Real Estate Legal Protection - Landlord Guide

Introduction

Buying low and selling high means buying now and selling later, when it comes to real estate in this depressed market. But before you go on a massive buying binge, there are a few things you should probably know about being a landlord, from the legal protection perspective.


Real Estate Legal Protection Strategy 1: Real Estate Ownership Type

One mistake that novice real estate investors often make when starting out is buying property under their personal names. There are two problems here: first, all of your rental properties will legally be considered personal assets, and second, if a tenant sues you (an all too likely scenario), all of your other personal assets are liable.

The bottom line is that you need to distance yourself, legally, from your rental properties, as they are both seizable assets and litigation liabilities.

The answer: create an LLC (no, don't overpay an attorney, get a template for free from your local taxation & assessment office), and own the LLC either with someone else (such as a spouse) or through a trust. For the latter, you probably should use an attorney. Lastly, make sure that you don't own too many properties under one LLC, as all are fair game if the LLC is sued.

Real Estate Legal Protection Strategy 2: A Muscular Rental Agreement

The rental agreement is the first and most important document you sign with a tenant, and will be the first and most important document brought out in court when and if something goes wrong with the tenant. What makes a strong somekeyword is a broad topic in itself, but the most fundamental requirement is that it conforms rigidly with state and local rental laws governing landlords and tenants. There are websites out there that actually custom-assemble a rental agreement for you, based on your state, municipality, and desired extras; here's a link to one such website for a custom rental agreement.

Real Estate Legal Protection Strategy 3: Sign Proper Real Estate Legal Disclosures

All states require landlords to issue real estate legal disclosures to their tenants upon signing a rental agreement, including a federally required pamphlet on lead-based paint. If you don't follow these laws to the letter, your tenants can successfully sue you down the road. Sign lead paint addenda, pet addenda, and anything else you think you might need, because (pardon the clich) you're far better safe than sorry.

Real Estate Legal Protection Strategy 4: Property Management

There's a lot to be said for a good property management firm, and I would urge every novice landlord to hire one. If you do plan to do it yourself, I recommend being extremely attentive to your tenants, as absentee landlords are favorite targets for litigation. Maintain a personal relationship with each of your tenants, and you'll be far less likely to be sued.

If you'd like to try out online somekeyword to help you keep track of your tenants, payments, properties, and legal forms, the rental agreement and landlord forms site from above has a good system.

Being sued is one of the most expensive and aggravating roadblocks that landlords have to worry about, so do everything you can to protect yourself. You'll sleep easier, and be far better prepared if the worst should happen.

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