When to Hire a Real Estate Attorney
Whether you’re buying or selling real estate, there are several benefits to hiring an attorney to make sure the details of the deal is in your best interest.
In this article, we’re taking a closer look at when to hire a real estate attorney.
When to Hire a Real Estate Attorney
Most people look forward to the prospect of buying a new home. If all goes well, the buyer is left with a brand-new home and the seller walks away with a significant amount of cash. But that doesn’t mean every transaction is joyful and free from stress. In fact, nothing could be further from the truth.
California’s real estate laws are not only exceptionally complex but also wholly convoluted. Something as simple as missing a key process or overlooking a major red flag can leave one or both parties at risk for significant problems later on down the line. In some cases, it can even render the sale invalid.
Avoiding pitfalls isn’t easy, especially for the average layperson. But the truth is there are few reasons to go it alone, anyhow. It’s far better to know how to recognize when to hire a real estate attorney to help.
If You Aren’t Sure the Deal Is Real
Not every home is worth the asking price. Furthermore, some homes can have hidden problems that end up costing you a small fortune after you buy. And unfortunately, some sellers purposefully mask problems, manipulate people, or over-inflated pricing just to scam or make a quick buck off of an unsuspecting buyer.
Issues like these can cause serious post-sale problems after closing for one or both parties, and it isn’t always easy to navigate them on your own. And while it might seem sensible to go to an accountant instead, the truth is that this is when to hire real estate attorney.
So how do lawyers help, here? Ultimately, they serve as a goalpost to ensure that all participants follow the rule of law. But they can also help you investigate a potential scam, send a legal demand for action, or even take action on your behalf if you believe you have been wronged.
Think of your relationship with a real estate attorney like a form of insurance. If you do complete the sale, you can be sure it was valid and that you got exactly what you were expecting. If something goes wrong, you’ll have plenty of evidence, as well as an official witness who can testify on your behalf, to prove your case in court.
If Your Home Is for Sale by Owner (FSBO)
“For Sale By Owner” simply means that you are selling your home on your own and intend to process all documents yourself, rather than relying on a real estate agent. This can result in a bigger net income from the sale as it eliminates the need to pay an agent a percentage of the net sale amount.
Unfortunately, it also forces you to access, fill out, and handle all legal documents associated with the sale on your own. You become the main contact point for the buyer, the person who reviews all incoming purchase offers, and even the person who must ensure documents contain the right information and language.
You also become the number one person responsible if something goes wrong or a mandatory process is overlooked. For example, purchase offers must contain very specific language in order to be considered valid. Leaving even a portion of that language out of the document might negate the sale at the last minute or even give the buyer the option to sue you for breach of contract.
These kinds of problems can, and often do, happen – especially when homeowners skip contracts, pull documents off of the internet, or try to make verbal arrangements instead. The buyer claims one thing, the homeowner claims another, and it essentially becomes a “he said, she said” situation in court.
If You Aren’t Familiar With Sale Documents or Processes
How often have you skipped reading the terms of service for a website just because it was long, convoluted, or boring? Far too often, people just assume a document is fair and written in their best interests, only to find out they signed away their rights.
Never reading a TOS or contract might be okay when signing up for a site like Facebook or Twitter (albeit you should read the TOS there, too, too). But it is entirely unacceptable in the realm of real estate transactions. Not only is the risk of loss much higher, but the processes, language, and terms used are far more complex.
For example, do you know what non-recourse carve-outs are? Are you familiar with the legal process for filling out a power of sale document or purchase offer? Do you know what language and information need to be included with your final closing contract as per the (very lengthy) Real Estate Settlement Procedures Act (RESPA) and the Internal Revenue Agency (IRA)? Do you know what it means to agree to indemnify the other party in the transaction, or when you should do it?
These terms and processes are complex enough, but they are really the only representative of the basics. Assuming you can “figure it out along the way” or that you know what you are reading is never wise. In fact, if things go sour, most courts won’t accept “I didn’t understand what I was signing” as a defense. They’ll simply tell you that you shouldn’t have signed anything you didn’t understand!
Remember: every document associated with the sale of real estate is, in fact, either a legally binding contract once signed by both parties. It is in everyone’s best interest that you have a real estate attorney review all documents before you use them or sign them – even if it’s just a tentative offer.
Hire a Real Estate Attorney for Complex Transactions
No two real estate transactions are exactly the same. In fact, every situation carries its own special considerations and nuances – and that means some sales are inherently more complex or convoluted than others.
For example, if the owner of a home is involved in an ongoing divorce process, the property may be listed as an asset within a divorce. He or she may be legally unable to sell without permission from their spouse or the courts. Or, they may not even have full ownership of the property in the first place – meaning the buyer needs to make an agreement with both parties at the same time.
Commercial real estate transactions are also notoriously complex. There are additional considerations for local and state building codes, special purchasing processes, zoning laws, and tax laws to consider.
Some areas may disallow special business types (e.g., cannabis or correctional facilities), especially if they are within range of a facility that deals with vulnerable people (e.g., an elementary school). This doesn’t specifically affect the sale itself, necessarily, but it can render the property useless after purchase – and that can be a big loss.
In the case of residential rental property acquisitions, businesses must also consider tenancy laws. For example, an entity that buys a 30-unit apartment building filled with current tenants will ultimately become the landlord for those tenants. They may need to offer the tenants a buy-out or support their lease until it naturally expires.
Conclusion
These are all great reasons for when to hire a real estate attorney, but you don’t have to be involved in a complex transaction in order to benefit. Ultimately, everyone who is buying or selling a property should consult a lawyer at least once to lower the risk of post-sale problems.
You’ll gain peace of mind, assurance, and confidence, too.
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