Dealing with real estate can be tricky – anything that involves contracts is often so. Because of the high level of commitment real estate contracts require, and because of the intricacies of real estate law, it’s always recommended that you seek help from a specialist in the legal side of real estate. Nevertheless, not all matters require a sit-down with your real estate lawyer. Whether you’re an investor, a buyer, or a seller, there are things you should know by heart and keep in mind when going about your business. If you’re in need of help, this article has all the legal advice you need.
Legal Advice For Real Estate Transactions
Know Your Property’s Boundaries
One thing most people overlook when buying a property is knowing its boundaries. Just because property comes with a large piece of empty land, it doesn’t mean that you own the land; at least not all of it. Likewise, a small backyard could be that small because a neighbor took advantage of the fact that the owner didn’t know their rights. Any master investor knows that before you purchase a piece of land, you need to hire someone to do a survey to reveal, among other things, your property lines and any intrusions done by your property on the neighboring lands or by your neighbors on the property. While you will have to pay for the survey, being safe is better than being sorry later on when you realize you had no right to a piece of your land, to begin with.
Look Up The Local Real Estate Laws
Especially if you’re an investor new to the field or a real estate developer looking for a property, make sure you know the laws in your area to avoid any misconceptions. If you were planning on renovating your property, you wouldn’t want to find out too late that your renovation plan violates zoning laws or other local state laws. To best achieve your real estate goals, Chaves Perlowitz Luftig LLP recommends you do your research and have a specialized real estate lawyer go over your transaction to ensure everything aligns with your wants. When sorting through prospect properties in the early stages, knowing the basic local laws will help you narrow down your options. When the transaction gets serious, that’s when you should bring in the people who live and breathe estate laws.
If you’re buying alone or if you’re married but have already decided that one of you should hold the title (ownership), you can skip past this point. For married couples who want to hold a title together, there are two main options. The first is a joint tenancy which doesn’t only apply to spouses, but to any number of people who wish to own a property. The perk here is that once one owner dies, the title gets automatically transferred to the other owner(s) – no probate needed. The disadvantage, however, is tax-related for the inheritor. Because property increases in value over time, by the time the surviving owner decides to sell, they would make a huge amount of money. A joint tenancy means that the surviving owner won’t get a step-up on a tax basis. Meaning, they will have to pay taxes for the whole of their earned income which is the difference between the original price (regardless of how low) and the selling price.
As for community property, it’s only available for married couples, and it allows each party to hold half of the title separately. Meaning, if one party dies, the title doesn’t automatically get transferred to the survivor. There must be a will that states to whom the title will be passed on. In which case, even if the title is passed on to the surviving partner, a probate will be needed which can be financially taxing. Nevertheless, the surviving partner will get a full step-up on a tax basis, only having to pay taxes for the difference between their property’s current value and selling price.
Knowledge is key when it comes to real estate, as you’ve noticed throughout this article. Be it through surveys, reading legal resources, or learning about tax laws, knowledge is always beneficial. At the same time, however, it can be destructive if it’s false information. When doing your research, make sure you’re getting your information from trusted, experienced sources. Most importantly, should you need legal help, don’t ask your estate agent as they’re not in any way qualified. Granted, they’re cheaper than lawyers, but that’s irrelevant given that they have no real experience in the legal field. A lawyer will charge more, but you’ll get your money’s worth, if not more.