Real Estate Law-At A Glance

If you are considering starting a career in real estate investment, whether it is part-time or full, you need to be aware of the many legal implications that surround properties and understand which ones apply to the sort of investments that you are interested in. Of course, your first port of call should always be to speak to an expert in the subject of property law. They will be able to provide you with plenty of information about what applies to you and the issues that you might face with the investments that you are considering. However, there are also a number of tips that are important to keep in mind before you invest any of your money in property.

Be Organised

The very first thing you need to do before investing in anything is to have complete awareness of your current financial situation. You need to be able to set a solid budget that doesn’t put you in trouble if an investment goes bad and you need to understand exactly where your money is going and what sort of return you are getting on it at all times.

In many cases this will require hiring a certified accountant who can keep track of where your assets lie at all times and will be able to inform you of any changes in law that may affect your investments. This is something that you are going to need to spend a considerable amount of time and effort on, but it is important if you want your investments to start paying out.

Be Aware of Local Issues

Real estate and personal property tax are going to affect every investment that you make, so it is important to be aware of what they are and which of your investments they affect. You will need to budget for each every single year, so don’t let your concentration slip and make sure that they are always included in your figures.

It is also important to note that neither is a set rate across the country. Different areas will have different rates of both types of taxes, so you need to be aware of what they are before you invest. After all, it can come as a massive shock to the system if you invest in a property outside of your comfort zone, only to find that you are required to pay a higher rate of tax for the pleasure.

Know Where to Make Savings

A good accountant who understands real estate will also be able to point out ways that you can save on the tax you pay, based on the investments that you make. This is particularly useful for people who are renting out the properties that they own.

Furthermore, you should always be aware of the 1031 exchange, which allows you to defer the capital gains tax accrued from the sale of one property directly into the purchase of another. You can keep hold of much more of your money by doing this, which has allowed for many investors to build a small fortune through continual deferral.

Most Overlooked Facts About Real Estate Law

The law of deeds has its roots in the ancient rite of livery of seisin. That ceremony served as the forerunner to the modern deeding process at a time when very few persons could write. This method of transferring ownership required that the buyer and seller gather a group of local residents on the property to be sold. All the persons would march around the boundaries of the property and then assemble at its center. Once there the seller would dig up a chuck of sod and offer it to the buyer with the local resident’s witnesses. While offering the sod, the seller would recite the terms of the transaction. Ownership was transferred when the buyer accepted the chuck of sod from the hands of the seller. While the modern deeding processes have replaced the old livery seisin, it’s easier to understand the modern process when it’s compared with the old ceremony.

The modern deeding process today, paper replaces the chunk of sod. Usually a deed is a single sheet of paper. Like the sod, a new deed is created each time there is a sale. Like the ancient ceremony of livery seisin, it’s the whole deeding process which transfers ownership. All the parts of the modern process must be completed before ownership is transferred. These elements of the modern deeding process are execution, acceptance and delivery.

Execution refers to the format, language and signing of the deed document. Many states have enacted statues which specify a form for short, simple deeds. These are called statutory deeds. While all deeds are essentially similar, there are some slight variations from state to state. For example, while some states require that the deeds new notarized to be valid, most states do not. Notarizing involves marking signed documents in a way which indicates that an official of the state has determined that the signatures are valid.

By itself, execution of a valid deed does not transfer ownership. Delivery, like transferring the chuck of sod, merely involves transferring possession of a properly executed deed with the intention of shifting ownership. Delivery can be made to either the buyer or the buyer’s agent.

As so, if a mother executed a deed in favor of a daughter, but the deed was left in the mother’s safe-deposit box until her death, the deed would not transfer ownership because it was not delivered. Further, if a deed were deliver just as security for a debt, ownership would not transferred because there was no intent to shift ownership. Acceptance merely means that the buyer indicates a willingness to assume ownership. Retaining the deed after delivery usually constitutes acceptance. In a nutshell, this is the deeding process of today!

Real Estate Law-Insights

Though deeds vary from state to state, all deeds contain basically the same information. The names of the grantor, the words of conveyance, name of the grantee, consideration of statement, property of description, the agendum, the signatures and certifications. Each section communicates the important information about the nature of the parties or the property or the transaction. Since the deed is the heart of most real estate transactions, it must be scrutinized carefully by both the buyer and there seller, if they’re to protect their interests. The person giving up ownership is the grantor.

Then the person receiving the deed is calling the grantee. The name of those exciting the deed as grantor appears first. These persons must be the owners of the estate conveyed on the order that interest to pass. The words of conveyance generally determine which promises or warranties the grantor makes to the grantee. When the words “warrant and convey” or “grant and convey” are used, this indicates the grantor promises or warrants the following:

  1. That the grantor owns the estate transferred and will pay the grantee for his or her injury if it turns out that the grantee doesn’t receive the state described in the deed.
  2. There are no liens, easements, leases, mortgages or other encumbrances which bind the grantee other than those disclosed in the deed.

Deeds of this type are generally called warranty deeds or grant deeds. They are the kind that are most used today. The other major type of deed is called the quitclaim deed. The words of conveyance, for it often included the word “quitclaim.” This deed merely transfers the grantor’s ownership, if any. No promises or warranties are implied in the deed.

If a professorship gave a student a warranty deed to the school building in exchange for $10,000 the student could sue and recover the money if it turned out that the professor did not own the building. If however, a quitclaim deed were given, the student could not recover the money.

Quitclaim deeds are often used to remove “clouds on title.” For example if a divorced man sold property and then died and the buyer feared that the man’s ex-wife might have a dower claim. The buyer could ask the ex-wife to execute a quitclaim deed. She might sign–perhaps in return for $75; but her lawyer would surely advise he to not to exude a warranty deed because she is not to certain that she owns any interest in the property.