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Tuesday, November 04, 2008
Law - "As Building Projects Collapse, Suits Pile Up"
Lynne Marek of The National Law Journal reported yesterday on the legal aspects of the commercial building crisis. Some quotes:
Litigation is cropping up across the country over multimillion-dollar hotel, condominium and manufacturing building developments that unraveled as U.S. financing tightened during the past year, leaving financiers, developers and contractors to fight over who should pay for the failed deals.Although many developments have fallen into foreclosure in the past few years with courts sorting out claims, others that stalled or stopped are now devolving into litigation as parties that invested money, labor and materials in the projects turn on each other to recoup what they can.
From a $181 million hotel envisioned for Norfolk, Va., to a planned $530 million auto parts plant in Tipton, Ind., lawsuits are popping up over deals gone bad. At the same time, some companies are waiting in the wings, assessing whether to sue or hope that the improving credit market will solve their problems, said litigators being drawn into the real estate disputes. * * *
The first step that construction companies and contractors often take when a development project stalls is to place liens against the developers. While liens don't always turn into litigation, it becomes more likely over time as the liens pile up and as claimants encounter their own financial pressures. Laws regarding liens vary from state to state, but generally a claimant has up to six months to file a lawsuit to enforce a lien.
In Chicago, liens are stacking up against two major developments that have slowed. The planned 1,200-condominium building known as "The Chicago Spire" for its corkscrew shape, designed by Santiago Calatrava, is just a hole in the ground near the shores of Lake Michigan, and the luxury Shangri-la Hotel that's slated to open in downtown Chicago in 2011 has only 27 of its 90 stories completed.
Posted by Marcia Oddi on November 4, 2008 09:28 AM
Posted to General Law Related