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In an increasingly complex business environment, we work with you to anticipate surprises. With Otten Johnson you get seasoned, straightforward advice coupled with the know-how to stay on track. Let’s do great things together.

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Applying Condominium Unit Escrow Deposits Towards Construction Costs: Proceed with Caution

While residential condominium development still has not reached its pre-Great Recession levels, it is growing (albeit slowly). This type of project presents an interesting source of capital for developers in the form of earnest money deposits by condominium unit purchasers while the condominium project is under construction (“Deposits”). To decrease their cost of capital and to help fill their capital stack, a developer may consider applying Deposits toward the cost of construction prior to the closing of the sale of the applicable condominium units. That developer would also likely expect that those applied Deposits will count towards the developer’s equity for purposes of obtaining a construction loan. Developers and their construction lenders considering this application of Deposits should proceed with caution because it might be against the law, irrespective of what the underlying purchase and sale agreement says. It could result in a purchaser’s right to cancel the purchase contract and developer liability for damages and attorney’s fees, and possibly even punitive damages.
Rocky Mountain Real Estate Blog

The latest real estate and land use news and updates.

Colorado Springs: A Millennial Haven?

It is no surprise that Colorado is ranked as the third most popular state for relocating millennials.  However, where in the state these 23-38 year olds are choosing to live just might be.  While Denver may seem to be a logical choice for inbound millennials, as has been the case in the recent years, millennials... Continue Reading...

Rocky Mountain Sign Law Blog

Regulatory, best practices, and other First Amendment news.

Federal Court Denies Challenge to Oakland, California’s “1% for Art” Program

In August, the Ninth Circuit Court of Appeals affirmed a district court’s rejection of claims by the Building Industry Association of the Bay Area that the City of Oakland’s program requiring developers to contribute 1% of the cost of a development project to public art violated the First Amendment.  In an unpublished opinion, the circuit... Continue Reading...

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Success isn't accidental

Every project has a life of its own.

There are always unexpected surprises. Experience is what turns an insurmountable mountain into a speed bump. Our experienced team of legal counselors moves things forward with fewer hassles. Let's walk through a scenario to illustrate how our skill in dealing with complex issues will keep your project moving forward.

Step 1: What's inside your wheelhouse?

Every successful business understands what they're good at. You've spent years honing your craft and amassed a team of talented people to deliver your product or service. Now you need a place to build it.

The Hunt Begins

Step 2: Find the Site and Do the Math

It's time to test the waters and identify options. Finding the right location can be elusive- not to mention it feels like a game of cat and mouse. Nevertheless, you start your hunt for the perfect space.

This is the right time to give us a call so that we can understand your vision and give you the best guidance. As you identify properties, you'll run pro formas to help you evaluate the numbers. And, just in case you're wondering, we speak pro forma. We'll give you guidance on which potential venues pass the sniff test.

Putting the Deal Together

Step 3: Creating the Structure and Mapping Out the Money

This is a really critical step in your planning. Once you've identified a location, it's time to put some serious thought into your structure and related funding stack. We work with you to figure out how best to structure the deal: what is the mix of debt and equity? Who are the players? Who controls the development and makes the decisions? We'll create LOIs (letters of intent) to lock in the team, the funding and the key terms of the deal.

Nearing the Home Stretch

Step 4: Agreements and Implementation

We'll be there with you on the next step as we draft operating agreements, purchase and sale agreements, construction documentation and put loan docs together. At the same time, we keep things moving forward with regulatory approvals, zoning, permits, development agreements and whatever other documents are required for your specific deal.

At this point we might encounter a few unexpected bumps in the road, but after doing this for thirty years, there aren't many surprises we haven't encountered. We'll lead you through the delicate dance around those potholes to keep things moving forward.

Moving Dirt

Step 5: Construction

It's always feels great to dig the shovel in and move first dirt. A grand vision and great planning will ensure a good build. Just in case anything comes up, we're close at hand to resolve any issues or disputes during construction.

What Comes Next?

Step 6: Leveraging the Asset

You've finished the construction and the project is filling up. It's time to decide if you want to hold onto the asset or sell it and move onto the next project. We're happy to help evaluate the financial and legal implications of your options. Congratulations on a successful project!

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