How Real Estate Lawyers Can Support Landlords
By FindLaw Staff | Legally reviewed by Robert Rafii, Esq. | Last reviewed March 21, 2024
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As a landlord, you probably view your rental property as a business. You want to minimize your expenses and maximize your revenue so that you can earn a nice profit. Just like any other business, consulting with an attorney before you begin can save you countless headaches later. This article lists some of the most important things an attorney can do for you before you even meet your first tenant.
Review Your Title and Deed
Your biggest expense as a landlord should be the building you wish to rent—not legal fees and court costs. But many properties have covenants and other restrictions. They may also have title problems, which means unclear ownership of the real estate. Either of these issues could lead to big legal battles later.
Homeowners should also be aware of issues relating to:
- Liens, easements, and other types of encumbrances that may or may not be part of public records
- A home buyer's real property title (a written document showing their legal right to be the legal owner)
- Chain of title and title search issues affecting a grantor (seller) and grantee (new property owner)
- Different types of deeds, such as special warranty deeds and quitclaim deeds, which create different property rights
- Assessor's property taxes, zoning laws, and other local issues affecting your real estate investment
A lawyer can investigate your deed and title to make sure there are no problems with property ownership. These are legal documents involved in every real estate transaction. If the lawyer finds problems, they can advise you on the best way to clear them up before you start renting the property.
It's much harder to correct these issues if tenancy has already begun. Suppose the escrow and title company that helped you buy your rental condominium didn't discover latent title defects. If your title insurance doesn't cover the defect, you might not be the true new owner. But the property has been rented and is in full occupancy even though you don't have clear ownership rights. This can land you in loads of trouble with your tenants and the true owner of the property. A lawyer can provide an analysis of these issues to prevent them from occurring in the first place.
Review Your Mortgage
A lawyer can also inspect your mortgage lender's papers, such as the deed of trust, in order to make sure the terms are fair. This can help a borrower avoid potential foreclosure if you miss payments down the road. Many landlords may not fully understand their mortgage papers. Or they may have been pressured into taking a mortgage loan with:
- Balloon payments
- Floating interest rates
- Other expenses
These kinds of surprises can make a previously profitable business too expensive to keep.
A lawyer can explain each term in your mortgage and whether that term is valid under current housing law. They will also be able to explain how to work with your mortgage company to create a different payment schedule if needed. This may help avoid foreclosure problems if you ever have trouble paying your mortgage and need to refinance or work out a new agreement.
Check That Your Building Is up to Code
Many rental units are older and may no longer be up to code. Some states or towns have strict rules about the safety and design of rented-out buildings. If your building doesn't have enough electrical outlets, or if the exits are not easily accessible or do not accommodate handicapped tenants, you may face a lawsuit from a tenant.
Many landlord-tenant lawyers are experts in local housing codes and will be able to tell you:
- What a building needs in order to comply
- Which repairs must be made right away
- Which repairs can wait until you have the time and money to spend on them
Set up a Business and Manage Finances
Many landlords choose to set up a small business in order to shield themselves from liability. That way, if a tenant decides to sue, it will be the landlord's business and not the landlord personally that will be liable. A lawyer can advise you on which business arrangement is best for you and then draft the appropriate formation documents.
A lawyer can also advise you on how to manage your finances as a landlord properly. In some states, you may need to keep your tenants' security deposits in special accounts. There may also be legal restrictions on when and how you can spend your money as it relates to renting out your property. Your attorney can give you this valuable information to help you avoid a future misstep.
Create a Standard Lease Agreement
Finally, a local landlord-tenant lawyer will be able to advise you on what can and can't be included in a lease agreement. Some landlords, in an effort to protect themselves, put strict provisions in their lease agreements that are invalid under state law. The laws governing lease agreements vary by state and sometimes by town. So, a lease that works in one jurisdiction may not work in yours. It's best to check with an attorney to make sure your lease will hold up in housing courts.
How A Lawyer Can Help Solve Landlord-Tenant Disputes
If you're having problems with your tenant, having a lawyer makes a huge difference. As a landlord, you have special responsibilities to your tenants. That includes providing a habitable (livable) space that is safe for habitation. But your tenants must also pay rent on time and take care of your property. Sometimes, tenants try to get out of paying rent for all the wrong reasons. If you have a lawyer to help you resolve your dispute, you can avoid court and save money in the long run.
To find an attorney, search through FindLaw's landlord-tenant attorney directory. Take a look at FindLaw's Landlord Rights section for more information.
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