As a developer, you need a steady stream of cash in order to bring your project into fruition. That might sound easy enough, but the fact of the matter is that disputes with lenders occur all the time. When that happens, you need to be prepared to take quick legal action to protect your interests and ensure that you have the financial resources that you need to finalize your project.
There can be all kinds of issues that lead to a lender dispute. We hope that this post will shed some light on some of those issues and what you can do to try to remedy the situation.
Common lender disputes
Because lender disputes can take many forms, you need to be on your toes and recognize when you’ve been wronged. After all, failing to do so could lead to major losses. Here are some problems you could run into with your lender:
- Failure to deliver: To keep your project on track, you need consistent and full payouts under the terms of the loan agreement. Sometimes, though, the lender fails to adhere to the terms of the agreement.
- Anticipatory repudiation: Your lender might get into the construction projection a little ways and not like what it sees. At that time, it might indicate in one way or another that it’s not going to live up to its obligations under the contract.
- Other breaches of contract: Your loan agreement has a lot of terms, and each of them is important. A breach of any one of them could cripple our project and leave you in dire circumstances.
- Wrongful foreclosure: If a lender thinks that you’ve failed to live up to the terms of your lending agreement, then it may foreclose on your property. If their belief that you breached contract is erroneous, though, then their foreclosure is illegal and can be extraordinarily costly to you and your business.
- Breach of duty to act in good faith: Sometimes lenders simply don’t treat borrowers fairly when it comes to discretionary terms of the loan. This area is very fact-specific.
- Fraudulent misrepresentations: A lender may intentionally or negligently conceal a material fact in hopes of securing the loan agreement. When the lender later takes action based due to your reliance on that misrepresentation, such as foreclosing under circumstances the lender previously indicated wouldn’t lead to foreclosure, then legal action may be warranted.
How an attorney can help
If your project has slowed or ground to a halt because of issues with your lender, then you need to think about taking legal action. An attorney who is experienced in this area of the law can help analyze the terms of your loan agreement and identify where the lender has run afoul of it. This is no easy task given the length of these agreements and the legal intricacies involved.
Once that analysis is conducted, an experienced legal team will undertake efforts to build evidence for you claim. This will likely include subpoenaing documents from your lender, deposing witnesses who have relevant information pertaining to the case, and combing through statutory and case law to build the compelling legal arguments that you need.
Mitigating your damages is necessary, which means even if your lender has breached its contract with you or acted in a fraudulent way, you’ll want to take immediate action to try to find a way to secure the funding you need to avoid costly delays to your development. If you don’t act to mitigate your damages, then you could be limited in what you can recover from the lender who has wronged you.
Don’t leave you case to chance
There’s too much at stake in a development to be soft with your lender. Far too often we’ve seen lenders take advantage of developers and construction companies under these circumstances. So, if you’re facing a dispute with your lender and what to learn more about what you can do to protect yourself, your project, and your financial wellbeing, then now is the time to reach out to a legal professional who has a track record of successfully litigating these kinds of cases.