Selling or buying investment property can be a very complex and expensive undertaking. To ensure that the real estate transaction is successful, you should consider hiring a residential real estate attorney. Since these real estate professionals understand real estate law, they will help you navigate complications, resolve disputes, and offer legal advice. It is therefore very important to understand when to hire a real estate attorney.
When Do You Need to Hire a Real Estate Attorney?
Knowing when to hire a real estate attorney is very crucial. Here are four circumstances when you should work with a real estate attorney:
- When it’s mandatory – In some states, a licensed real estate attorney must be involved in any real estate transaction. These states include Florida, Maine, New York, Kentucky, Kansas, Alabama, Georgia, Virginia, and Maryland.
- When the real estate deal is complex – An attorney will come in handy when the real estate transaction involves unique or complex issues such as beachfront property, historical rental property, oil and gas rights, riparian rights, zoning, and adverse possession claims.
- When it’s a high-value transaction – When making a major residential property purchase, you will not want to take any chances. One of the things which you must demand is a full home inspection. Your attorney will liaise with the home inspector to ensure that the investment property for sale is in good shape, as well as check for any judgments, encumbrances, and liens.
- When it’s a high-stress situation – When you are financially distressed or mourning the death of a loved one, you are prone to making unreasonable decisions when selling property. A real estate attorney will help you work through the process in a sober way.
So, What Does a Real Estate Attorney Do?
Real estate attorneys play a wide range of roles during the purchase or sale of an investment property.
1. Contract drafting and review
An attorney will put down all the terms of the agreement into an official contract. They will make sure that certain provisions are included in real estate contracts to safeguard their client’s interests, while also complying with federal or state laws. They can also help deal with other issues that may arise such as handling existing tenants and buying a lease-back by the seller.
In the course of the purchase or sale of a property, many documents will emerge. A real estate attorney will review all this real estate paperwork and spot any problematic wordings or legal issues.
Related: 4 Types of Real Estate Contracts: A Beginner’s Guide
2. Reviewing liens
A real estate attorney will conduct a title search on a home to establish if there are any liens or encumbrances against it. This search will show if the seller has the legal right to sell the home and if there is any issue that could block the transaction. For instance, the homeowner might be required to pay off a judgment or lien before they can sell. The attorney will follow up to confirm whether the lien or judgment has been satisfied.
Related: How to Find Out If There Is a Lien on a Property
3. Preparation of mortgage documents
Most beginner real estate investors don’t fully understand mortgages and the legal bindings involved. Real estate attorneys have experience in dealing with mortgages and related documents. Your attorney will explain the terms and conditions outlined in mortgage documents. They might even contact lenders on your behalf and negotiate better terms.
4. Transferring property
A real estate attorney will prepare deeds that will allow the transfer of real estate. The attorney will also review any contracts related to the transaction that are connected to a trust, partnership, or corporation. This will ensure that no terms of the charter agreement are violated.
State and federal laws mention what kind of details must be disclosed about a real estate property. A real estate attorney can request these disclosures on your behalf, or even prepare them when representing the seller. Working with an attorney minimizes your chances of being sued due to a disclosure. An attorney will also include an inspection clause in the buyer’s documents to ensure that any hidden defects are detected before the deal is closed.
There have been numerous cases about income properties that were bought, but no deed was recorded. If a deed is not recorded properly after real estate closing, the buyer cannot claim to be the legal owner of a home. A real estate attorney will see to it that the deed is properly filed and recorded.
How to Find the Right Real Estate Attorney
When it comes to finding a real estate attorney, be sure to begin the selection process early enough. From the time you start thinking of investing in real estate, begin looking for an attorney. You can find a suitable lawyer through referrals from friends, family, or real estate agents. Alternatively, you could call the bar association or visit their site to find a list of attorneys that specialize in real estate.
As you come across different attorneys, be sure to conduct some research about their background, expertise, skills, and experience. A good attorney should not only be licensed but should also have several years of experience in buying or selling real estate. Don’t forget to check for online reviews of the attorney on Google, Yelp, and Zillow.
Face-to-face engagement is also very important before hiring a real estate attorney. This will give you a chance to ask all the questions you have and clarify everything before making any commitment. In addition, meeting the attorney in person will help you determine their character. If you have a gut feeling that something is not right, it would be wise to walk away.
A Few Final Words
The hourly fee charged by real estate attorneys ranges from $150 to $350. Others will simply charge you a flat rate for their services. When you are buying or selling a house, you might be tempted to avoid hiring a real estate attorney in order to cut costs. However, this is a decision that could end up having detrimental consequences. Every real estate investor must know when to hire a real estate attorney and make the decision accordingly.
Related: 5 Legal Real Estate Investing Tips to Know