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Real Estate Trade Groups Are Spearheading the Fight Against Frivolous Lawsuits

Real Estate Trade Groups Are Spearheading the Fight Against Frivolous Lawsuits

Defining the future of real estate

Franco Faraudo
March 22, 2024

Propmodo Daily

By Franco Faraudo · Mar. 22, 2024

Greetings!

Real estate trade organizations have a lot of functions. One is to protect the industry by sponsoring favorable legislation. This is the case with a new law being championed by a few New York real estate groups. In today’s article, we dig into how two trade groups are pushing a state bill that would hopefully cut down on the amount of liability lawsuits by banning the practice of litigation lending.

Also, check out our new article about how the pandemic has challenged the allure of iconic "trophy" buildings. Sky-high rents, once justified by stunning views and undeniable cachet, are now met with record concessions. As landmark giants scramble to add trendy amenities, the question remains: Is the "trophy" label still a guarantee of success, or must these buildings now prove they offer more than just a famous name?

Yesterday, we discussed Sentinel Real Estate scaling back its NYC investments after regulatory challenges and scandals. After the article, we asked, “When it comes to affordable housing, which is the bigger obstacle?” The results are in:

🛑 Strict regulations that discourage investment: 46.67%
🪜 Lack of incentives for developers: 26.67%
💵 Not enough government-backed loans for developers: 26.67%

This week, Propmodo Technology and sponsor Valcre tackle valuation and underwriting tech. Learn about automated valuation, risk mitigation with cutting-edge data, and how to navigate the coming wave of commercial property revaluation.

Now, let's dig in!

Real Estate Trade Groups Spearhead Fight Against Frivolous Lawsuits

Many people are unaware that investing in lawsuits is possible. This practice, known as third-party litigation lending, began in the U.S. around 2010 and now represents a $13 billion market. Investment groups provide funds to "litigation funders," who pay a plaintiff's legal fees in exchange for a portion of any settlement or judgment. Plaintiffs bear no financial risk if they lose, creating a strong incentive to pursue cases.

Unsurprisingly, litigation lending has contributed to an increase in lawsuits, especially workplace-related claims. While some states regulate this practice, it remains largely unregulated. Now, two real estate trade groups – The Associated Builders and Contractors (ABC-NYS) and the Real Estate Board of New York (REBNY) – are opposing litigation lending. They support new legislation that would limit how third parties can financially benefit from lawsuits.

The proposed bill would regulate consumer litigation funding transactions, outlining disclosure, licensing, funding company and attorney responsibilities, and limitations.

“We’ve created a market of fraudulent claims where allegedly injured workers intentionally delay work, call 911, and are met at the hospital by their attorney," said Brian Sampson, president of ABC-NYS.

Trade groups argue that project insurance costs have risen significantly in New Jersey and New York, further burdening property companies in an already challenging market. This slowdown hinders construction efforts vital to maintaining affordable housing.

While this battle is centered in New York, successful legislation could inspire other trade groups to advocate for similar laws in their states. Proponents of litigation lending cite its role in helping low-income plaintiffs access legal representation. But, many believe the increase in lawsuits outweighs this benefit. With their high risk of litigation, real estate organizations may spearhead a wave of legislation that could significantly restrict litigation lending.

Office Leasing

Does a “Trophy” Building Classification Help Boost Leasing Numbers?

They're the architectural icons with breathtaking views and a certain undeniable cachet. But are "trophy" buildings truly worth those dizzying rents? The pandemic showed that even prestige has its limits – record concessions hit the top tiers. Now, landmark giants scramble to renovate, adding snazzy coffee shops and golf simulators just to keep up. Does the "trophy" label still mean guaranteed success, or is it time for these buildings to prove they offer more than just a famous name?

READ ONLINE: https://propmodo.com/does-a-trophy-building-classification-help-boost-leasing-numbers/

Insider Insights

🤕 Sale away: The battered residential real estate market seems to be picking up, as NAR data shows that sales volume was up 9.5 percent in February.

💥 Default of their own: Another Chinese developer, this one named Radiance, has defaulted on $300 million worth of bond debt.

Overheard

The post-COVID recovery saw the highest wage increases go to workers at the bottom, reducing income inequality and reversing the long-standing historical trend.
("Real wages" are already adjusted for inflation!)
cc: @EconomicPolicy
— Steven Rattner (@SteveRattner)
3:39 PM • Mar 21, 2024

Propmodo Podcast

Unrealized Losses: Adjusting Valuation Techniques for High Interest Rates

LISTEN NOW: https://propmodo.com/unrealized-losses-adjusting-valuation-techniques-for-high-interest-rates-with-andrew-lines/

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