Commercial Real Estate Disputes Attorneys in Philadelphia, Pennsylvania

Commercial property or real estate is different from residential real estate because it is for business purposes and to generate income or profits. Multiple residential units such as apartment or condominium complexes can also fall under the commercial real estate category because they are generally purchased with an eye to profit.  

Commercial real estate transactions are more complex than purchasing a single-family residence. There is no FHA or VA program to guarantee a mortgage, and loans for commercial realty are generally due in a few years’ time, not three decades down the road. Thus the risk is higher and more cash is usually needed upfront.  

Commercial real estate is also zoned differently and requires certain permits and licenses that a homeowner would likely never have to deal with. In other words, there are more chances that a commercial property transaction -- before, during, and after the close of the deal -- can run into difficulties or disputes that can threaten the fulfillment of the owner’s (or owners’) intended purpose.  

If you’re involved in a commercial transaction in or around Philadelphia, Pennsylvania, and a dispute threatens the viability of your enterprise, contact the commercial real estate legal team at Richard L. Vanderslice, P.C., for reliable legal assistance. 

We have the experience and knowledge about all relevant federal, state, and local real estate laws and will work with you to find a solution to bring your dream to reality. We proudly serve clients throughout the counties of Philadelphia, Montgomery, and Delaware. 

Common Commercial Real Estate Disputes

Because of inflation, the Federal Reserve has been raising interest rates to bring down the cost of living. One of the effects is that borrowing rates for real estate have gone up and up. In addition, this fluctuating interest rate has also had an effect on the valuation of commercial (and residential) real estate.   

As a result, incidents of buyers getting “cold feet” in closing a real estate transaction have risen. This has led to tension between co-investors. Another resulting phenomenon that has been on the rise is fraud. Commercial scams have risen to attract investors to a deal by misrepresenting financial information – inflating expectations, downplaying risks – and even misrepresenting the property itself. 

As a result, breach of contract suits – always a threat in a commercial real estate transaction – have become more prevalent. In addition to the new interest-rate environment and subsequent ripples in commercial property transactions, there exist a number of issues that commonly lead to disputes in such transactions. In addition, the following are other common issues. 

PARTNER DISAGREEMENTS: Co-investors and co-owners have often been at odds over many issues, including the terms of the deal and the ultimate use of the property being purchased, so a breach of contract is not a new phenomenon.  

ZONING/PERMIT ISSUES: You may want to build a shopping center, but the county or municipality has it zoned for other uses. You can seek a variance, but that can take forever if it’s even possible.  

It is vital to consider your options before getting ahead of yourself. An attorney can evaluate the situation and determine what steps to take.    

PROPERTY DEFECTS: The current owner of the property may withhold vital information about material defects in the structure(s) being offered. You may need to hire a professional commercial inspection service to survey the property and inform you of anything not disclosed by the seller. This is also true if you’re seeking to lease the property.  

EASEMENTS, LIENS, AND OTHER RESTRICTIONS: You, as the buyer, will also need to investigate whether there are any easements on the property being sought. For instance, you may be looking to purchase a few acres of land, but you find out that you must provide access to the frontage road for owners behind you. This means that a road or driveway must be allocated to facilitate access. It’s also possible that there are other legal restrictions or perhaps a lien on the property from a dispute with the current owner.  

BOUNDARY DISPUTES: A cousin to easements with even more serious legal implications are boundary disputes. Owners of adjacent land may have a claim to part of what you’re looking to purchase. This can lead to complications in determining where one property ends and the other beings, resulting in legal issues that need to be resolved.  

ADA COMPLIANCE: Depending on the structure, it may present challenges for compliance with the Americans with Disabilities Act (ADA). For instance, parking for the handicapped may be lacking, or a ramp providing access to the structure may be missing in an existing complex. 

Resolving Commercial Real Estate Disputes

Litigation is one solution to a commercial real estate dispute, but it is a long and costly prospect with no guarantee of which party will prevail. Before that step, it’s best to negotiate. For these negotiations, your optimal approach is to bring on board an experienced commercial real estate attorney to handle everything.  

Your attorney may even recommend using mediation. In this approach, an impartial mediator will meet with both sides assembled together to hear their positions and then confer with each party on an individual basis. After all is said and done, the mediator will issue a recommended solution or course of action, but it is not mandatory. Both sides must agree.  

Arbitration more closely resembles an actual trial. An arbitrator, who may be a former judge, will conduct a proceeding in which both sides present their arguments, evidence, and witnesses. The rules of evidence are a bit less strict than during an actual trial, as hearsay evidence is usually permitted. In the end, the arbitrator will issue a ruling that is mandatory.   

In light of this, it is often a good idea to include an arbitration clause in any real estate contract you agree to, with an eye to ending disputes outside of litigation.