“You shouldn’t be able to read a legal document but one way. If it is subject to more than one interpretation, the draftsman, his or her client, or both will likely find themselves in litigation,” said Raleigh James K. Pendergrass, Jr, founder of Pendergrass Law Firm. “Legal documents must be carefully drafted such that they are free of ambiguity and errors.”
Pendergrass and his partner, Bernard “Rick” Richards, Jr., close their share of transactions but also litigate real estate disputes. Many of those disputes are the result of defects in the drafting or recording of documents prepared by attorneys in real estate and business transactions. Those defects often result in access issues, boundary disputes, condominium, and other title failures, lien perfection issues, restrictive covenant disputes, estate conflicts, and countless other issues. The defects may also arise when land developers, builders, or property owners try to represent themselves.
“We have litigated virtually every real estate matter you can think of,” said Pendergrass. “Our litigation practice grew out of our collective experience in closing hundreds of transactions and litigating more than a dozen lawsuits Pendergrass successfully defended in the late 1980s involving a single property.
“As a result of those experiences, others began to call on us to prosecute or defend real estate cases,” he continued. “Because of our having closed so many deals ourselves, we have been able to litigate deals gone bad effectively and efficiently when problems arise.”
Pendergrass and Richards have a clear division of labor. Richards spends much of his time researching the public record in the chain(s) of title for the property or properties in question and provides that information to Pendergrass, who decides how to use that information to resolve the matter.
“I’m the linear thinker down on the ground digging through the historical ‘weeds,’” explained Richards. “Jim figures out what to do with what I find looking at each matter from a 40,000-foot view.”
Pendergrass is a native of Sanford, NC. He earned his Juris Doctor from Wake Forest University Law School. He has been practicing for 33 years. Richards is a Raleigh native who earned his Juris Doctor from Campbell Law School and has 25 years of experience. They have handled matters in 95 of the state’s 100 counties.
Both are certified by the NC State Bar as specialists in residential, business, commercial and industrial transactions.
“Board certification lets our clients know we are serious about what we do. It gives us the ability to hold ourselves out to clients as having a skill in a particular area,” said Pendergrass. “We often testify as expert witnesses, defend lawyers for legal malpractice and consult with other attorneys handling real estate matters.
“As a result of our practice focus, we can identify the issue quickly. We rarely find ourselves searching through the books looking for the answer. We either know there is a case that is precedent for our situation, or we are satisfied there is no case on the issue.
“To be effective in resolving real estate matters, one has to have a working knowledge of many substantive areas of the law,” he added. “Those areas include, but are not limited to, estate law, lien law, municipal law, bankruptcy law, corporate partnership, and limited liability company law, tax law, family law, and even criminal law. We also have to know and understand civil and appellate procedure when litigation is involved.”
A HOLISTIC APPROACH
Richards was in-house counsel for a title company for several years and knows what a title underwriter is going to look for. He also noted most litigators do not close transactions and are therefore unfamiliar with that process.
Pendergrass has litigated transactional disputes for over three decades.
“Understanding the deal is a must for litigating a disputed transaction,” said Pendergrass. “Having closed all kinds of deals, we know what the ‘next step’ is in the deal process. That experience is invaluable to us in navigating the litigation of a dispute when a deal goes bad.
“We know what is likely to come up in the case without having to consult with somebody down the hall or outside the firm that handles the transactional side,” he added. “So, when we get to the courtroom, there is a comfort level in questioning a witness if we know what his or her answer ought to be as opposed to not knowing a particular question should be asked.”
“Some of the more complex problems we have handled arose out of defects in the formation of condominiums,” explained Pendergrass. “Those defects often lie dormant for years. This often arises because the lawyer responsible for the formation of the condominium is also the same lawyer that handled the initial closings when the purported condos were sold for the first time.
“Those transactions are typically insured by a title insurer that is not made aware of the defect,” he added. In future transactions, other lawyers then ‘tack’ to those policies of insurance, and the problem only gets discovered when some other lawyer performs a full title search and evaluates the condominium formation documents. Tack searches can also perpetuate other title issues, not just those in the area of condominiums.”
“Details matter,” explained Richards, “especially in property transactions. Everything about a property transaction involves details.”
“The details also matter in litigation,” added Pendergrass. “From the legal theory one chooses to solve a problem to drafting pleadings in the litigation, particularly the wording of the final judgment, all of the details matter.”
CONVERGENCE OF HISTORY AND ENGLISH
Richards graduated from the University of Georgia with a double degree in English and history. The convergence of those majors has been beneficial.
“A title search is applied history. I’m looking back in time at what people apparently intended to do and how they documented that intention in order to piece those two together,” explained Richards. “We’ve had to take a couple of titles back to the original Patents that would have been granted by the colonial governor at the time in the 1700s. Another memorable title search led us to the Department of Archives, where we found a letter from Robert E. Lee.”
EARTH IS A PUZZLE
“I view the earth as a 3-D puzzle,” concluded Pendergrass. “Typically, there is something wrong with a particular piece of that puzzle when we are asked to get involved. Our role is to take the rough edges off those puzzle pieces and fit the earth back together again.”