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ROWLETT RAMBLINGS

Putting on the gloves

8/9/2018

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I'm really disappointed in the response issued by City Council regarding confrontations of the developers of Bayside. In a time gone by, it would be considered acquiescence.  Acquiescence is butt ugly.  Nothing is solved, but certainly extended, at considerable cost.  It is almost guaranteed to extend negotiations, and cost more money.   If there's going to be a fight, lets get it on.  Otherwise, both sides, with heavy emphasis on the developer, better rethink their position. 

Much of my career in real estate lending was as a "work out guy."  That means negotiating with subs, suppliers, and developers.  Subs and suppliers are protected by lien laws and they have the hammer. Plus, they had my sentimental support that says, "if they did the work they deserved to be paid."

Developers, on the other hand,  made promises.  If they defaulted on their representations, they were accountable.   This is where you pull in the "fix it" guys.  That would be me.
 
That's what we have in Bayside, and it's easily provable as represented by news reports.   So, what happened?  I don't know, but I know that some questions are warranted.  First of all, what's our legal position.  That would depend on the strength of the documentation of the very first contract with Bayside, and any forward.   If the City of Rowlett has good strong agreements with Bayside, then we have the negotiating hammer.  If the original agreements with Bayside are weak, where was our legal representation?  If our legal position is weak in this confrontation, somebody's head on the city's side should roll.......maybe more than one.   If our position on contracts with Bayside are strong, binding,  legal agreements, Bayside is in a lot of trouble.   When I was in the real estate development lending business, our documents were time tested and very effective.  When we went into negotiations, we were well armed. 

The problem with the city response after the Executive Meeting was that a "wait and see" attitude would be the present position of the city.  That is sending a message to the developer that you have a weak position.  Not good. 

My game plan was always to investigate the advisory's strengths and weaknesses.  I did that with "preliminary negotiations."  That is, sit around a table and argue.   If you listen carefully, in that preliminary negotiation, the adversary will tell you their strong points and their weak points.  They will try to cover them up, but listen carefully.   Armed with that info, recheck the legal documents.  Do your documents protect you from the adversary's strong points?    If so, its time to load up and head to the court house. 

It's not a big deal to file a law suit.  Probably, it costs no more than $100.   However, there is another document that can be filed at the same time.  This document is called a lis pendens, a Latin term meaning "a law suit is filed."  A lis pendens is filed of record.  It puts the whole world on notice that a law suit has been filed.   However, significant in that filing is that if the defendant loses the law suit, anyone advancing money to the landowners or does any work on the project after the filing is in a junior position to the claimant.  This is serious.  It means all money and expense incurred after the filing of the lis pendens is subject to the claimant's claims.   Furthermore, for all practical purposes, it notifies any purchaser that the property probably can not be sold until the law suit is adjudicated.  Folks, this really cranks up the heat without costing too much money, and it almost assures that someone (read defendant) wants to talk seriously.  It would have become time to get serious.

Two things to remember:

1.  No one on the current city council was in office when the deal was struck and the contract review and signing was done.

2.  Never, never, allow attorneys to do the business decisions.   They are very necessary for legal issues and legal advice.  Business people make business decisions.

My opinion?........hang 'em. I don't like being flim flammed.   (Not the attorneys..........Well, maybe.)

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