Real Estate Litigation
“Real estate provides the highest returns, the greatest values, and the least risk.”
̶ Armstrong Williams
Real estate may well provide some of the most exciting and lucrative opportunities for investors, but ownership can also provide some of the biggest headaches. Deals on the verge of closing fall through at the last minute. Buyers can’t secure funding. Improvements aren’t completed on time and on budget. Construction accidents happen. Defects are discovered—sometimes long after construction is complete and the deal has closed. Landlords don’t deliver on what they promised their tenants, and tenants don’t pay their rent. Owners default on their loans. Even the weather can interrupt a project, cause a casualty loss, or create an insurance claim. Whether you are a buyer, seller, lender, builder, real estate agent or broker, contractor, design professional, landlord, or commercial tenant, Bennett, Weston, LaJone & Turner, P.C.’s real estate litigators can advise you of your rights and can protect your interests in the litigation or arbitration process.
Types of Real Estate Disputes
Real estate disputes invariably require knowledge of multiple areas of law, including contract law, property law, torts, statutory law, agency, suretyship, insurance, and equity. Such disputes may require simultaneous consideration of legal principles and precedents from different areas of law depending upon the facts and circumstances of your particular transaction. On top of this knowledge, you need to be familiar with the litigation process and the rules of civil procedure. Many real estate contracts require arbitration, which has its own rules and procedures. Our real estate litigation team includes an attorney who is board certified in commercial real estate and another attorney who is board certified in civil trial law, with experience arbitrating cases before the American Arbitration Association and before JAMS. In addition, our firm has several transactional attorneys with considerable real estate experience who can facilitate a business resolution to many types of disputes.
Because of the statute of frauds, real estate sales almost always involve a written agreement. Large real estate acquisitions frequently involve a series of complex agreements which govern different aspects of the transaction. Real estate agents and brokers have contracts which clarify their authority as an agent of the seller or buyer and carefully delineate their duties and responsibilities, as well as the compensation they will receive—typically a commission—for their participation in the transaction. Earnest money contracts and similar agreements document the pre-closing rights and obligations of the parties, as well as prescribing remedies for the failure of either party to complete the transaction at closing. Deeds and similar instruments formally convey title. Notes, mortgages, and deeds of trust document the lending arrangement typically between the buyer and its mortgage company. Numerous other written instruments frequently document platting, easements, zoning and variances, local government incentives, conditions and restrictions, and other details affecting the property.
Disputes sometime arise during, and often shorty after, a real estate sale. Matters are discovered that materially impact the buyer’s decision-making, affect title, increase credit risk, or which otherwise must be addressed prior to closing. After closing, buyers may experience buyers’ remorse or learn about issues for the first time which should have been disclosed or discovered prior to closing. This may lead to disagreements between buyers and sellers or with their respective agents or inspectors. In some cases, statutory or common law fraud claims are asserted. Protecting your rights and remedies requires the knowledge of an experienced attorney who understands the interplay between different real estate documents and applicable statutory law.
Few buyers have the financial resources to purchase real estate without financing all or part of the transaction. Even the purchase of a single-family residence typically requires a mortgage company to advance most of the purchase price. Commercial transactions may involve conventional lending arrangements, SBA loans, bridge loans, or CMBS loans. Most such loans are secured by an interest in the property acquired. These loans often impose various additional requirements on the borrower to preserve and protect the property and other collateral securing the loan in the event that the loan goes into default.
The most common problem arising out of these lending transactions is the borrower’s failure to repay the loan. When this problem arises in Texas, the lender usually has the right to foreclose on the property without the necessity of first filing a lawsuit. Attorneys from both our transactional and litigation sections have considerable experience assisting clients with commercial foreclosure proceedings. We do not, however, typically handle residential foreclosures absent unusual circumstances. Occasionally, litigation arises as a result of an improper commercial foreclosure—especially when a lender attempts to foreclose using its own in-house personnel or another inexperienced attorney. In some circumstances, a commercial foreclosure may require subsequent eviction proceedings if the borrower leased a portion of the premises to tenants. Less common disputes between borrowers and lenders also sometimes lead to litigation. Our real estate litigators can help guide you through the process and protect your rights.
Decades ago, contractors would build improvements to property using a two-page form contract from a hardware store. In the 21st century, however, such contracts have become quite lengthy, detailing the rights and obligations of the parties and shifting risks of delay, damage, and loss. Many construction contracts begin with “form” contracts such as those developed by the American Institute of Architects (“AIA”), “ConsensusDocs,” the Texas Association of Builders (“TAB”), or the Design Build Institute (“DBI”). Other owners and contractors use their own proprietary contract forms.
The allocation of rights and responsibilities between the parties often depends upon the delivery system chosen. The traditional design/select/build system is increasingly challenged by alternative delivery systems including design-build, integrated project delivery (“IPD”), and the use of multiple primes. The use of a construction manager-agent or construction manager at risk further complicates these transactional relationships. Understanding these different delivery systems can be an important factor when a dispute arises.
Despite the length and specificity of modern construction contracts, disputes nevertheless frequently arise. The parties may disagree as to whether certain items are included in the original price and scope of work, or require a change order and adjustment in price. Completion of the project may be delayed by the contractor not properly scheduling subs or timely ordering materials, by the owner not promptly making progress payments or interfering with the work, or even by external forces like the weather. Subcontractors may encumber the property with liens or fail to perform their work in a timely manner. Sureties may be called upon to honor bonds or to takeover the project. Work may be challenged as non-conforming or defective. In some cases, contractors walk off the job, or owners terminate the contractor or the entire project. In each case, you should contact an attorney with construction law experience to advise you how best to resolve your dispute.
There is an old adage in the construction industry that there is no such thing as a perfect project. Defects can and will occur in most construction projects. Hopefully, any defects will be relatively minor, quickly discovered, and easily fixed. Sometimes, however, major defects appear—even long after completion—that dramatically affect the integrity of the structure. Warranties and insurance can protect both owners and contractors in many instances, but may not apply or may exclude coverage. While warranty companies and insurers may provide a defense, how your case is developed and presented will impact whether any damages resulting from a defect are covered. Whether you are a contractor, subcontractor, supplier, or owner, you need an attorney familiar with both construction law and insurance law issues commonly encountered in construction defect cases.
Construction defect lawsuits are among the most costly and complex types of litigation or arbitration. Poor site investigation and inappropriate foundation design can impact the entire stability of a building. Defective plumbing work or improperly sealed roof penetrations can allow water to seep into areas hidden from view, creating mold and other issues. Brick, stone, and stucco veneers may be installed incorrectly. Improper electrical work may create fire or safety hazards. Other issues can affect windows, doors, balconies, cabinets, countertops, or other parts of the work. Often, a problem arises which cannot be quickly or easily traced to an individual defect, but may implicate several trades. Catastrophic failures, including structure collapse, often require careful forensic investigation to determine the defect or cause of the failure. Even routine construction defect cases often require the assistance of one or more expert witnesses to investigate the problem, evaluate the cause, and recommend a solution.
Construction accidents are among the most common workplace injuries in the United States. According to OSHA, about 1 in 5 workplace fatalities in 2016 involved construction. Excluding highway collisions, nearly two-thirds of such deaths resulted from one of four causes: 1) falls, 2) struck by object, 3) electrocution, and 4) caught-in/between. Many construction workers are independent contractors who do not carry workers’ compensation insurance on themselves. In some cases, it is unclear whether an injured worker was an independent contractor or an employee of another. In other situations, the carelessness or mistake of another independent contractor or their employee caused the accident. In such cases, the rights and duties between the parties often depend more on agency law or contract law, than personal injury law. Our attorneys can help you understand your rights and duties when a worker is injured on your project.
Architects and engineers are highly trained professionals but, occasionally, even they will make a mistake. Foundation designs that are inappropriate for sub-surface soil conditions, or landscape architects who place trees too close to structures, may jeopardize the structural integrity of an entire building. Insufficient detail or omissions from architectural plans may lead tradesmen or workers to “wing it.” Even when design professionals do not make a mistake, it is not uncommon for contractors and subcontractors to claim that they “built it exactly like it shows on the plans” as an excuse for their own defective or non-conforming work. Architects often assume construction administration duties in their contracts requiring them to inspect and approve work on a project. Real estate litigators understand how different delivery systems can affect litigation involving malpractice claims against these design professionals.
Design professionals carry insurance—called “errors and omissions” (E&O) or “architects and engineers” (A&E) insurance—which is very different from that commonly carried by contractors. These policies are typically “claims-made” policies with “eroding limits.” In addition, special statutes apply to claims against design professionals which require certain litigants to provide a “certificate of merit” from another design professional as a condition to bringing a claim. Accordingly, it is usually necessary to thoroughly investigate and evaluate claims against design professionals quickly when an issue arises. Upfront costs in these cases can be significant but are usually necessary to be successful. If you are a design professional or think you may have a claim against an architect or engineer, you need to consult an attorney familiar with these particular types of claims as early as possible in the litigation process.
Commercial lease disputes vary from simple to complex. Probably the most common and simple dispute is a tenant’s failure to pay rent as agreed. In Texas, a commercial landlord usually can lockout a tenant who has not paid its rent, but must provide an address where the tenant can obtain a key upon payment of the delinquent rent. Occasionally, a landlord will make a mistake, leading to a claim for wrongful lockout. Many commercial leases are “triple net” leases which require the tenant to pay taxes, insurance, and maintenance in addition to rent. Disputes can arise when annual adjustments or bill-backs exceed what the tenant anticipated. In retail centers, conflicts sometimes arise between “exclusivity” and “use” clauses in lease agreements with separate tenants. Occasionally, problems between a landlord and its lender, insurer, or ground lessor may adversely affect a tenant’s rights under its lease. Local government ordinances and zoning can also impact the commercial landlord-tenant relationship. Whether you are a landlord, property manager, or tenant, our real estate attorneys can help you understand your lease terms and resolve your lease dispute.
Casualty losses and damage to property can frequently be insured against. Relatively recent innovations like “master” or “blanket” insurance programs can substantially reduce the cost, but have risks that accompany their benefits. While commercial tenants should always carry their own insurance, many “mom and pop” shops do not, mistakenly relying on their landlord to protect them if a loss outside of the tenant’s control occurs. Changes in ownership or management sometimes create gaps in coverage which seem to attract such losses. Depending upon the language of your lease, serious casualty losses can sometimes lead to claims of constructive eviction. Any time you experience a significant casualty loss or damage to your property, you need to consult an attorney to advise you of your rights under your lease and under your insurance policies.
Particular Types of Real Estate Disputes
The litigation attorneys at Bennett, Weston, LaJone & Turner, P.C. are experienced with a wide range of real estate litigation, including:
- Statutory fraud / failure to disclose
- Commercial real estate foreclosures
- Easement, reciprocal access and use disputes
- Boundary disputes
- Zoning disputes
- Owner-General contractor disputes
- General contractor-Subcontractor disputes
- Enforcement or removal of liens
- Construction arbitration
- Accidents involving construction workers
- Malpractice claims against architects / engineers
- Certain oil, gas & mineral disputes
- Breaches of commercial lease
- Disputes between landlords and property managers
- Insurance coverage issues
- Constructive eviction
There are other types of real estate disputes with which our attorneys have experience. While our firm does handle many litigation matters relating to residential properties, we do not routinely represent tenants in residential landlord-tenant disputes as they can usually be handled more efficiently in justice of the peace court.
Our litigation attorneys can tell you whether we have the experience and background to help you with your real estate litigation or arbitration matter.