Real Estate Law

Good question, as an attorney practicing in this area for 40 years, I would say people do not need an attorney, but in my experience, it is hard for a buyer or seller to navigate the process. There are many deadlines to meet under the terms of a contract. Failing to meet those deadlines could cause a party to be in breach of the Contract. When representing a seller of real estate some tasks the attorney will handle will include ordering title work from a title company, to make sure there are no unusual liens or judgments against the property or the seller. The attorney will also help negotiate any attorney contract modifications and any inspection issues raised by the buyer’s attorney during the attorney review and inspection contingencies. The attorney will also prepare seller’s closing documents for seller’s signing and presenting at closing. As a side note, Illinois is one of the few states that use attorneys for real estate transactions.

This question depends on what the dispute is and if the parties have been cordial to each other during property ownership. Sometimes the parties can work these issues out themselves, and sometimes, a party needs to hire an attorney to help resolve the issue. But at a minimum a party can have a consultation with an attorney to get a better understanding of what their position should be regarding a property dispute.

This may sound pretty basic, but if tenant pays rent on time, keeps the unit in clean condition and is not disruptive to other neighbors, etc., and landlord takes care of the rental unit for upkeep and repairs as needed, the relationship should work. Signing a lease also binds both sides to their rights and obligations to the tenancy.

I think the common mistake would be not fully reading a lease or real estate contract to fully understand their rights and obligations. Hiring an attorney to help explain terms in a lease or contract makes a big difference.

Whether a real estate attorney is legally required in a transaction would depend on state law. From a practical context, the approach to hiring a real estate attorney differs greatly between residential and commercial transactions.

While buying a home is usually the most significant transaction any individual will be involved in, the average home buyer usually does not retain a real estate attorney unless a problem arises. The reasons are multiple. 

First, paying attorney fees is cost-prohibitive for most individuals looking to buy a home. Second, many residential transactions are fairly form-driven processes. Qualified, licensed real estate agents can guide a home buyer through the normal ins and outs of a transaction and answer any questions that do not require legal advice. 

For example, a real estate agent can tell a seller what the asking price should be based on comps, tell a buyer what the typical option period is in a given market, and guide the buyers and sellers through typical form documents that are often used. The forms track the law of that state and anticipate common issues that should be addressed upfront. 

However, if questions come up during the process that require legal advice (What does this mean in Schedule B of the Title Commitment?) then a lawyer should be retained.

In the commercial context, buyers and sellers frequently retain a real estate attorney because the process is less form-driven and more negotiations occur where legal advice can be crucial. 

There is more due diligence required and various state and federal regulations could potentially come into play (Did the gas station that operated here previously remove the gas tanks properly?) that would require legal advice rather than market-driven guidance.

It really depends on the nature of the dispute. If neighbors can talk through a problem and come to a compromise solution, it will likely save time and money for everyone involved. However, sometimes even if the neighbors are reasonable and willing to work things out, there could be unknown legal issues that need a lawyer’s guidance. 

For example, a big storm comes through, knocking down a tree that falls onto a section of one neighbor’s fence. A potential homeowners insurance claim by either party is not feasible because the cost of removing the tree and fixing the section of fence is less than the policy deductible. 

If the neighbors can just come to an agreement and work through the problem, it is likely to be better for both of them. However, if one neighbor is trying to erect a new fence and a survey reveals that the old fence has been five feet over the neighbor’s property line for the past 15  years, it would be best to consult with an attorney as to the possible legal consequences.

There always seems to be inherent tension between landlords and tenants. Relationships work best when a landlord understands their legal obligations and treats tenants in a fair manner and when tenants are conscientious and take good care of the rental property. 

Landlords must provide habitable premises for a residential tenancy, and many states have specific statutes relating to repair issues in the residential context. Additionally, lawful handling of a tenant’s security deposit at the end of a lease agreement can avoid litigation after the relationship has ended. 

Tenants must follow any legal or contractual requirements regarding notice to terminate the lease and providing a forwarding address. However, landlords must also comply with specific guidelines regarding the accounting for deposit money that is retained and for the return of any remaining sums due to the tenant. 

Having a clear lease agreement that follows the law of the jurisdiction is helpful for starting the relationship on the right foot. It builds trust and shows that the landlord is treating the tenant fairly. 

Also, the tenant should not make unreasonable demands on the landlord and should follow community rules if in an apartment so that other tenants can also have a pleasant living experience. 

For a seller of real property, take the advice of qualified, experienced real estate agents. Do not try to sell on your own to save the commission. You will be better off overall relying on their wisdom and advice. 

Be sure to understand the market your property is in so that you can price it competitively and reduce the time on the market. Follow the law with respect to required disclosures in your jurisdiction because the last thing you want is to be sued years following the completion of the transaction. Answer a buyer’s questions because if this isn’t the right property for the buyer, you are better off finding another buyer than defending a lawsuit.

For a buyer, also take the advice of qualified, experienced real estate agents. Buy with your head and not your heart. Consider the financial impact of the transaction from a realistic perspective, and do not allow yourself to get in over your head because you love the place. 

Ask lots of questions to make sure you are buying just the right property. If you find out something you just can’t live with, understand the legal consequences of a decision to walk away from the transaction. 

While there may be a monetary penalty, it may be a much lesser amount than taking on a property with a physical or title nightmare waiting to play out.

Legally, the requirements for hiring an attorney for real estate transactions vary by state. For example, certain states have customary practices that should be followed, such as using attorneys or title companies to handle the transactions.  

It is important to identify those requirements or practices as soon as you are considering a property transaction to ensure that you obtain the maximum benefits and protections from the professionals you hire.

In addition, the various types of real estate transactions can have multiple levels of complexities and risks. Buying a stand-alone house is significantly different from buying a condo or co-op, especially if a Home Owner’s Association (HOA) is involved. 

Commercial or investment property transactions, including land, can be even more challenging. The average buyer or seller is unlikely to be prepared to handle many of these transactions on their own.

When you hire an attorney to assist you with a real estate transaction, you will have support from someone who does not have a direct financial incentive related to the completion of the transaction, unlike a realtor or real estate agent. 

Not only do attorneys have an obligation to do the best job for you, but they also have an obligation to follow legal rules and regulations, as they also answer to regulatory bodies.

The number one benefit of having a real estate attorney is the peace of mind that comes from knowing the transaction has been handled in a professional manner. Unlike buying something from Amazon, there are no easy returns if something goes wrong with a real estate transaction, so it is essential that safeguards are built into the process.

Attorneys can assist in many ways. Just making sure that all the required paperwork is signed and filed correctly is important. 

If there are complexities, such as making an out-of-state purchase or selling the property of a deceased relative, the assistance of an attorney can overcome these hurdles. Attorneys can also provide expert advice based on research and past experience.

But it is when things go wrong that your attorney is most valuable. Doing a quick internet search can highlight all the things that can go wrong with a real estate transaction. They can range from comical to criminal, but in all cases, they can be disruptive and expensive.

One common dispute can occur when a property does not have all the items that were standard and/or mentioned in the contract. Expectations related to appliances, fixtures, and even furniture need to be clarified and confirmed. Another area is undisclosed issues or problems, such as previous water damage and resulting mold.

For commercial and/or land transactions, the importance of due diligence is even more important. It is essential to inquire about or investigate any potential government actions related to property, including planned highway expansions and other eminent domain actions.

Hiring an attorney provides protection and signals to the other parties that their actions will be closely examined. This should help ensure that transactions are completed in a professional and legal manner.

The best advice is to communicate before it escalates. Before you make any significant changes to your property, or in some cases, even seemingly small ones like trimming trees, it is important to do your homework. 

Do you have up-to-date and accurate evidence about your property lines? Do you have an attorney’s review of that evidence? Do you know what the community rules and regulations are concerning the planned activity or issue? 

And don’t forget the Golden Rule. How would you react if your neighbors did this?

Then, take the next step of discussing your plans with your neighbors. If you don’t feel comfortable doing this, then you may already have an indication that a dispute might occur.

At that point, consider the consequences and how they might impact the costs and benefits of the plan. If you decide to move forward, you must be prepared to support your choice.

But unexpected disputes sometimes arise, often from innocent mistakes or miscalculations. If that is the case, it is important to be civil and use diplomacy to avoid escalating the conflict. If you are at fault, an apology and an offer of compensation are appropriate.  

If that does not work, finding a mediator — a neutral third party — to propose an equitable solution is a good next step.

Before taking any action, it is important to examine alternatives and their consequences. Living next to someone who you need to avoid is endlessly stressful. You might realize that all the other “Plan Bs” are worse.

Landlords and tenants need to recognize that they both need each other. Neither is doing the other a favor. Recognizing this need for balance rather than using perceived power is the key to a harmonious landlord-tenant relationship.

However, this harmonious relationship needs to be supported by honesty and transparency. Instead of just using a standard lease agreement, any requests and/or promises should be added to the signed agreement. 

Standard expectations of safety and livability should be followed, regardless of whether they are spelled out in a lease agreement. A guarantee of running water and heat does not have to be spelled out. The same is true for paying rent on time.

It is important to take the time to identify expectations and to communicate regularly. It is also important to recognize that the security deposit is not a bonus for the landlord. 

When I was a tenant and then a landlord in New Jersey, their laws were a good model to follow.  

Security deposits were limited to 1.5 times the monthly rent. They needed to be placed in a bank account specific to that tenant. The funds and the interest earned needed to be returned to the tenant within 30 days, with any deductions detailed using registered or certified mail. 

If that deadline was not met, then the landlord had to pay a penalty to the tenant. This stressed that the security deposit was to be used for extraordinary items, not for standard maintenance.

The most common and possibly the most costly mistake is allowing emotions to drive a decision, especially if common sense overrides financial realities.  

In a competitive market, there is a need to react quickly. This means that buyers and sellers should start their research well before they are ready to take the next step.  

It is also important for them to lay out their wants and needs, and especially their deal breakers.  Making compromises is essential since only some people can find and/or afford their ideal property. 

The results of a thorough review of options might be to postpone a transaction until additional funds can be obtained; from additional savings or even an extra part-time job, so that unacceptable compromises can be avoided.

Some of the expenses that are often underestimated include moving expenses, remodeling costs, utility deposits and fees, real estate tax increases due to reassessments based on the current selling price, other property maintenance costs, and other unplanned maintenance and repair expenses.  Even the most professional real estate agreements can’t cover many of these items.  And, these items are also the ones that are seldom mentioned in all those popular real estate reality shows.

In all cases, the current real estate market in all categories is extremely competitive and expensive.  That is why it is important to do research and to obtain professional advice before completing any transaction.

From a legal perspective, whether a real estate attorney has to be involved depends on the state. I would always recommend that either a buyer or seller retain a real estate attorney. A home is often one of the largest investments that one makes, and individuals will not usually be familiar with the contracts and laws associated with a real estate purchase or sale.

First, research the law regarding the issue. For example, did the neighbor follow the law when constructing the fence? If the fence is on your property, can you remove the fence? Will your inaction affect your rights? Second, consult a real estate attorney to understand your rights and potential actions. The attorney can then advise you on how to resolve the neighbor issue.

Communication is the best way to avoid tenant/landlord issues. The other way to avoid legal issues is for the landlord to properly vet tenants. Does the tenant have the capacity to pay the rent? How has the tenant behaved previously?

One of the common mistakes I have seen is the lack of adequate due diligence. How much will it cost to correct any issue with the property? Are there any environmental issues? Do the current tenants have any issues that have not been addressed by the current owner? Are there any legal or zoning issues with respect to the property?

My advice is to hire experts who can conduct an examination of the property. Don’t try to save money by hiring the cheapest property due diligence experts. Hire an experienced real estate lawyer. The real estate lawyer should be able to guide you through the real estate transaction.