Why a Real Estate Attorney Should Be on Your Investment Team
In many states, the presence of a real estate attorney is mandatory at closing. Even if your state doesn’t require a real estate lawyer, having legal representation is a wise choice.
When venturing into real estate investments, finding the right attorney is crucial. A real estate attorney plays a vital role in guiding you through the complexities of the process.
Should legal issues arise during real estate transactions, having an expert in real estate law ensures your interests are protected.
Understanding the Role of a Real Estate Attorney
Just as doctors have specializations, lawyers also focus on specific areas of law.
When it comes to buying and selling property, it’s imperative to engage a dedicated real estate attorney to provide advice and safeguard your interests. These attorneys possess in-depth knowledge of property law, including state-specific regulations.
If you are considering out-of-state investments, seek attorneys licensed to practice in those states.
Services Provided by a Real Estate Attorney
A real estate attorney takes on various responsibilities related to real estate law. Their tasks may include:
1. Legal Document Preparation
Even seemingly straightforward real estate transactions involve a significant amount of paperwork.
More complex situations entail even more documentation. For example, a real estate lawyer collaborates with a title company to conduct a title search to ensure the property has a clear title free from third-party claims.
Should any title issues surface, the attorney works with your mortgage lender and relevant parties to address them.
Ensuring the accuracy of all legal documents is a primary duty of real estate attorneys. Given that real estate is often a substantial investment, working with a licensed attorney is crucial.
2. Contract Review
The inception of a real estate deal begins with the purchase contract. While real estate agents often draft the initial contract, it is crucial for real estate lawyers to meticulously review it.
The purchase contract delineates the responsibilities of both buyer and seller.
The attorney may also draft riders or amendments to accommodate specific client needs.
These amendments may encompass financing and appraisal contingencies, the inclusion or exclusion of personal property, and unique provisions pertinent to the property in question.
3. Dispute Resolution
Real estate transactions don’t always proceed without hiccups. Issues like property liens, title disputes, or boundary disputes can arise.
A real estate attorney works diligently to resolve these disputes, ensuring the smooth progression of your real estate transaction.
4. Business Formation
Choosing the appropriate business structure for investment properties is essential to protect against liability.
Your real estate attorney will collaborate with you to determine whether an LLC, partnership, or another business entity best suits your legal needs.
5. Financing and Refinancing
Real estate attorneys can provide guidance on mortgage financing and the timing of mortgage loan refinancing.
They may work in conjunction with mortgage lenders or commercial real estate lenders to facilitate financing.
Additionally, these attorneys offer insights into related legal matters, such as tax implications when selling property.
6. Equity and Debt Investment Structures
Real estate lawyers aid clients in structuring and managing equity and debt investments, with a focus on maximizing returns.
7. Drafting Tenant Leases
To prevent potential disputes, your real estate lawyer should draft robust lease agreements that clearly protect the interests of all parties involved. While using a generic lease agreement may seem cost-effective for landlords, it can prove to be a costly mistake.
A legal professional well-versed in real estate law ensures that your real property receives the utmost protection allowed by law.
8. Handling Tenant Complaints
In instances where tenants raise concerns, it’s crucial to determine whether the complaint aligns with the terms of the lease or applicable local, state, or federal laws.
Your attorney will elucidate the legal rights and responsibilities of both landlords and tenants and assess whether the complaint breaches the lease agreement.
The attorney will take proactive measures to resolve the complaint before it escalates into costly litigation.
9. Property Tax Advice
Property ownership entails property tax obligations.
Your current property tax assessment may not accurately reflect market conditions. Your lawyer can advise you on pursuing a property tax appeal to contest an overvalued assessment.
Benefits of Collaborating With a Real Estate Attorney
When you include a real estate attorney on your investment team, they can manage nearly every aspect of the process, affording you more time to focus on achieving a favorable return on your investment.
In the event of issues arising before, during, or after a property purchase, you can rely on your real estate lawyer to resolve them.
These attorneys also provide insights on withdrawing from a deal to avoid costly mistakes. Ultimately, the real estate attorney you hire consistently works to safeguard your best interests.
Cost of Hiring a Real Estate Attorney
While the services of a real estate attorney may come at a cost, it’s essential to remember that you get what you pay for.
Determining your budget for legal fees should be a top consideration when contemplating the hiring of an attorney for your investment team.
Real estate lawyers may charge hourly rates or flat fees. Although more experienced attorneys might command higher fees, their expertise proves invaluable.
Finding the Right Real Estate Attorney
While searching online is a viable starting point, the goal is to locate a proficient real estate lawyer, not just an average one.
Seeking recommendations from professionals within the real estate industry, such as real estate agents or fellow investors, can be highly beneficial.
They possess insights into the best real estate attorneys in your area. Additionally, friends or family with real estate experience can offer valuable advice.
When seeking an attorney, look for those with experience in your specific field. For instance, if you’re investing in commercial property, prioritize attorneys specializing in that domain.
Avoid attorneys who handle various types of real estate work, as they may be more prone to errors due to the diverse nature of real estate investing.
Opting for smaller practices over larger firms can be advantageous, as you will have direct interaction with one attorney rather than being assigned to less experienced associates.
Questions to Ask a Real Estate Attorney
Conduct interviews before making a decision on which real estate attorney to hire. You are seeking a long-term professional advisor, so understanding their role is crucial. Pose the following questions:
- What is your fee structure? Do you charge hourly rates or flat fees?
- Where did you attend law school?
- What is your experience in residential, commercial, or industrial real estate investing?
- How many real estate transactions have you successfully closed?
- Do you frequently handle eviction cases in court?
- Are there any potential conflicts of interest to be aware of?
Long-Term Savings With a Real Estate Attorney
While legal fees may seem like an added expense, they pale in comparison to the cost of losing a property due to avoidable legal issues.
Real estate investing aims to maximize profits while minimizing risks, and the right real estate attorney plays a crucial role in achieving both objectives.
By incorporating a real estate attorney into your investment team, you can anticipate long-term savings, as their work can help mitigate future problems.
Once a real estate attorney is on board, you gain access to expert advice on every facet of your investment strategy, all while safeguarding your interests. Savvy investors recognize the invaluable role lawyers play when dealing with the intricate legal aspects of property transactions.