Litigation Considerations

Part 11 of a 12-part series on Legal Considerations for Your Missouri Leasing Business: What You Should Consider Now, Later, and Throughout the Process

Whether you encounter a tenant who breaches your lease, a contractor who improperly repairs your property, or an individual injured on your property, at some point your company may be faced with the need to pursue or defend against a lawsuit. It is important to understand what your company should consider when it comes to our court system.

What type of paperwork do you have?

The first item to consider when an issue arises is whether the issue is documented.

• If your contractor failed to properly repair the property, do you have a copy of your contract? What about pictures of the repairs?
• Regarding tenant disputes, were your discussions and agreements in writing or, if initially in person or over the phone, did you follow-up with a letter memorializing your discussion? Do you have a copy of any demands for unpaid rent or to do/cease doing some activity?
• Regarding an accident at the property, did you have warnings in place or written rules concerning the source of the accident?

What type of documentation was in place at the time the issue arose and what you have available will be crucial in evaluating whether and how to proceed with a lawsuit, what defenses are available, and whether settlement may be appropriate if your company is served with a court summons.

You will likely need to retain an attorney to represent the company in court.

The second item to consider is that, with very few exceptions – most notably small claims court – you will need to engage an attorney to represent your company when you go to court. In Missouri, non-lawyers may represent themselves in court, but may not represent other individuals and businesses. Remember, your company is a legally distinct “person.”

Do not delay. 

There are time restrictions associated with filing a lawsuit, answering a lawsuit, seeking administrative remedies, and otherwise pursuing your claims.

On the defensive side, depending on what type of court your company is summoned to, you may have 30 days to answer the allegations made against your company or perhaps less time before the company will be expected to appear in court. Failure to observe these time restrictions can result in a default judgment against your company and a forfeiture of your company’s right to defend itself.

On the offensive side, all actions (e.g., breach of contract, eviction, or fraud) are subject to Missouri’s statutes of limitations which require actions be brought within a certain number of years from the time they accrue or not at all. Failure to observe these time restrictions can result in a loss of your right to seek relief from the other party.

Remember that insurance we recommended? Check it.

While certain occurrences, such as an injury at your property, may seem more obvious to trigger insurance coverage, there are many which, while covered, are not as obvious. It’s a good idea to get out those insurance policies and contact your agent or an attorney at the early stages of becoming aware of an issue to see where your coverage stands.

Evictions.

We cannot predict and describe each of the potential types of issues which may affect your company and lead to a lawsuit, but given the nature of real estate leasing, at some point you may be faced with need to evict a tenant. There are several different types of eviction lawsuits you can bring depending on the type of tenant breach, possibility of tenant counterclaims, and type of relief you want (whether you just want the tenant to get current on rent or you want the tenant out regardless of payment). Each type of lawsuit also has its own procedural requirements, including pre-lawsuit notice requirements to the tenant. Failure to observe those procedures can thwart and unnecessarily delay getting a defaulting tenant out of your property. As such, it is a good idea to consult your attorney as early as possible to ensure the quickest and most effective result.

 A final note on being named personally in a lawsuit.

It is important to note that even when all corporate formalities are observed, you haven’t signed any agreement in your own name, you haven’t made specific representations, and you haven’t engaged in improper or nefarious activities, it is still possible that a lawsuit may be directed at both you personally and your company. This sometimes occurs with overzealous litigants or in instances where the other side is not fully apprised of the manner in which you do business. In many instances, your involvement in the lawsuit can be corrected in the early stages of a lawsuit informally, through discussions with the other party, or formally, through a motion filed with the court. (Of course, if you are acting improperly and not observing corporate formalities – you certainly can be held liable for your company’s debts.)

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This post is part of a series designed to help folks understand and navigate the various pitfalls and legal considerations of real estate leasing. If you are facing a lawsuit or need assistance enforcing your rights one of our experienced real estate attorneys would love to meet with you.

In the next post, we’ll discuss when and why it may make sense for you to seek help from an attorney. If you would like to go back and re-read any of our earlier posts, you can find links below.

Introduction
Part 1: Do I Need a Legal Entity?
Part 2: What Type of Legal Entities are Available?
Part 3: Tax Treatment Considerations When Selecting Your Entity
Part 4: Your Entity’s Governing Documents
Part 5: Operational Considerations – Purchasing Real Estate – Title Insurance
Part 6: Operational Considerations – Purchasing Real Estate – Indenture Review
Part 7: Operational Considerations – Purchasing Real Estate – Loan Documentation
Part 8: Observing Corporate Formalities
Part 9: Insurance Considerations
Part 10: Drafting the Right Lease Agreement
Part 11: Litigation Considerations
Part 12: Should I Employ an Attorney to Assist my Real Estate Business?