Real estate investing can involve complex contracts, ownership structures, financing documents, title issues, zoning requirements, and landlord-tenant laws. An experienced real estate attorney can help investors understand these matters, identify potential risks, and protect their interests throughout a transaction.
The right attorney will depend on the property, location, investment strategy, and type of legal assistance required. Before selecting counsel, consider asking the following questions.
Confirm that the attorney is licensed and authorized to practice in each state relevant to the transaction. Investors can typically verify an attorney’s license status and publicly available disciplinary history through the applicable state licensing authority.
The American Bar Association’s directory can also help investors locate state and local bar association referral resources.
If an investment involves properties in multiple states, determine whether the attorney can handle the entire matter or will need to coordinate with local counsel.
A general understanding of real estate law may not be sufficient for every investment. Look for an attorney with experience involving transactions similar to the one being considered.
Relevant experience may include:
An attorney who regularly works with residential real estate investors may be more familiar with the timing, documentation, and risks associated with rental, renovation, and construction projects.
Ask the attorney to describe representative matters without requesting information protected by attorney-client confidentiality.
The attorney conducting the initial consultation may not perform all the work. Associates, paralegals, or other professionals may handle portions of the assignment.
Ask:
Delegating work is not necessarily a concern and may help manage costs. However, investors should understand who is responsible for the matter and how the supervising attorney will remain involved.
The firm should conduct a conflict check before accepting the engagement. This is particularly important when multiple investors, business partners, lenders, sellers, property managers, or contractors are involved.
Investors should also ask whether the firm has sufficient capacity to meet the transaction’s deadlines. A qualified attorney may still be the wrong fit if the firm cannot respond within the required timeframe.
If several investors are participating in the same transaction, each party should understand whom the attorney represents. An attorney representing the business entity may not represent each owner individually.
Legal fees may be charged hourly, as a flat fee, through a retainer, or under another arrangement. The appropriate structure will depend on the work and how predictable its scope is.
Before hiring counsel, ask:
The American Bar Association recommends discussing how fees are calculated, when payment is due, and whether itemized billing will be provided. Review the ABA’s guidance on legal fees.
The fee arrangement and scope of services should be documented in a written engagement letter.
Delays or unclear communication can create problems during time-sensitive transactions. Establish expectations before the engagement begins.
Ask:
Investors should also communicate their own priorities clearly. Counsel cannot evaluate a proposed structure effectively without understanding the business plan, timeline, financing, ownership arrangement, and intended exit strategy.
Real estate requirements can vary significantly by state and municipality. Local experience may be particularly valuable when a transaction involves:
An attorney familiar with the relevant jurisdiction may be better positioned to identify local requirements before they delay or disrupt the investment.
Before work begins, review the engagement letter carefully. It should explain the attorney-client relationship, the scope of the assignment, the fee structure, billing practices, and any limitations on the representation.
For example, an attorney hired to review a purchase agreement may not also be responsible for forming the ownership entity, evaluating tax consequences, reviewing financing documents, or handling the closing unless those services are included.
Clarifying the scope at the beginning helps prevent misunderstandings and ensures that important responsibilities are assigned to the appropriate professionals.
The need for legal counsel depends on the transaction and applicable law. Investors may consider consulting an attorney when:
Obtaining advice early may be more efficient than attempting to correct a legal or structural issue after documents have been signed.
Choosing a real estate attorney should involve more than comparing hourly rates. Investors should evaluate licensing, relevant experience, availability, staffing, communication practices, local knowledge, and the proposed scope of representation.
The right counsel can help an investor understand the transaction, identify potential risks, and coordinate with the other professionals involved. Investors should select an attorney based on their specific legal needs and conduct their own independent review before entering an engagement.
CoreVest offers business-purpose financing solutions for residential real estate investors. Contact our team to discuss the property, investment strategy, and financing requirements for your next rental, renovation, or construction project.
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This article is provided for informational purposes only and does not constitute legal, tax, investment, financial, or lending advice. CoreVest does not provide legal services or endorse any particular attorney or law firm. Laws and legal requirements vary by jurisdiction and transaction. Investors should consult qualified professionals regarding their specific circumstances. All loans are subject to underwriting, credit approval, eligibility requirements, and applicable terms and conditions.
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