From Curing a ‘Gore’ to Releasing a Lien
Some real estate transactions are fairly straightforward: a client wants to buy a property, so we negotiate purchase agreement terms, review existing leases and navigate any administrative hurdles with the local municipalities. Then we close, and everyone moves on happily. But sometimes, deals don’t go the way you expect, and that’s when it really pays to have Cuddy & Feder’s full-service team in your corner – as the land use team steps out, the litigation team is ready to step in.
A real estate transaction we handled illustrates this point. It began as a matter of curing a defect in title. Our clients were in contract to purchase a piece of property that came with several commercial spaces, including retail stores and a restaurant tenant, as well as a municipal parking garage. But it seemed that a portion of the property – a small “gore” of land owned by the City – had not been acquired by the seller or its predecessor. It had been the intent of the City to convey it, and the title company had insured that it had been conveyed, but that failed to happen.
So Cuddy & Feder’s land use team, led by William Null, came in to help cure this problem – handling the municipal relationship, negotiating the resolution involving a lease amendment for the ground lease to the municipal garage and securing the municipal approvals needed. To correct the problem, our land use attorneys worked with the seller’s title company to resolve the claim under the seller’s title policy, and that settlement funded a resolution with the municipality, enabling the transaction to close with our clients becoming the new owners.
But the legal intricacies did not end there.
Sometime after our clients purchased the property, the restaurant tenant failed, and it decided to change its business to a supermarket, which required a complete reconfiguration of the existing restaurant space. The tenant hired, signed a contract with and supervised its own contractor on the nearly $2 million construction project. According to the terms of its lease with our clients, the tenant’s conversion project was to be at the tenant’s “sole cost and expense,” and our clients had no involvement with the project.
Around this time, our clients changed their minds about developing the property and decided instead to sell it. But after the supermarket project was completed, the contractor filed a $1.8 million mechanic’s lien against the property claiming that he had not been paid by the restaurant/supermarket tenant for his work. This significant lien not only prevented our clients from being able to move forward with any sale of the property, it placed the property as a whole in jeopardy, as the contractor was seeking to foreclose its lien, causing the whole property to be sold at auction.
This is when the matter transitioned to Cuddy & Feder’s Litigation Practice Group. In defending against the contractor’s claim, Cuddy & Feder’s team of litigators, led by Josh Kimerling, were able to defeat a motion for summary judgment at the outset of the case and then successfully defeat the contractor’s appeal. The case proceeded with months of strategic discovery and investigation, during which critical information was uncovered that provided a sound basis to attack the lien. Ultimately, our litigators prevailed by obtaining the release of the mechanic’s lien on summary judgment, avoiding a long and costly trial that would have further delayed our clients’ ability to sell the property.
We understand that most of our business clients think of litigation as a last resort. We also understand just how important it is to provide a rock solid team of litigators as a fallback when it does become necessary. It’s only when deals go sideways that you look around and appreciate just how important it is to have a strong litigation option available as part of your strategy.