Investing in real estate is a great way to grow your portfolio, as the value of land continues to appreciate over time. However, buying property can be intimidating, especially if you’re new to the real estate sector. Before making any major financial decisions, it’s essential to familiarize yourself with the legal documents and issues involved in purchasing land. In this blog, we’ll explore some of the key legal considerations to keep in mind, including important documents to review and common legal issues that can arise when investing in real estate. By understanding these elements, you can make an informed decision that helps protect your investment and ensures long-term financial success. So, let’s dive into the legal considerations of investing in real estate and help you feel more confident in your decision-making process.
To begin, you will want to review these important documents before buying a property.
The title deed that defines how the property is owned, inherited, transferred and allotted by an authority. It legitimizes the ownership of the property. It also legitimizes the ownership of the property and transfers property ownership from the owner to the buyer.
Verifying that the property’s title is free from defect is one of the most critical steps in investing in real. As such, it’s vital to review the property deed carefully before making any significant financial commitments. However, given the complexities of title examination, it’s best to seek professional help from a real estate attorney or title company to ensure that the title is clear and free from any encumbrances. By doing so, you can avoid unforeseen legal issues and protect your investment, giving you peace of mind and confidence in your decision to invest in real estate.
Property owners in the U.S. are required to pay property taxes every year and it’s crucial to review the property tax receipts carefully to ensure that the taxes are up-to-date and paid in full. Working with a real estate tax accountant can help you understand the complexities of property tax laws and ensure that your investment is protected.
If the property you’re interested in purchasing has any outstanding taxes, it’s essential to resolve these issues before closing the deal. Otherwise, you could become liable for any outstanding tax demands, potentially costing you an unexpected financial burden. By taking the time to review property tax receipts and working with a knowledgeable professional, you can ensure a smooth and successful real estate investment experience.
When investing in real estate, it’s important to avoid taking the property owner or builder’s words at face value. Blindly relying on information about the locality’s development provided by the builder can lead to costly legal issues down the line. Therefore, performing due diligence by verifying the property’s sanctioned building plan approved by the regional building development authority is strongly recommended.
The building plan approval process ensures that the developer has submitted necessary documents, providing evidence that the building codes have been followed. Reviewing the sanctioned building plan is an essential step in ensuring that the property has been developed correctly and complies with relevant guidelines and regulations. By checking the sanctioned building plan, you can mitigate potential legal issues and make a confident investment decision in the real estate sector. Because of this, it is highly recommended to review the sanctioned building plan before making any significant financial commitments in real estate.
Before investing in a property, it is recommended that potential investors work with others to thoroughly review the seller disclosures. This may include attorneys, real estate agents, property inspectors, or other professionals who can provide insight into any potential legal issues. Collaborating with others can help identify any material information that the property owner may have failed to disclose, which can help you make an informed investment decision and avoid potential legal complications. Therefore, working with others to review seller disclosures is strongly advised before investing in a property.
Accolade Accounting is committed to helping real estate investors make prudent investment decisions. Whether you want to invest in a residential or commercial property, our accountants can review all tax documents to ensure real estate taxes are paid in full. To make an appointment, call 470-646-2663.
Until next time my friends,
Cheers!
JD Longino, CPA
