Meeting a new person can be intimidating. For some people, meeting a new attorney can be especially intimidating. But it doesn’t have to be. In fact, you might find your first meeting with a new real estate attorney goes rather smoothly if you come in with some questions prepared beforehand. These four questions can both focus the meeting and save you both a lot of time.
For your convenience, here are some of the most essential questions to ask your real estate attorney. Of course, this list is not exhaustive. If you have an inclination to tell your attorney about a situation, it is always best to err on the side of saying too much over too little. Regardless, these questions should give you a starting point for building that new attorney-client relationship.
Download Your FREE Tenant Screening Guide!
Hey there! Screening tenants can be a tricky business, and this critical step can be the difference between profits and disaster. To help you with your real estate investing journey, feel free to download BiggerPockets’ complimentary Tenant Screening Guide and get the information you need to find great tenants.
4 Questions Every New Investor Needs to Ask Their Attorney
1. What kinds of real estate investing legal work do you usually do?
This question can save you a lot of time and money with real estate lawyers. One thing some people outside of the legal field don’t understand is that not all lawyers are litigators. I’m an example of one of those lawyers. I mostly practice transactional law. If you need someone to help with property transfers or the creation of asset protection structures, I do those things all day. You would need a different kind of real estate attorney if you wanted to, say, sue your landlord. Landlord-tenant litigators usually advertise themselves as such and wouldn’t be a great choice for, say, what I do.
Related: Tips & Tricks From an Attorney: Here’s How I’d Protect My Real Estate Assets
Come out and ask what types of business a lawyer does. Most of us will find a way to help you if you schedule a consultation and clearly explain the problem you are having or anticipating. You don’t need to know all the legalese, and, in fact, it’s usually best if you explain your problem in plain English. Contrary to some strange popular belief, most of us are actually nice people who will be happy to refer you to a competent colleague if we cannot help you ourselves.
2. Which entity is best for me?
As a real estate investor, you will eventually need an entity for both operational and asset protection purposes. We tend to find some form of limited liability company (LLC)—or even a network of a traditional LLC for operations and a series LLC for holding assets—is an effective solution for most investors. Ideally, you want your lawyer to set up a company structure that you know how to use and will protect your real estate investment assets while helping you manage them.
If you’d like to learn more about your entity options, check out our previous articles on the differences between the traditional and series LLC as well as Four Types of LLCs and The Way They Pay Taxes.
3. Can you take a look at this deal?
A good real estate attorney will usually gladly take a look at your deal. Their input is even more valuable if the attorney is also an investor like you. Even if you don’t have a real estate attorney for other reasons yet, most would gladly offer this service for a simple hourly consulting fee. It’s well worth asking for. Attorneys often catch errors in contracts or deal structures that would escape a layperson.
4. How will you bill me?
This may seem incredibly obvious, but failure to ask this question or have a conversation along these lines has lead to many an unpleasant surprise, usually in the form of an invoice followed by the recipient’s spontaneous emission of some colorful language. Some attorneys bill by the hour. Others of us use flat fees. And still others operate on retainer or contingency—though the latter is rare in the real estate world (at least from the landlord’s perspective).
Related: 5 Reasons Why You Need a Real Estate Attorney
While a variety of arrangements are just fine, the lawyer should at least be able to explain what he or she is billing for. An upfront conversation about billing possibilities and what you can expect to pay saves both parties potential grief. You can also use this time to negotiate the possibility of a flat rate, if such a maneuver makes sense for your needs. I offer flat rates because most of what I do does not require unpredictable hours spent in court. An attorney performing similar transactional services may be more open to a flat rate than one who will be performing largely hourly services or spending extensive time in court on your behalf.
I hope you have found this list helpful as a starting point for a conversation with your new attorney. This may likely include a follow-up article with more useful questions to ask your attorney if there is any interest.
In the meantime, if you have any feedback or suggestions to add to the list, fire away in the comments section.
Thanks for reading!