Do you need an attorney to buy investment real estate? That is a question I get asked a lot. The honest answer is no, you do not have to. But it is a very good idea to have one.
The reason comes down to the role an attorney plays in a real estate transaction. There are several key functions an attorney can provide that a simple title company cannot. Understanding those differences helps explain why having an attorney on your side is often worth it.
Reviewing Title and Legal Documents
One of the primary things an attorney addresses in a real estate closing is making sure the title passes free and clear. This is not always as straightforward as it sounds.
There can be unrecorded liens. Property boundaries may be unclear. Easements might exist that raise questions about how the property can be used. Any one of these issues can create problems if they are not identified and resolved before closing.
Having an attorney review these matters adds an extra layer of protection. They are trained to identify potential title issues and address them before ownership transfers.
Reviewing Loan Documents
Another important reason people ask, do you need an attorney to buy investment real estate, is financing.
Whether you are using traditional bank financing or seller financing, loan documents matter. An attorney can review those documents, explain what they mean, and help ensure you are protected as the buyer.
This is especially helpful if the financing structure is unfamiliar or if the terms are more complex than a standard loan. Being able to ask questions and fully understand your obligations can prevent issues later.
Preparing and Reviewing Closing Documents
Both title agents and attorneys prepare closing documents, but attorneys often take a broader role in reviewing how those documents work together legally.
This includes documents such as deeds and assignments of rents. An assignment of rents transfers the right to collect rents from leases that were originally written in the seller’s name to you as the new owner. Making sure this is done correctly is essential once you take over the property.
Reviewing LLC Ownership and Authority
Attorneys are also valuable when a property is owned by an LLC. Many investment properties are owned by groups of people, and those ownership structures can change over time.
Sometimes an owner passes away. Sometimes partners divorce or separate. As a result, the original LLC documents may no longer clearly reflect who has the authority to sell the property.
In these cases, there is often a need for a detailed document review to confirm that the person signing the deed is actually permitted to do so. An attorney can review operating agreements and related documents to verify authority before closing.
Reviewing Leases
Leases are another area where legal review can be important. Some leases are complicated. Others are simply poorly written.
An attorney can review existing leases and point out clauses that may create issues for you as the buyer. Identifying these concerns before closing gives you a better understanding of what you are inheriting as the new owner.
Final Thoughts
So, do you need an attorney to buy investment real estate? No, it is not required. But there are many areas where an attorney can add meaningful protection, from reviewing title and loan documents to confirming ownership authority and evaluating leases.
Many investors we work with appreciate having that additional layer of guidance when buying or selling property. If you are considering a real estate investment transaction in Pennsylvania or Maryland, contact us to discuss how to assemble the right team and move forward with confidence.
