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Welcome to the Commercial Real Estate Mastery podcast, where you'll learn the correct way to identify, negotiate, perform due diligence on, renegotiate, finance, turn around and operate real estate in today's market -- a market in which volatility creates opportunity, and sound principles defeat fads and bubbles. And your host is a 25-year commercial real estate veteran and co-owner of over $1 billion in real estate assets, Frank Rolfe.
Back in the 1980s, my wife and I had a kung fu class that we attended. We were going to a gym back then, and they had a kung fu session coming up when we were there. And we thought it'd be kind of interesting to learn what kung fu is. This is back in the era, back in the '80s of the show Kung Fu with David Carradine, and people were very interested in martial arts, and so we thought, yeah, we'll go ahead and attend. I forgot, it was like $20, so we'll go to this thing. And it was fascinating. All of these things that people had developed through the centuries, all the weak spots in the human anatomy that you could take advantage of in fights and things to escape, to get your way.
I learned if there's someone who's strangling you, you can grab any of their fingers and bend it backwards, and they immediately let go, because your body just freaks out when someone bends your fingers backwards. We just learned all of these things that we never knew as far as weaknesses in the human anatomy. And when it comes to having lawsuits with cities on commercial real estate, many of these same type of kung fu principles apply. This is Frank Rolfe with the Commercial Real Estate Mastery Podcast. We're gonna talk about the kung fu techniques that municipal lawyers typically use to try and win the day for their client.
Now, why would you ever need a municipal lawyer? You might say. Well, if you buy commercial property, you often have to deal with on a regular basis, City Hall. And City Hall can often be your best friend and very easy to work with. But sometimes City Hall can get confused. You may even have an inspector who goes rogue. And when those things happen, you have two options. You can do nothing and get pummeled with fines and penalties, or you can stand up for yourself. And when you're trying to stand up for yourself, the best way to do that is to hire a municipal lawyer. This is a lawyer that simply sues cities. And because that's all they do, they have learned over time, like those great martial artists, where the weak spots are.
So here are some of the weak spots I've noticed from working with municipal lawyers for the last 30 years. These are some of the things they focus on. I only want to give you this list because maybe you can then guide them if you have a problem, and maybe what some of the options would be, or at least you understand how the process works. So the first thing you'll notice with a municipal lawyer, a good one, a seasoned one, is they're always gonna ask for a jury trial, even if it's nothing, even if it's just a single ticket that is for $100 because something on your commercial property irked the inspector. We've received tickets on ridiculous things. For example, the light bulb in the security light is out.
Well, that shouldn't be something the city is even involved in. But sometimes the inspector, on a granular level, just hates landlords. Maybe this guy is a socialist who just hates business, and he likes to cite people just to irk them. Now, if you turn that ticket over to a municipal lawyer, first, I wouldn't do it on just a single ticket. But if you start getting these on a regular basis, what the guy is gonna do is he's gonna file that ticket. He's gonna want to go to court, but not just go to regular old court. He's gonna file for a jury trial. Now, why is that so punishing? Well, that's because typically the city is in cahoots with the judge, right? They often even office in the same thing. In some cities, the court is part of City Hall. So clearly, they're always gonna go with the city. It doesn't matter what it is.
But when you have a jury trial, the judge doesn't decide the case. He has no input. The jury of your peers has the input. And studies have shown that juries hate City Hall. People just don't like city government very much. So typically, the average juror is gonna look at any case with a negative slant, biased against the city. And the city knows this, and the court knows this. So if you're gonna file for a jury trial, it means the court will lose tons of time in picking the jury, seating the jury, instructing the jury, having the trial, and all these things. They don't want to do it because they're wasting all this time and they know they're gonna lose.As a result, typically, if you ask for a jury trial on those kinds of situations, they will immediately cave. They'll immediately cry uncle and say, "Okay, forget it. You win. We don't want to mess with it," and tear the ticket up.
Another thing, kind of a kung fu mechanic that some of these municipal lawyers like to do, is they like to look for difficulties in city charters. Because most of your cities began as just a bunch of farmers out in a field, maybe in 1930 or '40 or '50 or '60. They didn't know anything about Robert's Rules of Order. And a lot of city charters, if you go back historically, you'll see what happened was the farmers all said, "Yeah, let's form a city." "Okay." But they never had a motion or a second or a vote. And under Robert's Rules of Order, that means there was never any concrete thing accomplished. And most city attorneys know this. So what a lot of municipal lawyers will do to scare the city is they'll say, "Well, I'm gonna first start off by researching all the early formation documents of your city, all your early charter documents," knowing they're gonna find flaws in them. And if they could find a flaw in that, and if they really wanted to escalate it, it could theoretically make the entire city suddenly not a city anymore.
So that's another kind of bend-your-finger-backwards technique that some municipal lawyers will use just to get rid of you, just to get the city to let go, because they really don't want anyone in their underwear drawer prowling through all those early city documents. Another thing you can do, or that municipal lawyers do frequently, is they'll file on people personally. I saw this once down in a big deal in Dallas where they wanted to build a theater in an old abandoned Kmart building in a neighborhood. And yet the city council didn't want to allow this theater to go in because I guess they lived nearby or they had friends who did, and they didn't want this theater because they thought this theater would attract a lot of undesirable people, cause crime, et cetera. But the problem is the property already is zoned for a theater. It's a Kmart store that's abandoned.
So when they refused to give the guy the permit, the guy sued all of those people in City Hall personally. They had them all personally served at their own houses. When they called the city attorney and said, "Hey, we got this lawsuit served at us personally," city attorney said, "Well, I'm sorry, I can't help you on this. This is a personal matter." So now they were looking at having all the legal fees and issues and annoyance of this case. So what'd they do? They all changed their vote. They had an immediate meeting and said, "Oh, no, yeah, we were wrong. Sure, put the theater in the old Kmart." So that's another technique sometimes municipal lawyers will utilize.
Also, sometimes the best thing to do is to just send the fear to the city by filing a suit, because most cities have very tight budgets anymore. They really cannot afford to defend against anything. And it doesn't cost much to file a lawsuit these days. So the municipal lawyer might just file a lawsuit, not because they have any intention of ever actually going to court or doing anything with the suit, just to scare the city, which will then say, Oh, gosh, well, if we actually do have to go to court, we're gonna have to spend a lot of money in legal fees. We don't have that money. So, oh, gosh, what are we gonna do? And on top of that, people know in today's world that if you have a lawsuit, you have discovery. So you'll have all kinds of time lost and annoyance just gathering the documents for the city attorney to do something. So once again, they just don't want to do it.
Now, it's always best, of course, to have a happy life, to be a good neighbor, to get along with everybody. That's clearly what any commercial real estate investor wants to do. It's what they seek. But sometimes the city won't let you do that. The city doesn't want to be nice. They don't want to be friendly. They don't want to play ball. And in those cases, you probably would need a municipal lawyer, and those are some of the techniques they more than likely will use. This is Frank Rolfe with the Commercial Real Estate Mastery podcast. Hope you enjoyed this. Talk to you again soon.