Three Real Estate Myths: Debunked
by Maddy Rametta
Real Estate law is a very complicated area of law and has a lot of very specific rules and processes. Because it is so complicated and elaborate, a lot of myths are circulated about buying, selling, leasing, renting, and owning real estate. Many of these myths are backed in fact, but many are false. It is important to know when looking at homes, commercial buildings and land, what information is correct and helpful, and what information is misleading. As a landlord, tenant, buyer or homeowner, it is always better to be prepared with accurate information for any situation.
A real estate attorney can provide guidance and advice when situations come up that may not have a clear answer. Someone who knows the law inside and out will be able to advise and save you more work in the future. A real estate attorney can help clarify confusing topics in contracts and help guide you through closings or title searches as well as helping protect you from creditors and reduce tax liability. Each situation is different, and different challenges can arise with each individual situation. When dealing with any property, a qualified real estate attorney is vital to protect you and your assets.
Myth 1: Sellers and buys will make more money buying or selling on their own, or with the help of online resources.
Although it is technically possible for buyers to buy on their own and sellers to sell on their own, it is always important to cover all your bases and make sure no small things are missed. A small oversight can lead to larger consequences. Online resources may be able to provide a general estimate of the worth of your property as well as how to go about buying, renting, or selling, but the exact worth and processes are specific to every situation. Sites that cover topics like these are meant to serve a general or common situation, and the people providing this advice have no knowledge of your property or your individual circumstance.
Taking the Stress out of Real Estate Transactions
Oftentimes, buying or selling real estate can be very emotional for the seller or buyer. With a real estate attorney on your side, it is easier to see through the emotion to the best option and help make sure you’re protected. Personal feelings or connections may make the right path unclear, and a real estate attorney can help you make the most beneficial decision. Real estate attorneys have the benefit of being both knowledgeable and objective, and they can help protect you from bad deals, and offensive or rude clients.
Only Real Estate Attorneys can Provide Legal Advice
Real estate attorneys are objective and knowledgeable, which will help you make the best decision in an efficient time frame. There is a lot of paperwork involved in every transaction involving real estate, and it can be very confusing for someone who hasn’t received education on the topic or does not have years of experience. Even realtors and title companies are not legally allowed to provide legal advice when it comes to real estate contracts and closings. An experienced real estate attorney can also often recommend effective real estate agents to ensure sellers or buyers get the best price possible. They can also recommend highly qualified property inspectors that can help identify any building/construction defects that the average buyer would not notice.
Myth 2: Landlords can use the same lease for each client, and it will protect both the landlord and the tenant.
As a landlord with many tenants coming in and out frequently, it may seem like reusing leases is the easiest way to save time and energy. However, it is important to look at the fine print on lease templates or when reusing leases, because you may find some things hidden or aspects that don’t work for all tenants. A real estate attorney can help you find the fine print that could put you on the losing end of a court case, or leave you open to be blamed for negligence or ignorance of the law. Not including something important or legally required in a lease can be just as harmful as including the wrong terms.
Landlord Concerns
Like buying and selling, the laws for landlords and tenants are very specific. For example, Florida law honors oral, or spoken, contracts as well as written contracts, whereas places like Texas only honor written contracts. It is important to have someone with a background in real estate law on your side to make sure you’re making the best choices for your rental property. Landlords have very specific duties and responsibilities under Florida law. Having a real estate attorney can help protect you from missing or adding things that will cause you to be in violation of the law. Additionally, if you need to remove a bad or delinquent tenant, an attorney can ensure that every step in the process is handled correctly to avoid issues that could hold things up or worse, cause a landlord to violate the law.
Tenant Concerns
As a tenant, any lease can make you vulnerable if it’s signed without being properly looked at. A real estate attorney can see the fine print that a landlord may have missed or tried to sneak into your lease. You may also be able to negotiate security deposits, which are collected by landlords to cover any potential damage, non-payment of rent, unpaid cleaning, or utility fees upon moving out, or early termination of your lease. However, your landlord may try to hold onto that deposit without a valid reason, and a real estate attorney can help make sure you’re getting back what you deserve. A real estate attorney can also advise you of your options or inform you of legal rights you can use to protect yourself if a landlord tries to evict you with or without cause.
Myth 3: Selling and owning property are as simple as that: you sell it, or you own it.
Investors or property owners may use many tips and tricks to help increase their profit. With a real estate attorney, you have knowledge and experience with these tips and tricks on your side. Something like wholesaling can make you money, but may lead to loss of money or property if not handled properly.
1031 Exchanges
One example of a complicated situation that using an attorney would be beneficial for is a 1031 exchange. A 1031 exchange is the swap of one real estate investment property for another, which allows capital gains taxes to be deferred. In short, you’re able to swap properties to avoid certain tax costs. Without a real estate attorney, you may not know all the rules and specificities of this exchange, like the proceeds of the sale must be held in escrow, or that the properties must be considered like-kind (meaning the properties must be similar in nature or use) in the eyes of the IRS for a 1031 exchange to work.
Real Estate Property Liability Protection through Company or Corporation Ownership
Many real estate owners would also not know about the benefits of transferring their real property into a limited liability company (LLC) or corporation. A real estate attorney can inform you of the benefits of a move like this, such as the liability protection it provides or the possibility of being able to avoid probate, which is how your assets are distributed after your death. The help of a real estate attorney in this situation can lead to federal tax status flexibility or tenants by the entirety (TBE) ownership (a special type of ownership that can only be had by a married couple that provides significant protections from creditors), amongst other things. If you decide to transfer your real property into an LLC or corporation, a real estate attorney can help prevent loss of homestead or acceleration clauses, which can both lead to loss of property.
It is important to be informed and properly protected when dealing with real estate to prevent liability, or loss of money or property. If English isn’t your first language, try to find an attorney who can speak your native language to make sure you fully understand what the attorney is trying to tell you and that they understand what you are trying to tell them. Should you have any questions or need a real estate attorney, do not hesitate to contact the Law Firm of Gian-Franco Melendez, LLC to speak with an experienced Real Estate Attorney about your options.
