Common Legal Mistakes Real Estate Investors Make

by David Gerlitz on June 7, 2011

Common legal mistakes real estate investors make are the ones that could get you into serious trouble. Here’s how to avoid them.

Real estate investment deals abound, but it is easy to get into trouble if you cut corners or do not know the law. Legal procedures should not be ignored or forgotten (the IRS will love you for it and so will other authorities). You may even encounter lawsuits! What are the top legal mistakes real estate investors make? Here are a couple of big ones.

Common Legal Mistakes Real Estate Investors Make

Legal forms – the one size fits all variety you purchase – are a common legal mistake with real estate investors. Cutting corners will never be legal. Also, update and check to make sure the forms that are being used are still currently legal. Whether you are buying them online or at a store, it is your job, not the store or site, to know which is legal for your state, city, and county.

Hire a real estate attorney to look over everything to make sure nothing has been missed. For example, the contracts are legal and binding agreements between you and the seller or buyer. If you are a real estate broker, you do not have the legal training to take chances. A real estate investor has to protect their interests and investments.

Another  huge legal mistake for real estate investors is improper disclosures. What are those state and federal guidelines for disclosure? Here is an example. Lead paint has to be disclosed if the property was built before 1978. This is a must-have federal guideline. There are numerous state laws. So check everything out or again hire a real estate attorney to check everything.

It is common practice now to use a general purpose sellers disclosure. This is supposed to tell the buyer upfront about any problems, such as mold, water damage or electric wiring in the house that needs to be replaced.

The common legal mistakes real estate investors make can be avoided with common sense. If you know better, be sure to DO better!

For more information on sound real estate investments in Colorado, call Dave Gerlitz at 720-306-8017.

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