For some business leaders, they may think that they are insulated from the Federal Reserve’s interest rate hikes. However, unless someone lives completely off the grid and is independently wealthy, no one in the United States is truly insulated from these ever-escalating Fed rate hikes. And, these rate hikes have consequences for the new year.
These recent Fed rate hikes are the fastest the Fed has raised interest rates in 40 years. Real estate fraud has already spiked 22% as a result. And, experts expect lawsuit filings to spike by 20% this year alone.
Breach of contracts
The true nexus between Tampa, Florida, commercial and real estate litigation are breach of contract lawsuits. Why? Because they both are intimately connected with interest rates. Most, if not all, commercial contracts and real estate contracts are pegged to some interest rate, which is ultimately dictated or affected by the Fed rate. As such, if a spike in a rate causes one contract to fall through, it likely will cause the other one to fall through as well. Cold feet tend to affect both legs.
The advice is to go through your contracts with a fine-tooth comb. If both parties are not prepared for variable interest rates, make sure your contracts are not pegged to a variable rate. If that cannot be changed, shore up other provisions, like cancellation, damages and arbitration provisions.
Real estate fraud explosion
Historically, rising or chaotic interest rates increase real estate fraud, and now is no different. As uncertainty in the market increases, it causes normally rational actors to act more irrationally, which opens them up to fraud and scams.
The advice here is simple, do your due diligence, and if it sounds too good to be true, it likely is. Make sure you do not contract out of your due diligence provisions, like inspections, etc. And remember, regardless of the situation, a Tampa, Florida, business and commercial law attorney can help you.