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Dispute over Michigan prison site delays development

Ensuring that everything is in order before purchasing a commercial real estate site is crucial to avoiding surprises down the road. When real estate transaction disputes do tie up a sale or prevent the planned development, as in the following case, property owners may need to enlist the court system to get everything straightened out.

The development of a 500-acre site in Wayne County, Michigan, is being held up after the City of Detroit claims that a portion of the property is still owned by the city. The property is comprised of land in both Plymouth Township and Northville Township and includes the Robert Scott Correctional Facility and former Detroit House of Corrections farmland.

According to reports, a portion of the land was bought by Plymouth Township in 2011 through a tax foreclosure sale by Wayne County. Plymouth Township apparently bought two parcels of land, a total of 323 acres, in the sale, paying more than $606,000. The parcels were reportedly worth $14 million in 2007, but the value had dropped to $9.6 million in 2009.

The center of the dispute is that Detroit claims that 190 acres were improperly included in the sale and that it still owns that portion of the land. According to reports, the dispute has been held up in part because of the city's bankruptcy issues, but those involved are hopeful that the situation will be resolved soon.

Those involved on the Plymouth Township side say that they followed all of the proper procedures in the sale and that they simply wanted the land because of the geographic features. The township officials had reportedly planned to develop the site for mixed use, including possible trails alongside the creek and commercial real estate for retail and technology companies. While what will happen to the disputed 190 acres remains to be seen, those in Northville Township say that the development of the rest of the site will go ahead regardless of the court's decision.

Source: Observer & Eccentric, "Detroit's claim on old prison stalls Plymouth, Northville development plans" Eric Lawrence, May. 30, 2014

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