Betsy L. McCoy, LL.M. ’07, received her degree in Real Property Development from Miami Law. She is an adjunct professor at the law school and serves as Vice President and General Counsel of The Related Group.
Midwesterners tend to hope for the best but prepare for the worst, as the saying goes. In 2005, Betsy McCoy, who had a Tampa law practice representing lenders and developers, could see storm clouds brewing on the horizon.
The Iowa-born McCoy knew that real estate was cyclical, and a downturn was inescapable. A visit to Miami, where she observed a skyline filled with cranes, and a similar visage on the Tampa horizon, was the harbinger of trouble to come.
“I knew at some point the real estate bubble was going to burst, so it wasn't so much an if, but a when,” McCoy says from her office at The Related Group – one of the largest real estate conglomerates in the United States.
“Miami looked like a post-apocalyptic re-development scene. There were towers going up at a fantastic rate. I knew Miami attracted national and international buyers, but I was skeptical as to whether there were enough buyers to support the pace of building. And, I knew Tampa did not have a market to support the volume of development there.
“I cut my teeth as a lawyer by representing lenders through a prior real estate market downturn, and I wanted to position myself to be of value to lenders or developers when the inevitable happened.”
Decision to Pursue an LL.M.
As a result of the savings and loan collapse of the late 1980’s and a slowdown in real estate development in the 1990’s, there were significant real estate foreclosures throughout Florida. From that down cycle, many of the laws that govern real estate industry finance practices were modified. The loan documents of the late 1990s and early 2000s were different and there were no longer single lender deals, but multiple layers of stakeholders involved and hundreds of millions of dollars riding on the projects.
"Those changes in the lending practices were the catalyst for my election to pursue the LL.M. I knew there was going to be a demand for enforcing or restructuring construction loans and I wanted to really dig into the study of current loan documents and packages," McCoy says.
"The Miami Law LL.M. offered a curriculum that was completely on point for what I was looking for, and it was the only one of its kind in the country.”
New Career Path
McCoy could have never imagined how the decision to attend the University of Miami School of Law at that point her career would alter her path and the trajectory of her professional pursuits. When she arrived at Miami Law in 2006, Doug Bischoff was the director of the Real Property Development LL.M. He was also about to become lead counsel for The Related Group. Bill Sklar was the adjunct who taught condo law and a highly regarded expert on real estate, especially condominium development.
By the time McCoy was at Miami Law preparing for the bust cycle in real estate, Jorge Perez, the founder of The Related Group, and Related’s COO, Matthew Allen, were also reading the market tea leaves. They, too, were planning for the worst and looking for ways to gird Related for riding out the storm.
Bischoff knew Perez; Perez knew Jim Davis, a Tampa lawyer who had just made a gubernatorial run; Perez knew Ron Weaver, founder of Stearns, Weaver law firm; McCoy knew Davis and Weaver well. McCoy was asked to come aboard for "a year, a year-and-a-half at the most" to help TRG transition through the hiccup.
The Real Estate Downturn
By early 2008, McCoy had already laid the foundation for just such a collapse and was ahead of the rest of the pack with a strategy to defend the company against significant losses and possible ruin. "Of course, no one could have predicted how hard the market and greater economy would fall," says McCoy. "It was nearly unprecedented.
"The bankruptcy filing of Lehman Brothers in September of 2008 was the domino topple that brought the mortgage lending market to its knees. By the end of that year, it felt as if all hell was breaking loose," she says. "With the loss of the lenders, there was no way for buyers under contract to close. Mortgage loan commitments were being retracted at a breakneck pace. And, suddenly we were getting 30 to 40 claims a day from buyers’ intent on canceling purchase contracts."
TRG had nearly 10,000 condos in its current development cycle to be delivered between 2008 and 2013, but instead, in those years TRG faced and resolved almost 3,000 demands for contract cancellations.
Strategy to Weather the Market Collapse
McCoy’s team, that included Sklar, litigated over 1,500 lawsuits and favorably negotiated, closed or settled another 1,500 or so. McCoy's grand plan worked: TRG only suffered 12 or fewer judgments on the merits in court, and eight of those were due to a bad ruling in a federal court that has since been corrected by The Florida Supreme Court in an appellate case McCoy helped to strategize. Not one TRG project went bankrupt.
“It was not my singular effort; a team at Related all played their part in the turnaround,” says McCoy, “and, as sure as I was that my defense strategies would work, it helped a great deal that TRG’s condominium contracts had been drafted superbly by Gary Saul.”
TRG keeps McCoy on her toes as the company expands internationally, and as always, she is also polishing contingency plans that cover possible scenarios for every possible threat that the natural cycle of real estate may bring.
