If you plan to begin a career in real estate, you don’t need to take a course on real estate law to get started, but you do need to know basic factors of the real estate business before getting started. Many investors who plan to finance several investments at one time like to have a real estate lawyer on hand to help them through the legalities of the real estate business, but for new investors who cannot afford a full-time attorney, keeping simple real estate law facts in mind will help smooth out the investment process.
Contract Terms
The most important piece of advice that a real estate lawyer will give is to know the terms of a contract negotiation. Especially if you are an investor who plans to work without a real estate agent, you will want to do your homework before signing any contracts for bids on homes to purchase. The most important factors in the binding contract are the price of the home, meaning the amount of bid you are placing on the home, as well as the terms of negotiation, such as closing date, move out date, and any necessary repairs to be made. A real estate law contract should note that the buyer will do an inspection and if the inspection finds problems with habitability the seller either has to fix the problem or the buyer can back out of the contract. If your real estate contract does not cover this, you should definitely contact a real estate lawyer or real estate agent to add this piece in. Remember that if you want a potential negotiation between the buyer and seller it needs to be stated in the initial bid contract. If this is not done, the seller’s agent can say that it was not written in the contract and is not required to be done before the closing.
Using a lawyer or agent
Remember that you do not always need to buy the services of a real estate lawyer or agent, especially if you are investing one property at a time, but it is best to have a lawyer or agent present for the closing of the house. Unless you feel extremely comfortable with the real estate investment process, it is important to have a lawyer or agent present to review paperwork or answer questions as you go through the process. Real estate attorneys and agents are responsible for knowing the ins and outs of the closing process and can explain paperwork that the title company has you quickly sign. This way you don’t miss any important notes before the closing is over.
Mortgage terms
An important piece of law advice to keep in mind is that when you sign the promissory note to the mortgage company, you are signing a legally binding contract. If you break that contract by not making payment on time or by failing to simply pay taxes or insurance on the home, the home can be seized. Remember that until you pay the mortgage company in full they legally own that home, which is stated in the promissory note. This means they own the deed on the home and have full rights to that home if you back out of your promise for payment.
Power of Attorney
If you are planning to go into business with someone else or are buying a house with a spouse or friend who will not be present at the time of closing, you will need to acquire a power of attorney in order to finish the closing of the house. Simply put, a power of attorney will allow you to sign another person’s name onto the deed and title of the house without them being present. Often times, small real estate investment teams will place two persons on the deed of the house, but to save someone from having to be there, a power of attorney can help. Other times a spouse will use a power of attorney if the other spouse will be out of town or overseas during the closing transaction. In order to have a power of attorney drawn up, you will need to visit a real estate lawyer or legal aide in the same state you plan to purchase the property. Make sure to go to the state where the property will be purchased, as some states allow for a general power of attorney to purchase a property while others will require a special power of attorney for that one piece of property.
Foreclosures
If you plan to invest in foreclosed, seized or probate properties, it is best to consult with someone in real estate law to ask about the ins and outs of dealing with the court system. Remember that these properties have been seized by a government agency and may require a few more loopholes before you are able to purchase the property. Having a lawyer or a special real estate agent present can keep the process moving along smoothly.
