Chapter 29

Real Estate Litigation*

Mariano S. BorgesSteven A. KlettMark R. MolepskeMichael E. Straneva

29.1 Introduction

This chapter discusses the evolution of real estate litigation during the 10 years of economic uncertainty that ensued after September 11, 2001, and which is expected to continue well into a second decade. It also addresses traditional real estate disputes relating to environmental and regulatory conditions. Because each case has different circumstances, the issues described and the damages methodologies and considerations presented will not apply to every case.

The general economic conditions of recent years have sometimes had a dramatic impact on real estate market fundamentals, affecting both the performance of real estate industry participants and the values of their real estate assets (see Exhibit 29.1). This, in turn, has changed the face of real estate litigation and the issues that financial experts are most frequently involved with.

Exhibit 29.1 Catalysts to Real Estate Litigation

Changes in Economic Conditions

  • General economic conditions
  • Changes in credit markets (e.g., subprime mortgages)
  • Bankruptcy
  • Lender liability

Changes in Environmental and Regulatory Conditions

  • Direct: Contamination, noise pollution, visual impairment
  • Indirect: Proximity (real estate with impaired value because it is located near the site)
  • Eminent domain
  • Right-of-way
  • City planning limitations on property development
  • Federal laws (e.g., endangered species protection)

Exhibit ...

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