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3 things to check before you join that project

by | Nov 25, 2020 | Real Estate Law

When you take over or acquire an interest in an ongoing development, you are more than an investor. You are a builder, a speculator and — perhaps most importantly — a newcomer.

We have seen many people join a project in process and reap significant rewards. We have also heard of some breathtaking failures. The deciding factor often seems to be preparation. Here are the three general categories to check off before you commit to an ongoing project.

1. The physical aspect

New developments often stall, require cash injections and so on. However, a few face significant challenges. The most significant of these tends to come in the form of a physical problem with the site, neighboring properties or the ongoing work.

For example, there could be an easement dispute. These rights do not always transfer smoothly from one owner to the next. Understanding the costs involved in resolving these types of conflicts could inform your investment decision or negotiating objectives.

2. The financial aspect

Lenders tend to reassess projects whenever a significant change occurs. You joining the team — or the reason you had the opportunity to join, for that matter — might reopen negotiations with the bank. If you know how to navigate, negotiate and litigate these matters, you could avoid unnecessary delays.

3. The legal aspect

In the event you join a distressed project, there is a good chance that you would have some legal issues to resolve. Whether you have to remove liens, resolve contractor disputes or handle other problems, tenacity, knowledge and practical experience often go a long way. Even developments that look great at first glance could have some unwelcome surprises — especially for those who do not do their homework.

We have seen preparation pay off time and again. Once you know what you are getting into, you should be able to make the best decision possible for your portfolio.