5 steps for avoiding real estate development disputes in Pennsylvania

For experienced real estate developers, the steps needed to start and complete a successful real estate project should come as second nature. However, mistakes occur too frequently, not only by less seasoned developers, but also by those who have been down this road many times.

If you do not currently use a checklist, at the very least, take these important steps. They can mean the difference between a successful project and a costly and time-consuming real estate lawsuit.

Conduct a feasibility study. Your research should include, at a minimum, the following factors:

  • Legal: Will the zoning and land use restrictions allow for the planned structure and use?
  • Economic: Will the market bear this type of development in this location at this time?
  • Financial: What are the financial projections and what type of financial backing is available for start-up costs? Are projections realistic, and what is the back-up plan if there is a delay, dispute or act of nature that gets in the way?

Create a detailed plan. Once it is determined that the project is feasibly sound, a detailed and realistic business and project plan should be established. This plan should include the following:

  • Timelines: Make them attainable and stick to them as much as possible.
  • Budgets: Many developers run into trouble when projects go over budget. Keep a constant eye on costs as they come up in order to identify a problem before it gets out of hand.
  • Goals: If a developer fails to identify the end goal, the details for reaching it will be fuzzy as well.

Follow a structured strategy for raising capitol. Follow a clear financing plan so investors know what is going on. Additionally, in order to avoid inconsistency between investors or confusion about the fundraising strategy, maintain a well-defined agreement with each investor, which clearly address issues such as:

  • Investment terms
  • Project timelines
  • Return projections
  • Equity division, if applicable

Maintain good relationships. A developer's ability to raise capital, jump through legal hoops and find good partners with which to complete the project depends a lot on relationships skills. Open, honest communication with all involved will go a long way to establishing trust, helping to ensure ready and willing participants who will back future projects.

Hire an experienced real estate attorney. For quality legal assistance avoiding potential disputes and for getting your project started on the right foot, contact the Pennsylvania law firm of Caldwell & Kearns, P.C. The right lawyer can help guide you through the legal, financial and planning aspects from start to finish.