If you watch the news lately, you will have seen the dozens of stories of real estate developers thwarted by the economic downturn. Many property owners know to pay attention to the economic conditions that will affect property development. Fewer think about the legal preparedness that is also vital to successful real estate development.
Know your property options
The first thing you need to know if you are considering developing real estate is the zoning regulations that apply to your property. Zoning refers to the set of rules regarding property use; it determines if a property can become a condominium, a store or an apartment building. Because zoning is managed at the local level, your property is subject to municipal ordinances, which are subject to rapid change.
In Tennessee, our state is seeing widespread debate over the zoning regulations in cities, especially surrounding commercial use and multiunit housing. Before you develop property, you should understand the full ramification of zoning laws on your project.
Create a clear plan
Construction projects have many legal hurdles. The last thing your development project needs is a sudden regulatory or contractual issue that disrupts your plans and slashes your profits. You will need to consider:
- Does your contract account for unexpected construction needs?
- What is the expected construction timeline, and how does your plan account for major milestones and setbacks?
- Do you have a plan for construction mismanagement or breach of contract?
Each of these questions reflects a myriad of legal questions. A well-prepared contract and plan can ensure you resolve any future challenges long before they arise.