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Common issues in commercial real estate litigation this year

On Behalf of | Feb 10, 2023 | Real Estate Transactions |

Commercial real estate litigation is an always-evolving field. And, especially this year with the Federal Reserve’s insistence to keep raising interest rates, it looks to be a particularly active year for Phoenix, Arizona, commercial real estate litigation.


If there is one thing that can get a once-excited commercial buyer to get cold feet, it is an extra percentage point. Unfortunately, that is the interest rate landscape we live in now, and even if there is a rate lock, if it expires before a closing can occur, the resulting rate could be dramatically different. And, if they were okay with a variable rate, they suddenly may not be okay with that when the Fed does a back-to-back 75 basis point rate hike. As such, this year, you should expect an increase in contract breach lawsuits.

What can be done? Examine your contracts now, and if you do not already have a commercial real estate attorney, get one. Pay attention to each provision, especially any cancellation and interest rate provisions.

Be on the lookout for fraudsters

For those in the Phoenix, Arizona, commercial real estate business, you know that when there is interest rate chaos, the fraudsters come out. And, already, there has been an uptick in real estate fraud by over 20%. If you have deals in the works, be on the lookout. The best bit of advice is to not wave due diligence provisions, and if you need help, get help.

Internal strife

The interest rate escalations could also cause some internal strife between Phoenix, Arizona, business owners and shareholders. This could be from a partner who sees an opportunity to buy out their partner for cheap. Or, another partner who sees this current economic condition as a time to push for a receivership or to argue that the controlling partner is breaking their fiduciary duty. This is where having an independent counselor can help solve these internal disputes.