants, brokers, contractors, and public agencies. Each of the multiple parties has its own goals and timelines, which raises the chance of crossed wires. The money is large, the documents are complex, and even small gaps can create outsized risk.

In California, knowing the governing property boundaries and rules helps you spot problems early and reduce exposure. This includes commercial lease provisions under the Civil Code, mechanic’s lien rights under Civil Code § 8000 et seq., local zoning and land use restrictions, and compliance with the California Environmental Quality Act (CEQA). It also means being aware of statutes of limitations, such as the two-year limit on oral contracts, four years on written contracts, and three years for fraud claims.

Ahead-of-time planning and strong property maintenance paperwork lower the odds of conflict. Common flashpoints include lease disagreements over rent increases, a tenant buildout gone wrong, or co-investors who never clearly agreed on decision-making authority, potentially leading to future disputes.

Disputes in common real estate disputes commercial real estate tend to cluster in a few common areas. These themes show up repeatedly in office, retail, industrial, and mixed-use deals across California.

Leases are the backbone of most commercial property deals, and vague or unbalanced terms often lead to conflict. Disputes frequently arise over rent increases, renewal rights, tenant improvements, or common area maintenance (CAM) charges in the landlord–tenant relationship. Landlords and tenants may also clash over maintenance responsibilities, repair obligations, responsibility for capital improvements, or delays in completing buildouts.

Payment defaults remain a major flashpoint leading to potential legal action . Without clear billing procedures, late fee provisions, and cure periods, even minor delays can spiral into eviction or litigation, leaving landlords seeking legal recourse. California courts closely examine lease language, and under the California Code of Civil Procedure § 1161, landlords pursuing eviction for nonpayment must follow precise notice and cure rules, especially in cases involving cost overruns . Detailed exhibits for CAM charges, TI allowances, and operating costs can prevent disputes from escalating.

Shared access points are another frequent source of disputes. Driveways, utility corridors, and ingress or egress easements can trigger disagreements, including neighbor disputes, if rights are not precisely defined. In retail centers, conflicts often arise over shared parking or exclusive-use rights. For example, a landlord may lease space to two competing businesses despite granting “exclusive use” protections to one tenant.

The best prevention is recording easements with clear legal descriptions, maps, and maintenance terms. In California, easement disputes are often litigated under Civil Code §§ 801–813, which govern creation, scope, and termination of easements. Without clarity, conflicts over deliveries, emergency access, or parking use can reduce property value and delay operations.

Boundary and title disputes can delay financing, disrupt long-term use of property, or jeopardize closing. Common triggers include encroachments where fences, buildings, or driveways cross property lines, as well as unclear or conflicting surveys. Overlapping easements or inaccurate legal descriptions are also frequent culprits.

In California, many co ownership disputes are resolved through a quiet title action under Code of Civil Procedure § 760.010 et seq. Title insurance provides some protection, but it does not resolve physical encroachments or defective legal descriptions. Often, legal guidance is necessary, along with boundary line agreements, lot line adjustments, or corrective deeds to clear the path for financing or development, especially in cases of deceptive practices .

Fraud claims, often categorized as real estate fraud in California, arise when one party conceals or misrepresents material facts during a transaction, complicating resolving real estate disputes . Common examples include failing to disclose environmental contamination, overstating tenant occupancy, inflating rent rolls, or altering financial statements. Buyers may also discover undisclosed structural defects or zoning restrictions that materially affect property value.

These disputes among business partners re especially serious because they can lead to rescission of the deal or significant damages. A strong due diligence process—including third-party inspections, tenant estoppel certificates, and financial audits—helps uncover problems before closing, potentially avoiding real estate litigation. Under California law, courts also assess whether reliance on the misrepresentation was reasonable when determining liability and damages.

Joint ventures and co-investments can sour when roles, voting rights, and financial obligations are unclear. Vague operating agreements, loose capital call provisions, or missing buy-sell clauses often leave partners stuck.

In California, partnership disputes are governed by the Uniform Partnership Act of 1994 (California Corporations Code § 16100 et seq.), while limited liability company disputes are handled under the Revised Uniform Limited Liability Company Act (Corporations Code § 17701.01 et seq.). These statutes provide default rules, but without a carefully drafted agreement, parties may end up relying on terms they never intended.

Here are common pressure points we see in California partnership and joint venture deals:

We have seen litigation where a managing partner claimed unilateral control while investors believed decisions required a majority vote. Clear operating agreements with periodic legal checkups go a long way toward preventing that kind of breakdown.

Projects can stall when zoning restrictions, design reviews, or permit denials clash with a developer’s business plan. Friction often arises with city planning departments, county boards, neighbors, or state agencies applying overlapping rules. Environmental and historic preservation requirements can change site plans or halt them entirely.

In California, zoning and land use decisions are governed at the local level, but projects are also subject to state laws such as the California Environmental Quality Act (CEQA). CEQA requires environmental review for many developments, and challenges under CEQA can delay or even stop projects if procedural steps are missed.

Disputes commonly involve requests for variances, conditional use permits, or zoning amendments to bring a project into compliance with local codes. Understanding the timing for planning commission hearings, city council appeals, and judicial review deadlines is essential for keeping projects moving forward.

Disagreements over schedules, budget creep, or workmanship often push parties into claims. Tension also arises between developers, general contractors, and subcontractors over scope gaps and change orders. Clear scopes of work, pay schedules, retainage provisions, and delay clauses help keep everyone accountable and reduce conflict.

To cut risk, teams in California often rely on the following tools:

California law recognizes mechanic’s liens under Civil Code § 8000 et seq., which give contractors, subcontractors, and suppliers powerful rights to secure payment. Strict compliance with deadlines for recording liens and serving notices is critical since mechanic’s liens can directly impact title and financing. Owners, lenders, and contractors must carefully manage lien releases and conditional waivers to avoid unexpected claims.

Commercial real estate projects often involve overlapping insurance policies, indemnity provisions, and shifting responsibilities between co owners, tenants, lenders, and contractors. Disputes arise when coverage is denied, when policies conflict with contract terms, or when losses fall into gray areas.

Typical issues include:

In California, insurance disputes are especially common in construction defect claims, where courts closely examine whether faulty workmanship constitutes an “occurrence” under a CGL policy. California law also strictly enforces indemnity provisions in construction contracts under Civil Code § 2782, which a litigation lawyer can help interpret, limiting how far parties can shift liability for negligence.

Careful drafting of lease provisions, construction agreements, and loan documents can prevent many of these disputes. When conflicts do occur, attorneys often coordinate with insurance coverage counsel to push carriers for defense and indemnity, enforce contractual obligations, or negotiate settlements that protect project value.

Even after an investment property transaction closes, disagreements can surface between buyers, sellers, and lenders. These disputes are particularly disruptive because money has already changed hands and property use may already be underway.

Common flashpoints include:

In California, when property owners disagree sellers have strict disclosure obligations under Civil Code § 1102 et seq., and failure to disclose known defects can lead to claims for breach of contract, fraud, or rescission. Escrow disputes are also common since escrow holders must strictly follow instructions, and disagreements, including landlord-tenant disputes, often arise over whether conditions for release have been met.

Lenders in California may enforce remedies through foreclosure or judicial actions if borrowers fail to maintain covenants, property conditions, or insurance coverage. Addressing these issues quickly is essential for keeping projects and financing on track since delays can compound costs and risk.

Thorough due diligence, strong escrow instructions, and well-drafted post-closing adjustment clauses are the best ways to reduce exposure to these disputes.

Mediation allows both sides to negotiate with the help of a neutral third party. It often preserves business relationships, saves time, and allows creative solutions that courts cannot provide. Arbitration, by contrast, is private and binding. It can be faster than a lawsuit, but appeals are extremely limited.

In California, many commercial real estate contracts require mediation or arbitration before a lawsuit can be filed. The California Arbitration Act (Code of Civil Procedure § 1280 et seq.) governs most arbitration proceedings, aimed at reaching a mutually acceptable solution nd courts generally enforce these clauses. Mediation and arbitration services are often administered through providers such as JAMS or the American Arbitration Association (AAA).

Here is a quick comparison that clients find helpful:

ADR can shine with long-term lease partners who want to keep doing business together, or with high-profile developments where privacy matters.

Commercial real estate attorneys help you measure risk, choose the right strategy, and time your moves carefully. Skilled counsel uses discovery, targeted negotiations, and motion practice to strengthen your position and push for a favorable resolution. Early involvement with legal counsel often prevents a small problem from turning into full-scale litigation and helps contain financial exposure.

When choosing representation, look for lawyers with experience in California commercial disputes, land use conflicts, and contract enforcement. Litigation in California follows the California Code of Civil Procedure, which governs pleadings, discovery, motions, and trial practice. Having a team that understands both the local court system and California’s unique property and contract rules is a real advantage.

Strong habits can keep deals calm and predictable. A little extra care on the front end pays for itself many times over.

These best practices reduce confusion, speed up decision-making, and keep everyone aligned on goals and responsibilities. Preventive workup front is often the most effective way to avoid costly disputes later.

At Estavillo Law Group, a reputable law firm, we work to protect your investment while keeping costs sensible. If you need help with a lease fight, a partnership blowup, a title problem, or a contractor claim that may affect your legal rights , reach out and tell us what is going on. Feel free to call us at (510) 982-3001, or send a note through our Contact Us page. We welcome your questions and will walk you through the next steps that fit your situation.