For the real estate investor, hiring the right real estate attorney for your transactional needs can mean the difference between a smooth transition in the acquisition roadmap and years of litigation trying to reverse a bad deal.
You do not want just a good attorney, you want the right attorney. There are a lot of good attorneys out there, but not all of them will be the right fit for your real estate transaction needs.
The right real estate attorney will help guide and protect you through all phases of a real estate transaction and the investment timeline – from due diligence to acquisition to operations and finally, disposition.
The right real estate attorney will have particular skills in the types of transactions and operations in which you will be involved and will be familiar with the federal, state, and local laws and regulations applicable to your transactions.
Here are 7 questions to ask before hiring the right real estate attorney.
What Other Areas of Law Do You Practice?
This question is relevant in the attorney screening process because you do not want to hire a jack of all trades when it comes to handling your real estate transactions and your real estate investment matters.
An attorney who also practices family law, DUI, personal injury, etc. will not likely have the expertise necessary to meet your needs. You wouldn’t trust a family doctor to operate on your brain, so why trust a generalist with your complex real estate transactions needs.
Keep in mind, however, that a real estate attorney does not have to practice real estate law exclusively. There are certainly other areas of law that are complementary to real estate law including tax, franchise, securities, and banking & finance law.
How Many Years of Experience Do You Have in Commercial Real Estate Law?
The practice of commercial real estate law is very different from the legal practice involving the buying and selling of a residence.
The skills and experience in negotiating and drafting residential Purchase Agreements do not necessarily translate over to the more complex commercial real estate transactions. You want a real estate lawyer primarily focused on commercial real estate.
Also keep in mind that it’s not the overall number of years of experience an attorney has that you should be most concerned about, it’s the number of years of experience in commercial real estate in the particular types in which you’ll be involved that is more relevant.
In What Phases of the Real Estate Investing Life Cycle Have You Been Involved?
Is the prospective attorney a purely transactional attorney skilled only at the acquisition phase with Purchase Agreements or do they have expertise in the pre-acquisition as well as post-acquisition phases?
An attorney versed in all phases of the real estate investing continuum will better align negotiations and the forms and contracts involved with your investment objectives as well as protect your rights.
An attorney skilled in title & zoning, financial, environmental due diligence, etc., will be better prepared in preparing and reviewing pre-acquisition (e.g., LOI – Letter of Intent) as well as acquisition (e.g., Purchase Agreement) and post-acquisition filings (i.e., deeds) and forms (e.g., landlord-tenant agreements).
Describe The Types and Complexity of Transactions in Which You’ve Been Involved?
The right real estate attorney will have experience in complex transactions beyond simple buy and sell agreements.
Have they been involved in land use, zoning, entitlement, subdividing, development, and construction matters?
Do they have experience with the following?
- 1031 Exchanges
- Purchase and Sale Agreements
- Commercial Lease Agreements
- Property Tax, Development, Zoning, and Other Governmental Matters
- Landlord-Tenant Agreements
- Acquisition and Construction Financing
- NN and NNN Leases
- Ground Leases
- Opportunity Zones
- Syndications and Private Placements
What is Your Transaction Volume and Describe Your Biggest Transaction?
The answer to this question will reveal whether the attorney you’re considering is minor league or a big fish. An attorney with low volume working on mostly small deals will not likely possess the skill or experience to assist you with your comprehensive real estate investment needs.
Have Any of Your Clients Ever Been Involved in Litigation Over Terms of a Contract?
Conflict is unavoidable in the commercial real estate asset class. Most disputes will arise over the performance of the terms of a contract. Did one party fail in its obligations to the other party?
Besides performance, another common dispute is over the terms or interpretation of terms of a contract. Ambiguous or vague terms may open up contracts to litigation over the interpretation of these terms.
An attorney can not control the failure to perform by a party to a contract, but do wield significant control over the terms of a contract and how those terms are incorporated into the contract. A skilled attorney will leave nothing to chance when drafting or reviewing contracts.
Do You Personally and Actively Invest in the Asset Class in Which I Will be Involved?
Before I delve into this question, allow me to relate an experience I had in law school. In my first week of law school, as I met students from across the country with diverse personal, educational, and professional backgrounds, I met a student with a particularly unique background.
This 1L (first-year law student) was a board-certified M.D. He had spent years working in an ER in Detroit and decided to switch gears at the age of 40. Tired of spending as much time defending malpractice lawsuits brought against him as he did on patients, this 1L decided to pursue a career in law, in the field of medical malpractice defense. He wanted to defend fellow doctors against frivolous malpractice suits. I can’t think of a better lawyer you would want to defend you against a medical malpractice suit than an attorney who had once walked in your shoes.
In the same vein as the medical malpractice attorney who is also an M.D., a real estate attorney who is also an active investor is uniquely qualified to understand your needs and to devise the appropriate game plan and prepare and execute the appropriate forms and documents essential for carrying out your objectives and protecting your rights.
Towards an understanding of how much investment experience your prospective attorney has, consider asking him or her questions surrounding the number of properties the attorney has acquired for his or her purposes, the value of assets currently under management, and the price ranges and locations of the properties personally acquired or acquired through an entity.
Hiring the “right” real estate attorney to assist with your investing efforts and transactional needs is not a decision you can afford to get wrong. In your hiring efforts, I hope these questions will be helpful in screening and selecting the real estate attorney who will best advance your investment goals and objectives.