Information on Real Estate Law

Real Estate Law is the section of law concerned with real estate transactions. Real estate is something that is permanently attached to the land and is also known as an improvement. Real property can be any building on land, such as a house or a garage, or substances beneath the land, such as natural oil or minerals. Real estate transactions are anything to do with this type of property, and real estate law encompasses the federal statutes, as well as common laws, that govern these transactions. Real estate law pertains to a variety of legal situations having to do with financing, developing, leasing, selling, acquiring, and constructing commercial and residential property.

When Would I Need a Real Estate Attorney?

Real estate attorneys are always helpful. Unlike real estate agents or brokers who are getting paid on commission when they close a deal, a lawyer will be working for you and can give you unbiased legal information without having to push you to close the deal. Since real estate agents are finished with the job as soon as you finalize the deal, they generally do not worry about the “what ifs” of buying property. A lawyer, however, will help you make certain that your purchase and documentation truly reflect what you want.

If you decide not to hire an attorney when buying real estate, you may encounter future legal problems which require you to find legal aid anyways. There are often disagreements concerning contracts, titles, leases, and other legal documents. If you are entering a complicated agreement in which you foresee potential legal disagreements, it is best to hire an attorney in the beginning of the process.

What is Commercial Real Estate?

Commercial real estate is any land or property that is either used for retail, offices, hotels, industry, apartments, or any vacant land that can be used for these types of establishments. Basically, commercial real estate is anything and everything except for single family homes and lots of land that can potentially be single family homes.

How do I go About Buying Commercial Real Estate?

Buying commercial real estate begins with a contract drafted with the agreement of the buyer and seller. As with any legal document, it is recommended that you find an experienced attorney to help you make certain your interests are protected. Occasionally, people choose to draft a letter of intent before creating a creating a contract. A letter of intent ensures that the buyer and seller agree on the major terms of the transaction before they attempt to draft a contract.

After signing a contract, it is important to be certain that you gain title insurance, which is full legal ownership of the property you are buying. This removes much of the risk from buying real estate.

How do Commercial Leases Work?

Commercial leases exist between the tenant and lessee and determine the conditions in which the tenant uses the commercial real estate he is renting. The rent in a commercial lease is often determined by square footage of the space, although at other times it includes a portion of the tenant’s gross sales or a contribution to maintain the common areas of a shopping center or other retails space.

What Should be in a Real Estate Contract?

A commercial real estate contract should always include:

An exact description of the real estate you are buying, including any buildings or land.
The price of the property and how it will be paid (whether in full at closing or in increments)
A list of any non-real estate property included in the transaction such as industrial equipment or personal property
Any contingencies to be met before completing the purchase, for example, if you are depending on a loan or mortgage before buying the property
How taxes and utilities will be allocated
Any evidence or titles the seller will provide
The closing date
What happens if one party defaults

If you decide to hire a lawyer, which is strongly recommended, he may also advise you to include other stipulations in the contract before closing so that your interests are properly protected.

What Should I Know About My Property?

Owning real property lets you do various things with the land. You can use it, let others use it by renting or leasing, give it away, sell it, or use it as collateral. Because of the law, however, there are certain things you cannot do.

Real Estate laws forbid certain actions on the part of real estate owners. Some things that are regulated for real estate owners include:

Property usage. The rules in place for this are called zoning, which is a legal way of deciding the correct usage of the property. Certain areas are residential while others can be industrial, agricultural, or commercial. These zoning restrictions generally include construction rules as well.
Environmental hazards. The government regulates what materials can be stored on certain property as well as how to dispose of hazardous materials (such as asbestos).
Public easement and right of way. The government sometimes requires that certain portions of real property must be left open for public use. Public easement and right of way is generally used to provide access to other property and to provide for public necessities such as telephone or electrical lines.

In addition to government regulations, there are also other legal matters that property owners should concern themselves with. As a property owner,

You may be under a mortgage, which must be paid in order to keep your property.
If you fall into debt, a lien can be placed against your property. A lien is a security interest granted over property to ensure the payment of a debt.
You may be liable to any person injured on your property as a result of your negligence. For example, if someone trips on exposed wire in your store, he may sue you for the damages.

What is Closing?

The closing of a piece of property is the time at which both the buyer and seller meet to finalize the transaction. All unsigned legal documents are taken care of and the deed is transferred from the seller to the buyer, making him the owner.

Closing is also where the buyer signs any mortgage papers and also pays title insurance as well as any taxes to the state. Closings are often held through an “escrow”. An escrow is a third party which makes certain that all money and documents are distributed to both parties correctly. An escrow is commonly a lawyer or title insurance company.

My Closing is Going Poorly, Can a Lawyer Help Me?

Many buyers encounter problems when buying a home or any piece of property. Sellers sometimes refuse to close, sellers and buyers cannot agree on terms of a contract, and problems with the property occur before closing.

If you have encountered any of these problems, or anything similar during closing, an attorney can aid you greatly. When the seller refuses to close on a piece of property, an attorney can help you bring them to court and seek an order of specific performance, which requires the seller to transfer the property at an agreed upon price. A lawyer can also help you sue for monetary damages if you feel the seller has caused you to lose money in any unnecessary way.

If problems occur with the property before closing, such as fire ruining part of a house, the seller is assumed responsible and the buyer is allowed to cancel the transaction if the seller does not repair the damage. It is best to decide upon what to do in a situation such s this in a contract before encountering problems which could bring you to court.

If your closing is not going as planned, you should hire a lawyer immediately to avoid any additional problems. Disagreements and unexpected occurrences are common, but can be serious problems if not resolved with the right kind of help.

I am Buying/Selling a Home. What Should be in the Contract?

The contract, according to the buyer, should include an inspection of the property that meets the buyer’s expectations. He will want to know everything he can about the property, and can put an end to the deal if, after inspection, he is unable to finance the property, finds any serious environmental or mechanical problems with the property, or discovers any serious problems after signing the contract that could not have known about before.

According to the seller, the contract should include the details of the closing cost, including any escrow fees, as well as specify that the seller is entitled to damages if the buyer does not maintain his end of the agreement, accurate statements by the seller concerning the property, and the assurance that the buyer’s contingencies will be taken care of.

Both parties should be clear about the date of closing as well as the closing costs.

What if I Buy a House, and Discover a Problem I was not Told About?

This is a common problem for homeowners. The proper course of action is determined by the type of problem you encounter. You should read the seller’s disclosure statements as thoroughly as possible; if the problem is not contained in these and should have been, you should hire an attorney and file a lawsuit in hopes of receiving damages. If it is a problem outside the property, such as something you did not notice in the neighborhood, then it is entirely your problem and has nothing to do with the seller. It is best to not wait until closing to search for problems with the property, since anything you find before may change your decision regarding the purchase. However, if you do find something that you should have been told about by the seller and that constitutes a violation of the contract then a lawsuit may be justified. Ask an experienced attorney for advice.

What do I Need to Know About Mortgages?

A mortgage is a loan that allows you to buy real estate. Most people do not have enough money to purchase a home and must borrow money in the form of a mortgage that they can pay off over time.

Most people choose between four main types of mortgages when financing their home:

Fixed Rate Mortgages are mortgages which require a fixed payment based on a fixed interest rate determined beforehand. Fixed rate mortgages can either benefit or harm the borrower, depending on the direction of the market after the mortgage is taken out. If interest rates rise, the borrower benefits. If interest rates fall, then the borrower is not benefiting from the agreement. In this scenario, homeowners often choose to refinance their homes at lower interest rates.
Adjustable Rate Mortgages are similar to fixed rate mortgages in that they have a fixed payment and interest rate for the beginning period of the loan. After between 6 months and 5 years, the mortgage changes to an adjustable rate. The new rate, which changes every 3 to 6 months, is calculated by a predetermined formula which is unique to the lender. Most lenders place caps on the interest rate, however, so even if rates rise drastically, the rate on the loan may stop at a still reasonable amount.
Balloon Mortgages are mortgages which have a fixed payment and interest rate for a certain period of time designated in the agreement of the loan. After this period of time is over, the entire balance is due to the lender. Most people are not able to pay off a balloon mortgage after a short period of time and must take out a another mortgage.
Home Equity Loans are another type of mortgage in which homeowners borrow money based on the equity they have accumulated in their homes.

Choosing between different types of mortgages is difficult. It helps to “shop” for different mortgages by comparing rates at different banks as well as different types of mortgages and time spans.

I am getting a Mortgage, Should I Hire a Lawyer?

Hiring a lawyer to look over your mortgage papers before signing them is strongly recommended. Real estate is a very large purchase, and taking out a mortgage means you are going to be putting money towards this purchase for a very long time. Hiring a lawyer to help you make certain that everything in your mortgage is as you want it is well worth it. Mortgage brokers and real estate agents generally dislike seeing a lawyer involved in a mortgage deal because this means that you have sound advice on your side, and will probably get the most out of the deal. This is reason enough to employ an attorney to provide you with legal advice on what is a very important document in your life.