Commercial real estate is often the subject of legal disputes for several reasons. Whether the owner rented out the property to a local business or partners started a legal agreement with tenants, the disputes could emerge and require the court’s intervention. The terms of contracts define the legal rights of all parties involved and their responsibilities. A careful review of how to handle a commercial real estate dispute could help property owners or other parties involved and show them what to do next.
Common Real Estate Disputes
The first type of dispute is a breach of contract. This type emerges when one party doesn’t fulfill their legal obligations as outlined in a purchase contract or lease agreement. A failure to maintain the property, failure to provide monthly payments, or a violation of the terms of the lease leads to a breach of contract claim.
Real estate fraud outlines instances in which the seller made promises or claims about the property that was not true. An example is a seller that promises that electrical systems in the property are up to code, and the buyer finds out after the purchase that there are several issues with the electrical system. There are also scams in which a seller offers a property for sale, collects the money from the buyer, and the owner finds out that there isn’t a property.
What Is Arbitration?
Arbitration allows a third party to evaluate the claim and the dispute. This third party is not a trustee or court-appointed officer. They assess the rights of both parties and review important details pertaining to real estate. Some property contracts have a clause that initiates arbitration if the parties have a dispute that must be settled. The arbitrator will complete their assessment until it is possible to make a decision, and since it is out of court, each party can avoid additional expenses.
How Does Mediation Work?
Mediation allows both parties to meet with their respective attorneys. The parties discuss their dispute and try to find a resolution. Their attorneys and the mediator can evaluate settlement offers to find a way to reach a resolution. If possible, the parties could leave mediation with their legal needs met without going to court. If they cannot reach an agreement in mediation, the case will need to go before the court.
The Outcome of the Cases
With a commercial real estate dispute, there are several possible outcomes. The court could make either party provide a monetary award based on damages. They could require settlements for financial losses as a result of contract breaches. Some cases could lead to a decision where both parties must sell the property and divide the proceeds.
Commercial real estate is an incredible investment for many companies and investors. Unfortunately, a violation of the terms of the contract or disputes regarding rental leases could lead to serious legal disputes that could prove costly for either party. By reviewing the causes of the disputes, businesses could find a resolution through a local attorney.