In most states, involving an attorney in a residential real estate transaction is optional. If you’re using a realtor to help sell your rental and there is nothing out of the ordinary about the transaction, you probably don’t need a lawyer.
However, if you’re selling a rental under one or more of the following conditions, consider seeking advice from an experienced real estate attorney:
- Seller-financing: an attorney will advise you on the best way to structure the deal to protect you and the rental property.
- Short sale or foreclosure: an attorney will help negotiate with your bank, protect your other assets, and limit your personal liability.
- Uncooperative tenant in the rental: an attorney will advise you about your rights and obligations under the lease agreement, and help transition the rental business to the new owner.
- Executor or personal representative: an attorney can help probate the will (if necessary), advise you on how to deal with conflicts between beneficiaries, and help limit your liability and stress by making sure the sale is handled appropriately.
- Co-own with a reluctant seller: an attorney will advise you on how to protect yourself if the reluctant seller changes his or her mind.
- Complicated properties: if there’s a title problem, an issue such as questionable water rights or possible environmental contamination, an attorney will advise you on which disclosures must be made and help you figure out which issues to resolve prior to sale.
- Judgments or liens: an attorney can help negotiate payoffs and develop strategies to protect your other assets.
- LLC or corporate owner: if your business owns the property, and not you personally, an attorney will help draft the documents authorizing the sale and assist with debt payoffs, distribution of the proceeds among owners, reinvestment and tax implications.
In a few eastern states you may be required to involve an attorney. In most states you are free to go it alone, but remember that an ounce of prevention is worth a pound of cure. Hiring an attorney to prevent trouble, minimize liability, and give you peace of mind might be worth the money.
In March of this year, 14-year-old Willow Tufano shocked the country by purchasing a rental property. Now, she’s got a second, according to NPR.
According to the source, Tufano raised money to purchase her first home in Port Charlotte, Florida, by selling things on Craigslist. Her mother, a real estate agent, would often sell foreclosed homes to investors, who would allow Tufano to take the objects left inside the homes and sell them. When she earned enough money, she split the purchase of a $12,000 foreclosed property with her mother and became a property manager, charging $700 per month in rent.
Then, she took the rent coming in from that property and used it to purchase a second home in the same town. The second home cost $17,500, and according to Tufano, she’s hoping to have more control over this one. Because of her age, Tufano’s name is not the primary one listed on the lease, so her mother had some control over the way the first house was rented. After she had lowered the asking rent without consulting Tufano, the young landlord was annoyed.
“I said, ‘Did you even ask me if I like those people? Or if I wanted to lower the rent to $650? I don’t think so,’” said Tufano, in an interview with NPR.
According to the source, the fact that a young landlord can own not one, but two rental homes is a sign of the times. If a 14-year-old girl can afford to purchase a home and deal with tenants and determine rental rates, the housing market must have completely bottomed-out. On the other hand, it could also mean that anyone with a little inspiration and know-how can be a landlord.
Amid discussions of how best to deal with the number of foreclosed homes currently in the inventories of the Federal Housing Administration and its sponsored enterprises, Fannie Mae and Freddie Mac, HousingWire reports that panelists at the American Securitization Forum stated they are leaning toward rental conversions.
The idea of converting foreclosed homes into rental properties has been under discussion for some time, with some suggesting it would reduce inventory and help the market. The degree of government involvement in such a program has varied between proposals.
Individuals, including Federal Reserve Bank of Boston senior economist and policy advisor Paul Willen, have indicated such a plan might not be successful. According to Willen, the number of properties in circulation may essentially be unchanged and the program will not necessarily address the oversupply problem.
On the other hand, the source notes, the Federal Housing Finance Agency is already considering program structures that might be used if the government goes forward with an REO rental conversion plan.
Depending on the details, such a program could represent a chance for investors and property managers to get involved in a housing recovery while meeting consumer demand for rental accommodations.