Why Is CRE Litigation Growing?

Commercial real estate litigation is on the rise. Law firm Crosbie Gliner Schiffman Southard & Swanson has added to its litigation team, welcoming Sean Gaffney as senior counsel. According to Gregory Markow, head of the firm’s litigation practice group, Gaffney’s presence will be especially invaluable as the firm has seen a significant rise in commercial real estate related litigation cases. While there are many events contributing to this trend, Markow says that market uncertainty is among the causes.

“There is no single factor; however, we believe that market uncertainty is causing market participants to start to ensure that every last dollar is collected,” Markow tells GlobeSt.com. “We suspect that participants are worried about no longer being able to make up any shortfall on the next deal because they are uncertain about whether the next deal will happen.”

While cases in general have increase, small retail unlawful detainers have not, which Markow says is usually the case during a downturn. “We are also not seeing lease workouts or purchase and sale agreements failing for insubstantial reasons,” he adds. Instead, the firm is seeing a rise in litigation over capital disputes and land use rights. “We are seeing participants in deals disputing the amounts they are allowed to take out of deals, people litigating over entitlements and land use rights, rather than paying off claimants or objecting parties, and end-of-lease disputes about the condition of premises and indemnity obligations,” explains Markow.