Real Estate Litigation

A: Given that nearly all real estate transactions involve at least one written contract, breach of contract allegations are at the center of many real estate litigation cases. Fraud, misrepresentation and breach of fiduciary duty claims are also common in real estate litigation. Other frequent sources include: condominium/homeowners association and cooperative disputes; financing disputes; environmental contamination disputes; construction defect claims, land use, zoning, and permitting disputes; landlord-tenant disputes; partnership, LLC, and joint venture disputes; and title disputes. Scarinci Hollenbeck’s experienced real estate litigation attorney team is equipped to handle all of these disputes and more.

A: Yes, real estate disputes can be resolved through arbitration and, in some instances, alternative dispute resolution is required, particularly in matters where contracts require arbitration or in condominium disputes. As with other types of disputes, arbitration has both advantages and disadvantages. Arbitration typically proceeds more quickly than traditional litigation and, therefore, can be less costly. Other advantages of arbitration include the ability to select the arbitration tribunal, venue, procedural rules, and governing law. In the context of real estate disputes, the parties can agree to use an arbitration forum and/or arbitrators that specialize in real estate and, thus, may be more knowledgeable about the industry’s complex legal issues. The potential downsides of arbitration include limited avenues for appeal and the inability to pursue certain remedies, such as injunctive relief, foreclosure, eviction, and collection orders. Court decisions are also based on established court precedent, which can make them more predictable than arbitration and have well-settled rules of procedure and evidence, which are more flexible in an arbitration and often within the discretion of the arbitrator.

A: Unlike arbitration, mediation is a non-binding way of attempting to resolve dispute with the involvement of a third-party neutral. The neutral typically uses “shuttle diplomacy” and break-out rooms, to speak to each party separately in an effort to bring the parties to a settlement. Mediations are not always successful, but they can be a very valuable part of the litigation process and are often required by Courts prior to proceeding to a trial. Mediations allow the parties to learn about the strengths and weaknesses of their respective cases and how the other party plans to address those strengths and weaknesses either at trial or during an arbitration.

A: Buyers have certain legal remedies when a seller breaches a purchase and sale agreement. In many cases, the contract itself will outline what steps the buyer must follow to pursue specific remedies. The contract may also limit the remedies available under certain circumstances.

Generally, in the case of a material breach, an aggrieved buyer may be entitled to the return of his or her deposit, monetary damages, or specific performance, which is the enforcement of the contract terms compelling the sale of a piece of property. For instance, the buyer may be entitled to recoup the costs associated with finding another suitable property. Specific performance, however, is only available if the buyer can show that the property is so unique that money damages will not adequately compensate the non-breaching party.

Alternatively, if a Seller breaches a purchase and sale contract, the Buyer is often limited to the return of its down-payment. With that said, the Buyer may attempt to bring claims for other consequential damages relating to Seller’s breach of the agreement depending on the factual circumstances surrounding the matter.

A: A notice of pendency, or lis pendens (in Latin), is a notice filed with the county clerk’s office of a particular county to notify potential buyers of a property that a lawsuit affecting title or occupancy rights to the property is pending. The purpose of filing a lis pendens is to notify third parties that a lawsuit may affect the ownership, possession, or use of the property is ongoing, and therefore it would be wise to await the result of the lawsuit prior to purchasing the property.

A: When a lender files a foreclosure action for the nonpayment of a mortgage, the lender must name anyone who has a subordinate interest in the property, including any tenants, to foreclose their respective interests and allow for the prompt sale of the premises so it can satisfy its debt from the proceeds of the sale. A commercial lease that postdates a mortgage is typically subordinate to that mortgage. Accordingly, if the lender includes the tenant as a defendant in the foreclosure action, the tenant’s rights under the lease may be extinguished by a foreclosure judgment unless the tenant reaches an agreement with the lender stating otherwise called a Subordination and Non-Disturbance Agreement. In the case of residential tenants, lenders must comply with laws such as the New Jersey Anti-Eviction Act.