Despite the cloud of doom that may be looming amongst many commercial lenders and developers, a recession can actually bring opportunity; some of the risks can even be mitigated with careful planning. Hindsight and decades of ensuing risk management and litigation have led me to firmly believe it boils down to these ten tips:

Get a fresh set of eyes on loan documents, construction contracts, and land purchase agreements to fully understand all your contract terms. Check your force majeure clauses and notice provisions thoroughly and be sure to comply with them. Regularly review your documents throughout the life of the project, particularly if construction loans are involved.
Make sure your deadlines are consistent between documents. Provide ample time for potential delays that may be out of your control.
Ensure that you keep accurate, exhaustive records and notes from the outset. Monitor contract compliance recording deviations and delays as you go.
Conduct regular, on-site inspections. Owners and developers should be watching their contractors and overseeing the project's progress, and lenders should observe firsthand whether deadlines are being met.
Communication is key. It may seem cliché, but strong communication can salvage a relationship and increase the potential for a loan or contract modification when necessary.
Review and maintain insurance.
Don't overpromise. It seems simple, but a project's success can, at times, depend on managed expectations.
Stay in your lane. As one court recently noted: "[i]f a lender exercises excessive control over a borrower . . ., a lender can assume the role of fiduciary rather than creditor." However, even absent a fiduciary duty, "if a lender takes a particularly active role in the business decisions of the borrower" it "may become liable for tortious interference."
Utilize consultants – construction managers, inspectors, supervisory architects, lawyers, and/or accountants – who have the experience and know-how to tackle any issue that could arise.
Seek modifications to documents where necessary, obtain appropriate consents, and document any changes to agreements.

Even in the midst of a recession, following these ten steps will minimize legal risk, if not alleviate it fully.

Instant Insights /

How Developers and Lenders Can Mitigate Legal Risk in a Downturn Economy

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