Key Legal Issues in Real Estate Development

From land acquisition to construction and beyond, this post will review some of the most critical legal aspects of a real estate development transaction. It is important for developers and investors to have experienced legal counsel to help them navigate potential pitfalls, mitigate risks, comply with regulations, and protect their interests.

Land Acquisition and Zoning:

The process of land acquisition is not as simple as purchasing a parcel of land. Developers must conduct due diligence to assess factors such as zoning regulations, environmental concerns, easements, and title issues. Zoning regulations dictate how land can be used and developed, and obtaining necessary zoning approvals is crucial for ensuring compliance with local laws and ordinances, particularly in California and Los Angeles County, where constantly evolving zoning regulations restricting industrial and other uses are prevalent.

Contracts and Agreements:

Real estate development involves numerous contractual agreements between developers, investors, contractors, suppliers, and other stakeholders. Common types of contracts in real estate development include purchase agreements, construction contracts, financing agreements, and lease agreements. It is essential for developers to carefully negotiate and draft these contracts with trusted counsel to protect their interests and minimize the potential for disputes.

Permitting and Regulatory Compliance:

As a condition of closing on the land purchase, developers should ensure all necessary permits, entitlements, and variances necessary to proceed with the planned development and intended use are properly obtained from governmental authorities. Developers must comply with various regulations and codes related to land use, building construction, environmental impact, and safety standards. These regulations may restrict the type of development allowed on a property, such as height restrictions, setback requirements, or historic preservation regulations. Developers must understand and comply with these restrictions to avoid legal challenges or enforcement actions.

Typically, the last stage in the development process before breaking ground is the closing of the land purchase and financing transactions, although this is not always the case. Because there are so many moving parts, there is no “typical” deal. The land purchase may occur at almost any stage of the process depending on how much risk the developer or the investors are willing to take.

By working with experienced legal counsel and staying informed about relevant laws and regulations, developers can minimize risks, protect their interests, and ensure the successful completion of their projects in a complex and dynamic industry landscape.

This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between MNK Law and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material.