“Do I really need a real estate attorney? Can’t my agent just handle everything?”
When buying, selling, investing or developing property, it can be difficult to add another expense of an attorney to the mix. But not having an experienced real estate attorney at this stage of the transaction could prove to be disastrous or extremely expensive to you later on. A real estate transaction, whether it be the purchase and sale of a family home, an investment property, or a large commercial development, is a significant event which, left without proper legal support and guidance, can (and most probably will) result in costly mistakes. Don’t wait until it’s too late; it’s much more efficient to have an attorney help you structure the deal than it is to have an attorney salvage it.
One of the most important times to have an attorney on your side is when drawing up contracts. Real estate contracts are often laden with landmines, even the pre-printed ones approved by various real estate associations like the CAR (California Association of Realtors). One of the most important parts of these contracts are the contingency provisions and their associated deadlines. The contingency sections require both the seller and the buyer to meet and satisfy certain obligations and overcome certain hurdles during intervals throughout the transaction. Not knowing what these obligations or hurdles are or not knowing how difficult they may be to achieve is a fatal and costly mistake.
For buyers, examples are loan approval and inspection contingencies. If the buyer fails to obtain a loan on time, there can be a breach of the agreement. Similarly, if the buyer either fails to conduct inspections in a timely manner or fails to notify the seller of negative results of an inspection, the buyer may be deemed to have waived any objection to the purchase.
Sellers should be aware of assignment and liquidated damages provisions. The seller needs to make sure that the buyer will in fact be the buyer and if not, who the buyer may assign the purchase rights to and under what conditions. The seller would also want to include a liquidated damages provision to ensure that the seller has an adequate remedy if the buyer is in breach.
Other important considerations on behalf of both the seller and buyer are disclosure statements and land use restrictions and limitations. For sellers, it is imperative that full disclosures be made of all known problems, defects and issues with the property (land and building). If a seller knowingly omits a known defect or problem and the buyer later discovers it (sometimes no matter how long afterwards), the seller may be sued for fraud, misrepresentation, and breach of contract. This could be quite costly. For buyers, the disclosure statement provides a roadmap to potential problems and issues with the property (land and building). Therefore, it is incumbent upon the buyer to read and understand the disclosure statement and to question and follow up with anything that stands out or could be an issue.
An attorney is also capable of reviewing title reports and title insurance to make sure that the property is being sold unencumbered; without liens, easements or competing interests; or claims, including (but not limited to):
An attorney will be able to provide counsel as to how to approach these and other title situations, thus saving the buyer from buying into endless litigation over title and liens on the property.
Property ownership, like the structure of a business can take many forms. One of the best and most often used ways to protect and insulate property owners from liability, especially real estate investors, is to take title to the property in the name of an LLC. In this type of structure and acquisition, title and interest in the property is held by a pre-formed LLC. The LLC and its members hold title and interest to the property and are insulated from certain liabilities and tax consequences. This is why investors most often take title to properties in this manner. In order to secure adequate protection to the buyer, a seasoned real estate lawyer is essential.
Similarly, if the property is going to be held by a real estate investment trust (REIT) or a partnership, these transactions require an extra level of sophistication and expertise. A real estate attorney can then ensure this is done properly and that the transaction does not violate the partnership’s, trust’s, or corporation’s charter agreements.
An attorney will be able to file deeds at the county and state levels quickly and efficiently. They will also be able to navigate state regulations so that you can complete the transaction quickly and with mitigated risk.
If your transaction revolves around commercial property, securing an attorney is even more important, as your attorney must be fluent in real property law as well as the complexities of the Uniform Commercial Code (UCC). Commercial law is riddled with red tape. An experienced attorney will be able to cut through it to obtain your tax identification number and establish your corporation or sole proprietorship as a valid business entity for state tax purposes.
A Real Estate Attorney Is the Best Way to Secure Your Investment and Property Ownership. Having an experienced real estate lawyer by your side, especially one who also has an expertise in business law, provides you with the strength and security you need, whether in an investment property, a home or commercial property. Whether you are an investor, developer, contractor, homeowner, or property owner, it is pivotal that you have counsel to help you navigate the surprises that are often hidden in contracts, filings, property transfer, and titles of a new property. Contact us at Steinberg Law to help you close on the next opportunity.