If you or a client are thinking about delving into real estate investing, you should seek the services of a real estate lawyer to help navigate the process, according to a RealtyTrac.com article.
“As an investor, you’ve spent so much time honing your ability to find and successfully fix and flip or buy and hold profitable investments, but when it comes to the legal aspects, you may be unclear how to proceed,” wrote Erica Hackmyer, content writer for direct private real estate lender LendingOne.
Hackmyer discussed these five reasons why hiring a real estate attorney is a must for real estate investors:
Problem #1 Creating Entity Documents — When starting a corporation or LLC, there are articles of incorporation or organization — among other legal documents — that must be considered, according to Hackmyer. It’s not a good idea to complete these documents alone, as pertinent information such as delineation of authority could be inadvertently omitted.
“An attorney will make sure all these documents and paperwork are in order so you avoid having any closing issues or delays,” Hackmyer wrote.
Problem #2 Reviewing Loan Documents — For purchases that will be financed, a real estate attorney can review the loan documents and answer questions about anything the investor finds confusing.
Problem #3 Evaluating Purchase and Sales Contracts — A contract favors the seller, according to Hackmyer, and most buyers may not know how to get out of one (should they need to) once it has been signed. Having a real estate lawyer review the contract provides a level of protection should the deal not go through or takes longer than expected. “For example, most buyers don’t realize that the short inspection period provided on standard real estate contracts can actually be extended,” Hackmyer wrote. “An attorney will be familiar with this and can request more time for a thorough inspection.”
Problem #4 Understanding The Closing Process — Before closing, all underwriter requests must be satisfied. In addition, on closing day, the investor must be sure to bring all necessary documents the lender, title company, or any other party requires, such as a voided check to set up mortgage payments, Hackmyer noted. “A lawyer can offer experienced advice on this overall process and help clarify anything that the investor is not sure about,” she wrote.
Problem #5 Dealing With Title Issues — If any liens against the property come to light during the closing, a real estate attorney will be extremely valuable in negotiating with the seller regarding their satisfaction, according to Hackmyer. If not satisfied before closing, these liens will stay with the property, “…so when the investor acquires the home, they are also acquiring these debts along with it,” she wrote.
Source: “Five Legal Reasons Why Investors Need A Real Estate Attorney,” RealtyTrac.com (Aug. 25, 2016)