Landowners should be aware of certain legal issues that can arise when creating a real estate development contract. Our Rockford real estate attorneys explain common legal issues landowners should pay attention to before entering any real estate contracts.
Common Legal Issues with Real Estate Development
Landowners need to understand the provisions of a commercial construction contract that can lead to legal problems. Below we have put together common legal issues that you should look out for with real estate development contracts:
- Performance Duties Provision: The performance duties provision in a contract illustrates the builder or contractor’s duties and responsibilities, along with how the work will be completed. The provision should also describe how you or the contractor will handle unforeseen events and how the design documents will be interpreted.
The most common issue with the performance duties provision is that it contains incomplete descriptions. This can result in incomplete or defective work, problems with work coordinations, and disputes concerning work quality.
- Monetary Assurances: Your contract should also describe the monetary assurances that you and the contractor make to assure the real estate development project’s performance. The builder or contractor also needs to ensure that you have the necessary capital to fund the project.
A common legal issue with monetary assurances is that the builder or contractor reaches their credit limit amount and will stop working until you make future payments to extend the project funds. Another legal issue is that the credit relationship was not detailed, so the contractor may have unexpectedly expanded your credit amount and performed extra work without approval.
- Payment Issues: Payment methods and times should also be illustrated in a real estate development contract. Landowners often face misunderstandings with payments. In many cases, landowners aren’t content with the contractor’s performance or defect work and don’t provide the full payment. However, withholding the payment can be viewed as a breach of contract.
If you are facing legal issues with your real estate development, our Rockford real estate attorneys are here to help you. Contact us today at (800) 639-1488 to schedule a consultation!