Commercial real estate disputes take many forms, from landlord-tenant disputes to boundary and title disputes, easement issues, breach of contract, and more.
These issues can be complex to resolve, often involving high-stakes decisions. Understanding your options as a property owner, landlord, or leaseholder is fundamental to preventing escalations of disputes and costly, time-consuming legal battles.
Let’s consider the main types of disputes and the main strategies available for resolving them.
How is commercial real estate defined?
Commercial real estate is any property that is purchased or leased by a business to support, expand, or grow it.
This includes:
- Commercial constructions on purchased land.
- Retail locations and shopping centers.
- Warehouses and manufacturing facilities.
- Office buildings.
- Apartment complexes with at least five units.
- Commercial condos and hotels.
With such a broad range of property falling under the umbrella of “commercial real estate,” it is not surprising that the types of disputes that affect these properties are also very broad.
What types of disputes impact commercial real estate in Mississippi?
Typically, in Mississippi, we see the following types of commercial real estate disputes arising:
Construction disputes
Many businesses purchase an empty piece of land and build the required structures to specification.
These are often high-stakes cases, where construction disputes due to project delays, design defects, payment disputes, and other contested matters require timely and decisive resolutions.
Landlord-tenant disputes
If a business leases commercial property from a building owner, they sign a landlord-tenant agreement.
Rent arrears due to unpaid or late rent, repairs/maintenance issues, lease termination, subletting, property modifications, etc., can lead to disputes during the lease term or even before the lease is signed.
Title disputes
Commercial real estate, like all property, has a “title” that proves ownership.
If ownership is disputed, whether because of illegal deeds, liens, or other challenges, legal issues are almost inevitable at some stage of the purchase or lease process.
Boundary disputes
Sometimes, the commercial real estate dispute is about land boundaries between adjacent properties.
Disputes can arise over fine details involving a few inches or a few feet of land or a much larger difference. Alternatively, the placement of a building on the boundary between properties sometimes causes disagreements between land users.
Breach of contract
A breach of contract can occur between any two parties in a real estate purchase or between a landlord and tenant.
Failing to fulfill the contract terms, such as making payments, maintaining the property, delivering the property as agreed, or using the property as contracted, can lead to disputes, as well as other matters.
Easement disputes
Land easements typically provide access to landlocked property, allow utilities to be installed, or protect natural resources and wildlife habitats.
Regardless of the reason for the easement, disputes often arise when it negatively impacts a development or business using the land.
Why is commercial real estate more contentious than residential real estate?
Commercial real estate disputes are relatively common compared to residential disputes.
Commercial real estate deals are typically tied to a business’s ability to generate income. Multiple parties may also be affected by any issues that arise, raising the stakes. If large sums are involved, disputes are more likely.
Many disputes arise due to simple misunderstandings or poor communication, which can be remedied in a variety of ways.
What are the best strategies for resolving commercial real estate disputes in Mississippi?
Disputes should be expected in commercial real estate deals. How you deal with the dispute is key to whether the outcome is favorable for you or not.
Property owners, landlords, and tenants should be familiar with the following strategies for resolving disputes.
Negotiation
Discussions and negotiation between parties (with or without their lawyers present) is the simplest and most flexible way to resolve commercial real estate disputes. No third party is involved with this method of dispute resolution.
Negotiation works best where there is a genuine interest in continuing the relationship, a degree of goodwill from both parties is present, and a spirit of compromise to find common ground is shown.
Mediation
If negotiations fail, the next step is to proceed to mediation with the other party. During mediation, a trained and impartial mediator attempts to facilitate an agreement between the disputing parties.
Final decisions rest with the disputing parties (the mediator does not make decisions or provide legal advice). The mediation process remains confidential and is less formal and costly than litigation. Mediation also allows for more “creative” solutions than litigation, which relies on strict adherence to commercial real estate law in Mississippi.
Arbitration
The arbitration process is presided over by an arbitrator, who is usually a legal professional familiar with the type of dispute at stake. As with litigation, both sides provide evidence to support their stance, and a legally binding decision is made by the arbitrator.
It should be noted that, in Mississippi, an arbitration award must be confirmed by a court to have the full force of a judgment for enforcement purposes (e.g., garnishment or liens).
Arbitration is less formal and costly than litigation, and is sometimes specified in contracts as the preferred form of dispute resolution.
Litigation
Litigation is often the “last resort” option if all else fails with dispute resolution. It is adversarial and can be expensive, time-consuming, and brings matters out into the public domain. Parties have no control over the final decision after presenting evidence before the judge.
The decision will essentially create a “winner” and “loser”, meaning that the relationship is rarely salvageable after the verdict.
Commercial real estate disputes can be challenging but mutually beneficial solutions are possible with the right legal assistance. In fact, only a small percentage of disputes end up at trial.
Our lawyers can review contracts for parties in commercial real estate deals either before the contract is signed to help prevent disputes or after a dispute arises and legal advice is required.
For legal advice and assistance with business disputes in the Biloxi area of Mississippi, contact a lawyer at Rushing & Guice, PLLC
