The following is a list of areas of the law that owner’s of commercial and residential real estate should become familiar with, or at the very least have a relationship with a real estate attorney they can call on.
Contracts include acts of sales and leases. Contracts govern the relationships between the parties to the contract and the law merely supplements when the contract lacks clarification of an issue that has arisen. Moreover, contracts are a creature of state statute and the laws of each particular state will govern. Therefore, it is crucial to have the language as the basis of the contract be clear and correct in setting forth the agreement and the parties rights and obligations.
2. Land and Use Laws
As an owner, you must understand the limitations that are placed on your property. In addition to federal and state law, local ordinances are often the most complex and difficult laws to maneuver around. It is important to know whether or not your property can be used for retail or whatever purpose you bought it for or are leasing it for.
Generally, the landlord must apply for rezoning and conditional use permits. Do not cause an automatic breach of contract by leasing a property to someone when it cannot be used for such use as they intend it to be.
3. Landlord Tenant Laws
Landlord-tenant law is governed by state law and as a result varies greatly and can included municipal and local ordinances. The laws are intended to protect the rights of both parties in any rental or lease agreement. Common clauses included in rental or lease agreements include: payment of rental fees, taxation, rights of privacy, disclosures, duration, rights of termination, and much more.
Understanding Landlord-Tennant law is important for issues that include eviction, termination, or liability for damages. Therefore, if you are to rent or lease your property, it is advisable you become familiar with the laws so you are properly able to negotiate the terms of any rental or lease.
4. Disclosure Laws
Disclosures are the way in which sellers and lessors protect themselves from potential claims from buyers and lessees. Written disclosures effectively put the party being informed on notice of any defect, hazard, or risk that may exist or has existed on the property prior to the relationship. Therefore, it is through proper disclosures that a seller or lessor can effectively reduce their exposure to potential claims while still being able to utilize their property for revenue or for sale.
5. Insurance Law
Insurance is the way in which one protects their property. Due to the lack of federal law, the state government generally regulates insurance law where the property is situated. Thus, understanding your state insurance law is imperative to protecting your property.
Additionally, as the lessor of property (commercial or residential) it is advisable that you require the lessee to carry their own insurance policy on their property to protect their interests. This is because your insurance may protect some of the lessee’s property; it does not cover all of their property, such as equipment. Thus, insurance is pivotal to protecting both your property and the lessee’s and not having insurance is effectively not protecting yourself.
When In Doubt, Always, Always, Always Ask Your Real Estate Attorney:
The only more damaging mistake a person can make is to assume that either they know what to do or they make it up as they go. Don’t get trapped by a false sense of thinking you understand the law. Attend sponsored events to confirm your interpretation of the law. In terms of investments, the ROI you will receive from paying for clarification and advice on an issue from an attorney will far exceed the loss you expose your self to without it.