Deciding to invest in commercial real estate can be daunting, especially when you are new to the process or start getting in the multi-million dollar ventures. Hiring an experienced broker will help you find investments that meet your criteria such as location, expected returns, and quality of the asset. They may also help you understand key factors in the real estate investment market like, triple-net properties, 1031 exchange, sale leaseback, etc. Yet, it’s wise to take a few extra steps to protect your investment, and hiring a real estate attorney is right up at the top of the list. Below we’ve outlined just a few of the most prominent reasons you should spend the extra money to hire an attorney specializing in real estate.
- Structuring Your Business. The right attorney will help you structure your business to protect your personal assets. It’s better to get set up right from the beginning than have to defend yourself later on in a lawsuit. An experienced attorney will know whether to be an individual owner, LLC or some other business entity for holding strategies and future tax advantages, let alone which business entity will have the right liability protection.
- Title Issues in Real Estate Purchases. An experienced attorney can review the title and alert you to any issues that may arise. Defects and/or encumbrances may get hidden and a good attorney will conduct a thorough review and protect you from any issues that may inhibit your ability to use your investment as planned.
- Encroachments and Surveys. Typically, real estate transactions will be accompanied by a survey of the site. The real estate attorney can check compliance against zoning and usage regulations, and ensure you are free of any encroachments from neighboring parties. A good attorney will identify any issues and work with the seller to get them resolved ahead of the actual transaction.
- Review Existing Leases. This is important, especially in a single tenant net lease property where you have higher risk with just one tenant. You’ll want the attorney to help you fully understand the allocation of costs to maintain the structure and roof as well as the burden of operating expenses, taxes, etc. The attorney should also handle the estoppel agreement process which can be tricky and is extremely important as it outlines the process for rent payments and security deposits.
Let’s face it. There is a lot of legalese that goes right over our heads. You need an attorney that not only can make sense of all of it, but effortlessly guide you through the process and protect your investment at every turn. What you should remember is that real estate law is a specialty. Simply hiring your neighbor’s uncle who is a divorce attorney, may end up costing you money in the long run. Take the time and spend the money to hire the right attorney.
Thanks to our friends and contributors from Calkain for their insight into real estate law and litigation.