Home > business, Real Estate > LINC Real Estate Development News, and Lessons from Recent Court Decision

LINC Real Estate Development News, and Lessons from Recent Court Decision

Happy Friday!

News in local real estate development….

Yesterday, the Grand Rapids Planning Commission approved a $15 Million Project. Article here.

The Project, 70 housing units with retail on the first story, is being developed by LINC – a Grand Rapids based non-profit focused on Community Revitalization.

LINC is great example of a local non-profit doing good work in community revitalization. LINC, per its website defines its views on economic development efforts for local communities:

“to develop the entrepreneurial spirit of our community, boost business ideas and expand the business base of our communities, thus creating viable businesses that strengthen the fabric of our neighborhoods”

Business can strengthen local neighborhoods. That’s what local business should do.

I blog a lot about crowdfunding, and how I believe it has potential to be a tool for social entrepreneurship and community revitalization.

On the flip side, I am always reminded that any time an investor is considering taking part in a local project, they should take great care to perform their own due diligence. They need to understand the risks of what they are buying into.

Lessons for Investors in Real Estate Development: The Dinoto Case.

This morning I was reading a court case decided on May 21st,  regarding a dispute between an investor and a developer (and its various entities).

Dinoto v Nu Way Investments, LLC, et al

You can check out the case here

Brief facts;

  • Dinoto was an investor in a real estate development company owned by a relative of his.
  • Dinoto’s investment was apparently intended to fund the purchase and development of commercial real estate.
  • Ultimately, Dinoto lost his entire investment, and the real estate was foreclosed on.
  • Dinoto thereafter sued for an “Accounting” – apparently he suspected his money had been misused.
  • After undergoing discovery, Dinoto wanted to amend his lawsuit to file various claims for breach of fiduciary duty, embezzlement, and to pierce the corporate veils of various affiliate entities.
  • Ultimately his case was dismissed. The Court of Appeals affirmed the decision.

Lesson from Dinoto

I don’t believe there is any real significant legal holding that came out of this case.

I do think it provides a practical warning for investors in real estate.

Perform your due diligence ahead of time – not afterwards.

Dinoto apparently invested in the project and asked questions later. When it was too late. Finding out answers to key questions is not best left for your lawyer via a lawsuit – where it is going to cost you potentially your entire investment, plus additional tens of thousands of dollars in legal fees.

Questions? Comments?

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com

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