Proceed with Caution when Considering the Acquisition of a Busted Deal

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Do not underestimate the importance of due diligence when evaluating the acquisition of a busted deal. In the world of land use and zoning, a busted deal is a planned real estate development that has failed, and the future of the asset is unknown. Acquiring such an asset without understanding the hurdles necessary to reposition the asset can be costly to lenders and buyers. The costs take the form of unexpected expense resulting from missed flaws in the entitlements and opportunities overlooked in repositioning the asset.

As with any acquisition, whether by foreclosure or otherwise, the general rule remains unchanged: Gather all land use related documents, identify and analyze the issues, strategize a resolution, and quantify the cost and time to remedy in advance of ownership. Following is a concise list of questions to contemplate before proceeding.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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