Hi, I've contacted a couple of attorneys stating that I'm preparing to launch a direct mail campaign and there (hopefully) will be leads which I'll want to do Subject To or Seller Financing transactions.
I asked the attorneys how they typically handle these and they stated that once the deal materializes, that they can draw up the paperwork.
Is this the case for others? My concern is that I'll be paying a big chunk to an attorney per transaction which will definitely take away from profits.
Should I be approaching them in a different way? I figured that once they draw up the paperwork, I can apply it to multiple deals and tweak minor details depending on the situation.
Any thoughts on this matter from the pros would be greatly appreciated. Thanks!
I suggest you make it understood that you only want contracts drafted for your use.
With contracts or other documents you can have copyright issues, the contract may be owned by the author and they may use the contract to facilitate a sale which they oversee. This route means the attorney takes on the liability of conducting the transaction and or settlement, if they sell you a contract they are only liable for the text contained in the document and nothing else. How you use the contract is no skin off their nose.
It is better to obtain a standard contract used in your area, draft what you want and take that to your attorney. Ask the to review the contract as to form AND content and to make necessary changes. They won't have to start from scratch adding time to the bill.
Many will simply pull a contract from a library of boilerplate contracts, they have somewhat of a seal of approval of their Bar Association. Attorneys don't sit down a construct RE contracts from scratch each time, they hit the print button.
Most all that I have seen in connection with seller financing, having a note or an installment agreement are poorly devised, that's because most attorneys are not finance types. I contacted several attorneys in my area and discussed the issues with their work, one said he just wouldn't be doing RE anymore, the others agreed to change and correct the issues as to my concerns. What is commonly missed are matters relating to the reduction of principal owing being acceptable for future lending requirements, insurance assignments of loss proceeds and other matters.
They charge by the hour, those that do enough of something knowing the time expected may have a flat fee. Many if not most if not every attorney may consider pricing services as to an economic benefit to what the market will bear, they may charge $500 for something when it takes them only a few minutes to review and paying the paralegal and their hourly rate may be $200, but what they do is required, usual and customary.
Like any other service provider they will have a pitch, their education, experience, success in related matters, answering questions in a timely manner. None will give you any guarantees.
You can certainly negotiate, if they won't, either agree or find another. I have found that using a really good attorney is worth the additional cost. IF they take you as a client, they may charge $500 for a box of contracts, but they are receptive to answering phone calls, giving advice from the hip and guiding you time to time without ringing up the cash register. Discount types may send you a bill if you leave a message.
My primary RE attorney has been around for decades and was the mayor of the city. He's expensive, but what I'm also paying for are his connections, reputation and a huge battle ax, issues can be dropped before they ever get started if he's involved and if it's of a political nature, say a zoning issue, it may only take a phone call.
Most folks don't get to pick their doctor today, they get who the insurance company or hospital assigns. Attorneys are different but you may not convince any attorney to represent you, one, they don't want to bother with some manner, or, they may not feel comfortable dealing in a more advanced matter, that isn't cookie cutter or that could well end up in court, they avoid trouble. Another reason is that they may have clients that would present a conflict of interest, if the represent the Board of Realtors, they may not take clients that could have run-ins with a Realtor or the Board.
Best to interview several attorneys, you are hiring them. Most will give you 15 0r 30 minutes free while they talk about themselves as their resume'. See how they communicate with you, do your personalities mesh professionally, are they receptive or arrogant? Ask how they bill and set charges! Might ask about a retainer, paying them and then working that amount off, they like money up front and often give better services and value for clients on a retainer.
Contracts are your inventory in the RE business, without them you're not in business. Pay for one contract and use it 300 times.
Investors (or non-attorney or someone very well versed in such matters) should not change the basic body of a contract, you make additional one time type agreements as an addendum to the basic contract. You can agree that paragraph 9 will not apply in this transaction in its entirety and initial by all parties and sign it. You can add additional agreements as well, but don't touch the body as often, there are related matters that support other terms or conditions within the body of the contract, if you change something you may effect the applicability of other covenants, to the extent you may not have a valid contract.
Don't play lawyer, I know most here probably do, they just haven't had an issue yet, we have many outhouse attorney wanabes in real estate, if they new more about law they wouldn't be doing what they do. Pretty much ego, you'll never convince those types they are wrong or that they are practicing law to save a buck. There are old timers that can write a basic contract that mirrors a standard contract, I'm speaking of more creative that so many dream up. You also need to take care in how you describe an agreement, your English, sentence structure, write as simply as you can and don't try to inject your version of legalize. A judge or attorney can spot a novice a mile off and it won't help your position, especially if you write terms that favor one side much more than another (popular with gurus).
Don't write contracts for others, that is the unlawful practice of law, if a deal blows up the judge will ask "who wrote this?".
Lastly, another good source for contract reviews could be your title or closing folks, they know contracts and what is customary. Good luck :)
Take a blank sheet of paper and list the key terms that form the essence of your agreement.
I can now do this with seven line items and a lot of white space.
A closing attorney or a title company can guide you through what you need.
Many years ago I consulted with a "real estate attorney" about what I need to buy notes. What a waste of my time. I was so disappointed that I've made it a lifelong quest to improve the availability of info on this topic.
Suggest you create your own documents after basing on documents commonly available from title companies that serve your state. After modifying to fit your requirements, pay an attorney to review what you have and bring into compliance.
@Bill Gulley and @Rick Harmon, thanks for your responses. It's still sinking in, but this is very helpful!
OK for all you non contract law types!
1. Go here...learn the basics of contract law
2. Book http://www.amazon.com/Complete-Book-Real-Estate-Co...
it has a word CD, design your own.
3. Books for contracts by my favorite lawyer
I have all of them.
And get an attorney! lol
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