Commercial real estate transactions in Houston are some of the most complex. The buyers and sellers involved are often multi-million dollar corporate entities with a lot at stake. Zoning laws, capital sources, budgets, and other conditions must be thoroughly researched and carefully negotiated prior to closing. If one party feels that the other party acted fraudulently during the transaction, this can lead to real estate litigation.
A seasoned real estate investment firm accused a luxury hotel chain of misrepresenting financial obligations before and during purchase contract negotiations. The construction budget for the resort and golf club at the center of the lawsuit was just under $400 million, but cost overruns pushed the final price tag to approximately $484 million. The investment firm filed a lawsuit citing fraud and negligence, among other things. A Texas court ruled in favor of the luxury hotel chain, stating that the investment firm participated in the budgeting process and signed an addendum with broad changes to the original plans and specifications; they were not ignorant to the changes in the contract or budget. Furthermore, the purchase agreement in question contained an “as-is” clause, releasing the hotel chain from financial liability. Upon appeal, the verdict was upheld.
Ignorance is rarely a successful argument in our judicial system. Presidents, vice presidents, CFOs and CEOs are all highly educated people who have with knowledge of common business contracts. Whether you are the plaintiff or the defendant in a contract dispute, you could benefit from discussing different legal strategies with an attorney who is well versed in commercial law.
Source: law360.com, “Marriott Dodges Claims In Texas Resort Cost Overruns Suit,” Linda Chiem, Dec. 4, 2013