While you cannot reduce your risk to zero when you are in the real estate business, you can take clear steps to reduce losses as much as possible. Knowing the financial and legal issues that can crop up with every decision you make is vital.
Keeping this in mind, here are 3 common legal mistakes that every investor should avoid:
#1: Poor Legal Forms
It’s surprising how many real estate agents buy poor legal forms from discount stores. Instead, buy good one which apply to your business and have a real estate attorney check them. Make sure you fill these forms correctly as well. One more thing: it isn’t a good idea to depend on real estate brokers to fill up legal forms. Please be advised that they aren’t trained to carry out this task adequately.
#2: Improper Disclosures
It is vital for one to be aware of both federal and state disclosures. One simple example is the necessity of the disclosure of lead-based paint used when selling or renting out properties that were built before 1978. This is why it has become a common practice for real estate brokers to use detailed forms for all aspects of the house. No matter what, disclose what you don’t know and what the tenant or buyer who might not know either.
Avoid soliciting money from strangers for investment purposes is considered to be syndication – and also, illegal. This might mean that you cross over a number of federal and state securities regulations in the process. Advertising to the public in mass is considered a public offering so it is a good idea to check with an attorney before doing so.