The legal definition of real estate or real property is land and buildings. Real estate law affects the ownership of land and its sale and usage. Because property rights are some of our most important rights, there are federal, state, and local laws regarding real property. There are also more legal issues about the use and transfer of property than many other matters.
Real estate is an area of law that covers a wide range of legal disciplines. Real estate may be residential or commercial. It may be owned or rented. Zoning laws determine land use locally, but federal and state laws regulate environmental and natural resource use.
Not all real estate transactions require a real estate lawyer, but any property owner or renter should talk to an attorney before any decision about property. Read on to learn why property decisions can be more risky than you think.
Types of Property Law
Real estate law has its roots in English common law. In ancient times, kings granted their knights "fees," and the knights could pass them on to their sons. Later, tenants won the right to pass estates to their families, a right still seen in the deed formula "tenants in common" or "tenants with right of survivorship."
Today, property law includes other aspects of ownership and tenancy, including:
- Title Law: This area of law determines property ownership and includes title insurance, property liens, adverse possession, and other clouds on the title.
- Landlord-Tenant Law: Renting income property can be lucrative, but there are legal issues for both landlords and tenants. A property owner should know how to lease property before taking on tenants.
- Tax Law: Owning property can be a huge tax break. It's important to have someone who can explain how to take advantage of your property and ensure you don't do it wrong.
- Estate Law: Keeping property in the family is as important today as in medieval England. Today, laws determine how family members can inherit property and the legal documents that must be included with the will or trust to make that happen.
Buying a Home: When You Need an Attorney
The home-buying process is one of the times when you should have legal advice. You don't need an attorney at every step of your home purchase, but there are things you ought to discuss with a lawyer.
Buyers must make a down payment on the home so the owner will take it off the market. An "escrow" account holds the down payment until the buyer and seller complete negotiations. Usually, the buyer must place money in escrow before they apply for a mortgage or make other negotiations on the price of the home.
The next part of the process is obtaining a mortgage. To get a mortgage loan, the new owner gives the lender ownership of the home as collateral against the home loan. The terms of the mortgage are a critical part of the home sale. These are documents you want your attorney to review with you.
A real estate purchase includes a title search. This confirms that the current owner has the right to sell the property and that no one else has bought it or has a judgment lien against it. Your real estate lawyer can refer you to a title company that can do this search. New buyers should get title insurance if there is legal action following the sale. This extra purchase gives you peace of mind in case anything happens later.
Real Estate Closing
The purchase agreement is the most important part of the real estate closing. The new homebuyer and the attorney should review the purchase contract carefully to ensure that everything discussed during negotiations is included in the agreement. Some states, like Connecticut and West Virginia, require an attorney's presence at the closing. Other states do not require this, so check your state laws carefully.
An attorney must prepare these documents in some states, such as Massachusetts. In others, the mortgage lender or real estate agent can prepare most of these documents but cannot give new buyers legal advice about the purchase unless they are also attorneys. When signing a real estate contract and handing over property or the closing costs for a new home, you should have an attorney present.
Visit the Property Rights and Real Estate Law Glossary for real estate definitions. Learn more about these laws on FindLaw's real estate legal answers page.
Post-Purchase Legal Needs
Sometimes, after you've closed on your house, you may still need an attorney. Real estate lawyers can help with many other property-related needs.
- Foreclosure: If you run into financial difficulties and can't keep up with your mortgage payments, the lender has the right to foreclose on the property. Before they come and take the land, banks give owners many opportunities to pay the debt, including refinancing and alternate payment plans. These plans are time-sensitive and involve a lot of paperwork. If you find yourself facing foreclosure, you need legal assistance.
- Short Sales: Short selling can be an alternative to foreclosure or bankruptcy. It means selling distressed property for less than owed on the mortgage. If the lender agrees to the sale, it can be a way for cash-strapped owners to sell the property. You will need a real estate attorney to help with this complex process.
Real Estate Issues? Talk to a Real Estate Lawyer
If you live in an expensive real estate market like California or New York, you need the right lawyer to help you purchase your new home. Your real estate lawyer should be local, so they know the market in your buying area. If you're purchasing out of state, take the time to research attorneys on the state bar association's website and online reviews. Find an attorney there as reliable as the ones you know near you.