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Commercial disputes can involve the state or government

Real estate disputes don't only involve small corporations and businesses. Sometimes, real estate built for commercial purposes results in disputes with larger entities, like the government itself.

Take, for example, a case taking place in New York. A March 21 report stated that Cor Development Co. is suing the state for unpaid construction bills. It is believed that the state has delayed making payments because two of the executives of Cor are facing criminal charges. The charges are pending, and the state allegedly owes $500,000.

According to the story, the lawyers for the company have filed a lawsuit and mechanics lien asking for the funds that the state has not released. They total $567,859, which the state owes the company for constructing a factory in DeWitt.

Is the state to blame a second time?

Interestingly, this is the second time the company has had to file a lawsuit against the state for disputes over buildings. Both structures are implicated in a corruption scandal, which alleges that the two Cor executives were in a bid-rigging scheme to win the contracts for the two DeWitt facilities.

The company's attorneys believe there are no grounds for holding back payments, even if there is a pending trial. The work is already done, so the attorneys have sought immediate payment or the court-ordered sale of the structure, allowing the lien's full payment.

The escrow funds holder, Empire State Development, was asked to hold the funds until January 2018. The escrow could extend until June 1, 2016, if there was a reasonable basis for doing so. The company has held funds during the pending litigation, stating that claims could be made against them. However, the lawsuit states that there's no reason to believe that the Cor Collamer Road Company II will face any claims. That's the company awaiting payment.

Previously, the state had to pay to settle a case with Cor in which the state failed to purchase or pay rent for a property under a ground lease. The state paid $2.9 million to settle that case. In this pending case, the factory was originally designed for Soraa, which decided not to occupy it. Instead, another $15 million was spent to make it ready for NexGen Power Systems.

When you develop or plan to use commercial real estate, understand your rights. Know when you owe payment or are to be paid. If you run into trouble, your contract can be the difference between a winning or losing case.

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