To first understand conflicts that may arise during a real estate development project, you need to understand who the major players are and what this process entails. Real estate developers are individuals or agencies that acquire an area of land and then develop property on that land. They may have been real estate agents beforehand; however this is not always the case. This simply means that the developer will build on the area of land that they purchase. The real estate development plan could be for residential or commercial structures or buildings.
The process starts with a real estate developer researching an area to determine if it is right for the project and then creating a budget. Next, the real estate developer will generally create a preliminary plan with an architect to develop the area. Think of a new subdivision or strip mall as examples. Then, the real estate developer will take steps to convert this idea into reality. This includes purchasing the land, obtaining the proper approvals and permits, initiating construction, and carrying out the plan. The developer can then sell or lease the building or structure to someone else.
A few other important things to understand about the real estate development process include the following:
- Real estate development is much more than construction of a house or new building. As noted above, this is a larger process and construction is only one phase of a real estate development project.
- Real estate development does not only encompass new projects. This can also include improvement of existing business or structures, property leasing, selling raw and unimproved land to buyers, and working on a mix of plans in one designated land area.
- Real estate developers have working relationships with many parties to carry a project into completion. This includes architects, engineers, construction foremans, surveyors, contractors, subcontractors, landlords, city workers, property investors, accountants, and more depending on the type of project involved.
Now that you have a better grasp on the real estate development process, it is important to understand what conflicts may arise, the effect this can have on a real estate development plan, and how to remedy common real estate development conflicts.
What Are Some Examples of Real Estate Development Conflicts?
Real estate development is always a major endeavor requiring a lot of time, varying resources, sufficient money to cover the project’s expenses, and cooperation from several moving parts. Without all of these elements, completion of the project becomes very difficult. Because of this, there is a potential for real estate conflicts to arise. This will inevitably present roadblocks to carrying out the project.
Some examples of common legal conflicts or issues that may arise during a real estate development project include the following:
- Residential property owners living nearby to a proposed real estate development project attempt to prevent construction from occurring. This is arguably the most common conflict that comes up and can be very detrimental to the development process. Homeowners often cite the following as reasons to prevent construction from happening: increased noise during and after construction, more traffic, and claiming the new building does not fit in with the character of the neighborhood.
- The zoning department experiences delays and holds up the process.
- There is a breach of contract to either the construction or development contract.
- The development project violates zoning laws or land use ordinances, which means the proposed building is not approved for the zone that the developer intends to build.
- Carrying out the development would cause environmental violations. Some examples are pollution and increased noise levels.
- There is a dispute over titles and land deeds which can hold up the sale. For example, if there is not a clear chain or title or unknown liens on the property that were never paid off then this can cause conflict during real estate development.
Keep in mind that a variety of other conflicts may arise during the tenure of a development project. If you are a developer, make sure that you know the applicable laws in your area and are taking all the proper steps to ensure successful completion of your project from start to finish. If you are a property owner that has issues with a proposed or pending development project, as discussed above you may also have rights to stop or modify the project.
How Do Real Estate Development Conflicts Affect the Project?
If there is a pending or proposed real estate development project in the works and a conflict arises, this will cause a range of consequences. This includes temporarily halting the project, delays, money loss, and even project termination.
Even a small conflict can end up having bigger consequences than anticipated. This is because one conflict can spur other conflicts down the chain. For example, a breach of contract for supplies that significantly delays construction can lead to contractors quitting or missed deadlines. Because of this, it is important to remedy issues as soon as possible.
How Are Real Estate Development Conflicts Remedied?
When a real estate conflict development arises, the goal is to resolve and remedy the situation in a swift manner. Attempting settlement before initiating formal legal action is preferred, but not always feasible. For a conflict involving objections by nearby property owners, some remedies include monetary compensation or having a hearing to determine if the project should be stopped.
A lot of conflicts are resolved through civil lawsuits seeking damages. For example, when private parties are involved and a contract is breached court intervention may be necessary. For example, say a contractor did not complete a job as agreed upon and therefore breached the construction contract.
Here, the non-breaching party (the real estate developer) may be able to recover monetary damages for any losses that stemmed from the breach. The same would go if the roles were flipped and the contractor was never paid for work performed according to the construction contract. Other remedies may be available as well when there is a breach of contract, like amending the contract terms.
In other cases like zoning issues, more drastic remedies may be required. One example is ordering a real estate developer to change their development practices, especially when environmental violations and land usage are involved. This could include using different materials or procedures that would eliminate or lessen environmental risks.
Challenges to zoning ordinances can sometimes result as a response to a real estate development conflict. The developer could disagree and argue that the project is in line with the ordinance to avoid project termination. This is a serious situation that can be financially devastating to the developer if they are ordered to stop a project.
Do I Need to Hire a Lawyer for Real Estate Development Conflicts?
Real estate development is a major process that involves many different steps. Whether you are a developer or other party affected by a development project, when a conflict arises you should strongly consider hiring a property lawyer to help resolve the legal dispute. A lawyer will be familiar with relevant laws and have experience with handling real estate development conflicts. They will present your options and attempt settlement of the issue.
An attorney can help you resolve the matter swiftly to avoid delays and more financial loss. Also, if you need to file a lawsuit or challenge an ordinance, a lawyer can represent you in those proceedings.