Lending Bank’s Involvement in Marketing Developer’s Property is Questioned

Banking Expert WitnessThis case takes place in Florida and involves a bank that was promoting a property with an appraisal value of $21,000,000, (it had provided funding for) to prospective investors. A developer secured financing from a bank to purchase a piece of property. The developer planned to build a resort on the purchased property. In order to complete these plans, however, the developer looked for investors. Construction and maintenance was scheduled, as the land was essentially bare, lacking any roads, curbs, and sewers. The bank, in order to help promote the property for the developer, showed up and participated in real estate marketing events. When the development did not occur, the investors brought suit against the developers. The plaintiffs (the potential investors) alleged that, in addition to the developer, the bank should be a defendant because it had been particularly active in the marketing and promotion of the property. The plaintiffs argued that the bank had become an agent of the developer, and thus, a part of the suit.

Question(s) For Expert Witness

  • What's the course of action for a normal lender on a commercial real estate project as far as marketing is concerned?

Expert Witness Response E-001395

Expert-ID: E-001395

Generally speaking, banks do not ever get involved in the marketing of a property. I would need to discuss with the attorney more details, though, to find more specific instances of the bank’s possible misconduct. I have worked in banking for over thirty years. I have experience at all levels of management, and understand the complexities of credit reviews and other documentation. My grasp of banking regulations has aided many legal cases before, and I have testified in both federal and state courts.

Expert Witness Response E-004502

I assume that this is some sort of a lender liability suit. It would be highly unusual if the bank had actively pushed the investors to invest with the developers. However, it is customary for the financing sources (banks and others) to be present during marketing functions. Such participation does not indicate the bank’s support of the project beyond the lending relationship between the bank and the borrower. By reviewing the approvals, documents, and correspondence, I would be able to give a more specific answer. I have over thirty-five years of diversified experience in real estate, and I feel comfortable with a case like this. I often deal with matters of lender liability, and I am well versed in high-end lot sale developments and golf course communities.


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