Know Your Real Estate Laws

The real estate business is fraught with scams, fraud and unethical practices. As such, it is a highly-regulated business. As a real estate investor, you are treading on areas of law which you should be familiar.

A good real estate attorney will help you along the way, but you should stive to educate yourself as well. At a minimum, you should be aware of the following:

Landlord-Tenant Rules
What exactly does it take to evict someone? How much does it cost? How long does it take? Can I serve notices myself, or do I need a process server? Are there special housing rules that apply in my city? Is there a limit to the amount of rent increases I can ask for? Is there a limit to security deposits? Do I have to give interest on a security deposit to my tenant? How long can I hold a security deposit after the tenant leaves? Is there a minimum grace period before I can charge a late fee?

Cornell University Law School's website maintains a good list of state real property statutes. You can also find information on the Rental Housing Online site.

Legal Documents

What form of contract, deed, mortgage, note, lease, etc are commonly used in my area? Are there special forms required for licensed real estate agents? Am I required to use these forms if I am an agent acting as a principal? You should learn the local forms and how to custom-tailor them for your needs. A good attorney and my Nuts & Bolts of Creative Real Estate Transactions course will help.

Recording Rules

Where do legal documents get recorded? What are the filing fees? What format must the documents follow? Is there a transfer tax? Contact your local title company or the County recorder's office for information.

Disclosure Laws
What must be disclosed to a buyer or tenant about the property? Lead? Asbestos? Rapists in the neighborhood? You can usually find this information by contacting your local real estate investor's association.

Interest Rate Limits & Other Loan Regulations
What is the limit for charging interest until it becomes usury? In most states the limit is 21%; a few states have no limit. Once you loan money or sell houses on credit with owner financing, you may have to comply with Federal Regulation Z (Truth-in-Lending), the Real Estate Settlement Procedures Act (R.E.S.P.A.) and other state counterparts.

Fair Housing
Can I discriminate against certain groups when I rent my property? Obviously, you cannot discriminate against people based on race, religion, sex, age, etc. However, some state and cities have more peculiar restrictions, such New York City. where you can't discriminate against lawyers!

Licensing Laws
Learn Real Estate Agent Licensing Laws. In some cases, your practices as an investor may be treading close that of an agent. Check with your state licensing agency for more information. If you are rehabbing homes, you may need to comply with building regulations and be licensed as a homebuilder or developer. Also, be aware of Consumer Protection laws that regulate high-pressure sales, foreclosure purchases, sale-leasebacks and other distress real estate transactions.

By: William Bronchick, Esq.

Courtesy: legalwiz.com