An attorney is an essential part of your real estate investing dream team, providing both legal protection and guidance throughout the entire process of buying, owning, and selling properties.
What Do They Do?
Your attorney will play a variety of roles, both during and after your purchase.
Here’s what attorneys typically handle:
- Helping You Set Up and Maintain Your Entity – If you’re setting up an LLC or other entity for asset protection or tax purposes, your attorney will help you structure it properly. This is often done prior to buying a property. Maintaining that entity over time, including filing necessary paperwork and ensuring compliance, is also something they can manage or help you do correctly on your own.
- A Significant Contributor to Your Asset Protection Plan – A good attorney will ensure that your assets are protected. This includes not just setting up entities but also making sure that all your legal documents are properly executed to shield you from and limit your personal liability.
- Helping You Understand the Contract – Purchase agreements can be complex, and your real estate agent isn’t equipped to give you legal advice. Your attorney can explain any clauses you don’t understand and suggest changes or additions to protect your interests.
- Preparing Paperwork – Beyond the purchase contract, attorneys help prepare leases, loan documents when doing private money loans and hard money loans, and other key paperwork that you’ll need during your real estate investment journey.
- Title Review and Suggestions – While the title company handles most title work, your attorney can review the title policy and provide legal advice on any issues or concerns that arise. They can also help resolve disputes over title or boundary issues.
- Legal Advice During Purchase, Ownership, and Sale – Attorneys aren’t just for closing; they can offer guidance throughout your ownership. This includes resolving disputes with tenants, advising on landlord-tenant law, structuring partnership agreements, and making sure all your transactions are legally sound when you buy or sell.
- Handling Evictions – Evictions can be tricky, especially if the tenant disputes the process. An attorney will ensure that you follow local laws, file the correct paperwork, and represent you in court if necessary.
When Do You Involve Them?
You’ll likely need an attorney before, during, and after the purchase process.
- Before you buy, they can help set up your entity, review the contract, and provide legal advice on the title.
- After the property is yours, they can assist with lease agreements, tenant disputes, and other ongoing legal matters.
Why Are They Important?
Having the right legal advice is critical in real estate investing. Mistakes in contracts, title issues, or tenant disputes can be costly, both financially and in terms of time.
Here’s why they’re crucial:
- Ensuring Legal Compliance – They make sure all your transactions and dealings are legally compliant, protecting you from lawsuits or regulatory penalties.
- Protecting Your Assets – They help you set up the correct legal structures to minimize personal liability and safeguard your real estate portfolio.
- Preventing Costly Mistakes – By catching legal issues early, attorneys can save you from costly mistakes that could damage your business or delay transactions.
Other Items of Note
- May Be Different Attorneys with Different Specialties – You might need to work with different attorneys who specialize in specific areas. For example, you may use one attorney for setting up your LLC, one for reviewing title work and another for handling tenant evictions. Make sure each attorney has expertise in the specific areas you need help with.
- Consider Ongoing Legal Counsel – As your portfolio grows, it may make sense to retain an attorney for ongoing legal advice. This can be especially useful if you regularly deal with tenant issues, contract negotiations, or other complex legal matters.