Seder & Chandler, LLP
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New hotel finds Boston space thanks to eminent domain

Experienced real estate developers know that the purchase of commercial real estate for construction projects can be difficult once owners realize there is interest in their property. The Massachusetts Convention Center Authority discovered this recently as it ventured into the Boston real estate market.

The success of the Boston Convention & Exhibition Center in the Seaport District has suffered, according to the convention authority, from a lack of hotel accommodations in the area. Seeking to remedy this situation, the convention authority has been trying to acquire land for construction of a hotel near the convention center.

The convention authority appears to have found a 5.5-acre piece of commercial real estate on D Street that it is planning to acquire by eminent domain. Eminent domain refers to government power to acquire private property for public use. In a process that is similar to commercial real estate transactions, the convention authority reportedly offered $30 million to the owner of the property.

When government or a government authority acquires real estate by eminent domain, the purchase progresses begins with the drafting of a purchase agreement and concludes with a real estate closing. The difference between a private transaction and an acquisition under eminent domain is that a property owner can be forced to sell as long as the government offer represents the fair market value of the property.

Commercial real estate transactions are complex matters that require knowledge and understanding of real estate land use laws and regulations. Developers and owners of commercial real estate must know the impact the local zoning laws have on the construction and use of the property.


Source: The Boston Globe, "Convention center authority to buy site for hotel," Casey Ross, August 1, 2012

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