An investment in commercial real estate can come with strong returns, but along the way you’ll want to be proactive with how you approach the legalities. While there is no such thing as a foolproof transaction, there are plenty of methods that you can take in advance to reduce the risk of litigation. We’ll explore the most common reasons why commercial real estate litigation in Arizona occurs in this article to help you better understand.

1. Contractual Disputes

One of the most common reasons for Commercial Real Estate Litigation in Arizona is disputes arising from contracts. These can occur in a variety of contexts, including but not limited to:

A. Breach of Express or Implied Contracts

Contracts are central to all commercial real estate transactions. They identify all the terms and rules that each signing party is agreeing to and can be remedied by the court if they are breached. A breach occurs when one party fails to meet its obligations under the contract. This could be due to non-payment of rent, failure to deliver the property as agreed, or any other violation of the terms of the contract.

B. Disputes Over Lease Agreements

Lease agreements are a common cause of disputes in commercial real estate.Common reasons why these disputes come to fore are due to things such as the non-payment of rent, the landlord’s failure to maintain the property, or disagreements over the terms of the lease].

In many cases, the lease agreement may not be clear on certain issues, leading to disagreements between the landlord and tenant. 

2. Fiduciary Duty Breaches

Another common reason for Commercial Real Estate Litigation in Arizona is the breach of fiduciary duty. This happens when contracted parties fail to meet their obligated duties, thus breaching the trust. 

In a commercial real estate context, professionals like brokers or agents are expected to act in the best interests of their clients. This may include disclosing all material facts about a transaction, acting with due diligence, and avoiding conflicts of interest.

This can lead to a iduciary duty claim. Such claims can result in significant financial liability and damage to the professional’s reputation.

3. Tort Claims

Tort claims are another common cause of Commercial Real Estate Litigation in Arizona. These involve wrongful acts that result in harm or injury, and can include a variety of issues, from negligence to fraudulent misrepresentation.

For example, a seller may be sued for misrepresenting the condition of a property, or a property manager may be sued for failing to maintain the premises, resulting in injury to a tenant or visitor.

4. Property Claims

Property claims are a broad category that can cover a variety of issues, from disputes over ownership to issues with zoning or land use.

For example, a dispute may arise over who has the right to use a certain piece of property, or there may be disagreements over how a property can be used based on local zoning laws. In some cases, these issues can lead to litigation.

5. Commercial Lease Disputes

Commercial leases are complex documents, and disputes often arise over their interpretation and enforcement.

These issues can include disputes over rent, the condition of the property, the responsibilities of the landlord and tenant, and the termination of the lease. In some cases, these disputes can escalate into full-blown litigation.

6. Early Lease Terminations

Sometimes, circumstances may compel either the landlord or the tenant to end a lease prematurely. This can lead to disputes especially if the lease agreement doesn’t cater for such an eventuality or the conditions for early termination are not met[^9^].

7. Disputes Over Property Repairs and Maintenance Costs

Who bears the onus of maintenance and repair costs is often a contentious issue in commercial leases. While tenants are usually responsible for maintaining their specific premises, landlords typically have to maintain common areas[^10^].

8. Non-disclosure, Misrepresentation, and Fraud

Issues of non-disclosure, misrepresentation, and fraud can also lead to litigation. For instance, a seller or landlord has a duty to disclose all material facts about the property that could affect its value or desirability.

9. Trespass and Nuisance

Trespass and nuisance claims can arise in a variety of contexts, from disputes over property boundaries to issues with noise or other disturbances.

10. Financing Issues

Real estate transactions often involve significant financial commitments, and disputes can arise when a party is unable or unwilling to meet these commitments.

11. Problems with Zoning and Land Use

Zoning and land use regulations can have a significant impact on the use and value of a property. Disputes can arise when a property owner wants to change the use of a property or when new regulations are introduced that affect a property’s value.

12. Title Discrepancies

Title discrepancies can lead to disputes over ownership and can complicate the sale or lease of a property. These can include issues such as liens, easements, or other encumbrances.

Conclusion

The world of commercial real estate can be fraught with challenges and disputes. By understanding the most common causes of litigation, you can better prepare and protect your interests. When disputes arise, it’s crucial to seek the advice of a competent legal professional experienced in Commercial Real Estate Litigation in Arizona to guide you through the process and help you achieve the best possible outcome.