Banking Law
More Builders Sue Lenders for Dried-Up Financing
Posted Jul 23, 2008, 06:49 am CDT
By Debra Cassens Weiss
Lender liability lawsuits that were popular during the real-estate downturn in the 1990s are making a comeback.
Builders are beginning to file lawsuits that contend their lenders cut off financing for construction projects, threatening their financial viability, the Wall Street Journal reports (sub. req.).
Fearing real-estate losses and under pressure to reduce their exposure, many financial institutions are seeking to pare down construction loans. Some lenders are justifying decisions to stop financing with appraisals that show a project’s value has plummeted. In some cases, the lenders are seeking to enforce personal guarantees to make up for the lower value.
One developer who filed suit is John Thomas. He contends his lender, First Bank, refused to release the final $6 million of a $40 million construction loan for his 222-unit condo and hotel project in Stockton, Calif., the newspaper says. Now liens are encumbering the project and it can’t be completed.
Said Thomas’ lawyer, Matthew Quint: "In our view, the bank took a healthy project and destroyed it."
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Posted by kay sieveding - 2 months, 2 weeks, 5 days, 14 hours, 40 minutes ago
I recently saw such a case in the Madison WI newspaper. It said the builder’s lawyer quit, probably because he couldn’t pay.
WI case law has a similar case. Hlavinka v. Blunt, Ellis & Loewi, Inc. 174 Wis. 2d 381, N.W.2d (Ct. App. 1993). That involved a man who sued his broker. His lawyer quit and he presented himself. The WI court ruled “Every person has an absolute right to appear pro se”. The WI Supreme Court affirmed that. However, the D of Minnesota in 08-2494 ruled that WI citizens don’t have an absolute right to represent themselves in paid civil matters and that this fundamental right can be removed without written standards or procedures.
I personally am an older woman who was raised in an anti gun family. No one ever called me macho. I am afraid of guns. The builders however, are often macho men who are not afraid of guns at all. I predict that some of them will engage in murder if they are denied their right to represent themselves.
The whole reason for democratic government by elected accountable officials is to avoid violent uprisings by citizens. Take away the calming effect of Access to Courts and the hurt and rage will remain. Why should these guys just quietly commit suicide when they can do a Marvin Heemyer or something equivalent?