Real Estate Investment – Why Should You Hire a Real Estate Lawyer
Would you design your house without an architect? If you have the necessary expertise and knowledge, sure. But if you don't, it's better to hire a professional who does.
It's the same in the case of real estate investment. Buying real estate involves several moving parts – negotiation, inspection, making contracts, reviewing contracts, and closing.
If you don't possess the necessary expertise to handle all the parts, you'll fall short of buying the real estate of your dreams or get stuck with real estate surrounded by legal issues.
When you’re on the edge of making one of your life's most significant financial decisions, it's better to have as much professional help as possible; it’s better to have a real estate attorney by your side.
Read on to learn the What, Why, When, and How of working with a real estate attorney and closing on the property of your dreams.
What's a Real Estate Lawyer?
A real estate lawyer is a person who specializes in real estate transactions. They are legally authorized to prepare and review documents and contracts related to the sale and purchase of a home. A real estate attorney can also be in charge of the closing process.
Closing is the last step of the home-buying process, where the owner transfers their property ownership to the buyer.
And we use Rocket Lawyer for our attorney needs.
The buyer and seller can hire a lawyer to represent their interests in the home-buying process. An attorney can also represent a lender if a home is purchased with a mortgage loan.
Why Should You Hire a Real Estate Lawyer?
If you're under significant debt, you need a debt settlement attorney; if you're facing a criminal charge, you need a criminal defense attorney; if you're looking to plan your taxes, you need a tax attorney.
Similarly, if you're considering real estate investment, you need a real estate attorney.
Here are some reasons why –
- They will perform a thorough check of the land title and approvals.
- They will make sure the purchase contract is in your best interest.
- They will help identify any contingencies you may have overlooked.
- They can help you counter the legal team of the builder more effectively in case of any dispute.
- They can make the builder legally liable if a real estate project gets delayed or commitments are not fulfilled.
- In most cases, legal due diligence in advance saves you from future litigation.
When Would You Need a Real Estate Attorney?
Real estate investment is a significant financial decision that can benefit you for years. And, with severe financial investments come loads of paperwork and legalities.
Here are some ways a real estate attorney can be helpful –
Reviewing Purchase Contract
Although real estate agents usually prepare purchase contracts, a lawyer can review the contract terms. A proper review can help you avoid significant problems down the line.
If you're planning on involving a lawyer at this stage, it's essential to give them a few days, if possible, to review the contract before it is finalized.
In a disclosure form, sellers check off features of their property and rates and describe its condition.
To ensure that the seller includes all necessary information in the disclosure form, you must be well-versed in your state's disclosure laws. Without it, scammers may use technical jargon to deceive you and conceal flaws in their property.
If you don't know the laws or don't have the time to read and understand them, hiring a real estate attorney is the easier option. They can help you review the disclosure, ensuring your best interest.
Some states require a real estate lawyer to be present at closing.
The States that demand an attorney include:
- The District of Columbia
- New Hampshire
- New Jersey
- New York
- North Dakota
- Rhode Island
- South Carolina
- Virginia, and
- West Virginia
Even if you are not on the list, it's a good idea to retain an expert pair of eyes on your side. There are several moving parts of the closing process, like mortgage, title insurance, the deed, and final inspection, and a lot can go wrong without proper guidance.
A real estate lawyer can assist you in reviewing, adjusting, and preparing all closing documents, ensuring a timely and successful transaction.
Some Miscellaneous Scenarios
The following scenarios are rare; however, if you encounter any of them, a lawyer's negotiation and legal skills can come in handy –
- You're buying a house in a different state.
- You're purchasing or selling a home with serious problems, like structural damage.
- You're looking to buy a home that is part of a particular type of sale, such as an estate sale, auction, short sale, or purchase from a bank.
After buying, if you want to lease out your property, a real estate attorney can help you learn the laws that govern your investment.
They can also assist in drawing up leasing terms, preventing disputes with your tenants, and advising on ways to avoid legal problems in the future.
If you feel that something could go wrong in your home-buying process, it's not uncommon. You're making a significant financial decision, and stress is only natural, especially if you are new to the process.
But when you have an attorney by your side, you can be sure that all your bases are covered.
With a good legal professional, you can be confident that even if the transaction turns out badly, you will have someone looking out for your best interests and who can help you work through a difficult situation. A good legal professional can ensure mental peace during this significant time of your life.
How to Find a Real Estate Attorney
Regardless of the type of attorney you require – debt settlement attorney, criminal defense attorney, tax attorney, or real estate attorney – it is essential to establish a rigorous screening procedure to pick someone dependable.
Here are some steps that you can take to find a reliable and credible attorney –
- Ask for recommendations: If your friend or a family member recently purchased or sold a home and had an attorney, consider asking who they worked with and their experience.
- Use your state's Bar association directory: You can use the American Bar Association's directory to find your state's Bar association website and locate lawyers in your area who practice real estate law.
- Use an online legal review site: Several sites like Avvo, Martindale, Findlaw, and more can provide you with information on attorneys in your area, such as their specialties, fee structures, and feedback from previous clients.
Make a list of potential lawyers and set an interview with each of them to compare their approach, rates, and availability.
Some questions that you should ask are –
- Do you charge by the hour or a flat fee? – You'll find out the fee structure of lawyers in your area and their price range.
- How available can you be during the buying process? It's crucial to find out because when you're in the middle of heated negotiation, you'll need your lawyer to advise you, talk to the seller, and resolve any issues.
- How many real estate investments do you supervise in a year? You’ll get insight into the attorney's overall experience with real estate transactions. The number that the attorney says will also help you determine if they are unpopular, in-demand, or over-committed and less likely to provide you with attention.
- How are you usually involved in real estate transactions? The question will assist you in determining the role that the attorney prefers and will most likely play in your real estate transaction. If their usual role does not match your expectations, you can keep looking for other options.
How Much Does a Real Estate Attorney Cost?
Real estate attorney charges vary, but here are some ballparks to give you an idea:
- Fixed hourly rate: Real estate attorneys often charge between $150 to $350 per hour. However, the cost can vary depending on the attorney's level of experience and your location.
- Fixed rates for specific services: An attorney can charge a flat fee for particular services, say $500 – $1,500, to conduct a home closing. The price, however, may vary on the sale price of the property in question.
Hiring any kind of attorney, be it a debt settlement attorney or real estate lawyer, depends on your personal preferences and ability to pay a little more.
If you have the knowledge and skills to find your way through the laws and handle negotiations, you can opt for the DIY way.
However, if you're new and lack the necessary skills, it's better to rely on a professional. It'll cost you some money but can save you from significant issues in the long run.
Remember: Even if you use a real estate agent (or a lawyer), learning as much as possible about the home-buying process is wise. For example, researching the market value of similar homes in the area will help you shield yourself against aggressive realtors who might urge you to bid high. In addition, studying the contents of the various real estate documents in advance will help you avoid the “sign here” anxiety.
Author’s Bio: This guest post was written by Lyle Solomon. Lyle has considerable litigation experience as well as substantial hands-on knowledge and expertise in legal analysis and writing. Since 2003, he has been a member of the State Bar of California. In 1998, he graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California, and now serves as a principal attorney for the Oak View Law Group in California. He has contributed to publications such as Entrepreneur, All Business, US Chamber, Finance Magnates, Next Avenue, and many more.
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