Risks to Real Estate Investors: Misrepresentation by Sellers and Developers I

Real estate investment, while offering significant opportunities, also carries inherent risks—one of the most concerning being intentional misrepresentation by developers. When critical details regarding a project’s feasibility are withheld, such as issues related to land ownership or environmental restrictions, it can be highly detrimental to investors and lenders.

Our firm was involved in investigating a case in which a developer failed to disclose that a substantial portion of their proposed project would encroach upon a protected nature reserve. This omission—whether inadvertent or intentional—has significant implications, both in terms of the project’s viability and the potential legal consequences for the developer.

Key concerns include:

• Serious legal implications: such as violations of environmental regulations and permitting obstacles, both of which can lead to fines, project delays, or cancellations.
• Substantial financial exposure: escalating costs due to legal disputes and regulatory hurdles, and investor losses from misrepresented land ownership or zoning problems.
• Reputational damage: deceptive practices can severely tarnish a developer’s reputation, making future investment opportunities harder to secure and exposing them to potential lawsuits.

In sum, these factors compound to create significant financial risk for all parties involved.

If you are an investor or lender; or their legal counsel and you believe that you or your client might be the victim of misrepresentation in a real-estate transaction contact us to learn more about how we can help.

keynorthgroup.com | info@keynorthgroup.com |  613-233-8509