Investors in commercial real estate often take significant risks with their time and money. While there are practical risks, such as the fluctuating market and the condition of the property, investors must also deal with the question of whether the seller is reliable. They may spend many months examining a property, working out a deal and preparing for the transaction only to have the deal collapse because the seller was not forthcoming. When investors lose money on such deals, they may seek recompense through real estate litigation.
One such situation occurred in California when the CEO of a real estate investment firm agreed to sell one of the firm’s properties to a group of investors. The two parties had reached an agreement of $10 million for the investors to purchase leases for a historic hotel, a storefront business and an adjacent residential property. However, the investors did not know the court had placed restrictions on lease owner’s ability to sell any of his real estate holdings.
Divorce affects real estate transactions
Apparently, the CEO was going through a contentious divorce. Several months earlier, his wife won her bid for court receivership of all properties her husband and his company owned or controlled. This forbade him from selling them without seeking court approval. The investors filed a lawsuit seeking general, special and punitive damages, claiming the CEO deliberately misled them and cost them significant losses. They also want the court to declare the transaction enforceable once the marriage is dissolved.
Real estate litigation can be stressful when millions of dollars are on the line. However, even when simple transactions go wrong, buyers may incur loss and damages. Those in California dealing with these issues may benefit from working with a skilled and experienced attorney who will fight for the most positive outcome possible.