In Today’s blog, we will talk about lawyers and their role in real estate. This person will be a key part of your real estate dream team, so you must choose the right one for you. They are vital to the smooth transaction of sales from the opening to the closing of property contracts. I have a video presentation on this subject on my Youtube channel, so feel free to take a look. As real estate investors, you will have to navigate the maze of documents, laws and contracts that are part of the process, and you will need a lawyer that represents your best interests and protects you from any legal issues. They will guide you through the process and determine the legal steps you need to undertake when buying, selling or renting a property. Legal issues can pop up anytime in real estate, so you need professional advice on dealing with them. So Today, we will discuss when to hire a lawyer and what they will do for you.
The majority of real estate transactions are straightforward processes, but there can be issues or problems that arise during or after the transaction. Not all attorneys are lawyers who specialize in real estate transactions, so you want to make sure your lawyer has experience with real estate investors. If you’re investing in another state or country, it’s even more important to have a local lawyer that is up to date with local laws. This is when your lawyer steps in, represents your interests and ensures the transaction is completed. A real estate lawyer can also help you by authorizing the property title deeds and providing advice on a home inspection and other professional services. Once the sale goes through, they will also ensure that the deed is recorded and registered correctly.
One of the more common issues that can develop after buying a home is discovering a problem with a property that the previous owner didn’t inform you about. If the seller had a duty to reveal these defects, a real estate lawyer could handle any litigation that may occur to rectify them. As an investor, you may need a lease agreement drawn up if you’re renting a property. You will also require contracts to hire a contractor or a purchase agreement. If you’re buying directly from a homeowner, you can ask for a referral or perform an online search and make some phone calls. Always interview lawyers and ensure they are also dealing with other real estate investors because they will be able to guide you in a much better way than somebody not working with investors, especially if you are out of state. In Canada, a real estate transaction always has to be completed through a real estate lawyer; in the US, this is not always the case. In some states, a lawyer doesn’t have to perform the sale of the property; you can contact a title company to handle the transaction. Check the state jurisdiction to find out what options are available to you.
The title company is a third-party company that works on behalf of both the lender and the buyer. You hire them to research, provide due diligence and authorize the title deeds of the property you’re buying. This is important because if you buy a home with a higher title company and later you find out that the seller inherited the house and only owns half of the property. The other half belongs to a sibling who turns up on your doorstep wanting 50% of the property. You can imagine what an unpleasant situation that would be for anyone. The title company and the title insurance policy you purchase from them will protect you from any such liability, an important part of the closing process.
I want to take you through the process of what title companies do. This is an area I’m very familiar with in the state of Ohio. I know those title companies will also complete selling and buying transactions in other states. The first thing title companies do is a chain of titles performing research on the complete history of the home’s previous ownership. Searching the ownership titles would have revealed the second owner and halted the sale before you closed on the mortgage. They also look for existing liens, so you won’t find out the hard way that a contractor never received payment for any work completed on the home and is expecting payment from you, the new owner. In most estate surveys, they are lawfully required to close on a house to ensure that the property occupies only the space indicated on the title. They also provide all property taxes paid in full, including the title research and property survey.
You also want to know if your neighbor’s fence is on your property. When this research is complete, the company provides a report called a title abstract. Both you and your lender will receive a copy to review before closing the sale. The abstract is not your title insurance policy; that’s a separate document you get from your agent. title companies also provide two types of title insurance policies, one for you, the buyer and one for the lender. Because the lender has a financial interest in the property, title insurance also protects them; if someone comes forward with a claim for the property that was missed in the title search, generally, the seller of the home you’re buying pays for the title insurance policy. You pay for your lender’s policy. But unlike most insurance policies that require you to pay a yearly or monthly premium, you only have to pay the title insurance once when you close on the property, and you’re then covered for as long as you own the home.
We always purchase title insurance for every home that we sell. It’s important to work with your title company to ensure that your title’s wording accurately describes who has the right to transfer ownership. Your title phrasing may also affect how you pay property taxes and fees if you sell your home in the future. If you are not married, and you are not the only one in the title, it’s easy. You hold the title in sole ownership. It gets more complicated if you are married or live in a community property state, so your title company will help you understand what’s best for you and what the title should say. Talk to your state lawyer to decide what you need. When I started buying and doing fix and flips, I established an LLC company, and everything went through the company, and I had no problems.
However, my first two property sales went through my personal name, and they asked many questions about what to have in the title deed; this service might be called the settlement, and most of the documents you will receive will be called settlement documents. Depending on what your state requires, they appoint a signing agent or real estate lawyer to review all closing documents and finalize the deed and title transfers. Title companies may hold funds in escrow. An escrow account is a savings account managed by a third party, in this case, the title company, which distributes payouts under certain conditions. Escrow accounts are standard in real estate transactions as mortgage lenders want to ensure you have enough funds for certain expenses. For example, if your lender requires several months of expenses held in escrow, the title company will likely manage this account on behalf of you and your lender. All parties involved in buying a house will need to send or receive funds related to the transaction, working closely with your title company agent when you need to transfer funds. They will also assist you with the safest and most convenient transactions.
So, in conclusion, we have outlined an overview of what lawyers can assist you with during a property transaction. Remember, they are a vital part of your real estate dream team. You should always employ them, especially in their local area, as all the requirements for real estate transactions would differ slightly in each area you’re working on. So make sure that you check with a local lawyer. Until next time, invest wisely.
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