Real estate attorney for Multi-Family investing

7 Replies | Pittsburgh, Pennsylvania

Hi 

I am in the process of making an offer for a multi-unit property in Pittsburgh. I work through an agent and he has recommended that I use a real estate attorney to review the contract and make any additions, if necessary. I am an out of state investor and wondering if anyone can help with the following

  1. Is this normal for an attorney to review or modify every time an offer is made? Don't the costs skyrocket?
  2. What is the exposure that cannot be covered by standard PAR (Pennsylvania realtor paperwork)
  3. How much should I expect to pay for these services?
  4. Any recommendations for a real estate attorney in Pittsburgh?

Will be grateful for any help or advise here. Thank you

@Anand S.

How many units does this property have? Many folks use the Standard PAR Form for 1 to 4 units. Of all the deals I've been part of, I've seen the Commercial PAR Form get used twice. Both of the times, it was a for a tiny commercial building.  

When using a standard PAR form for 1 to 4 units, I never directly edit the form itself. I typically just add addendums at the end. In many cases, the PAR already have addendums available that are okay. 

No idea how much you would need to pay an attorney since I have no idea what the scope of work is. It would be helpful if you provided more details. That way, folks can give informed responses. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information

@Anand S. what size/value property are you talking about?  If you are talking about a million dollar building you probably want an attorney to draft a contract for that specific deal. I would figure $2-4,000. Because of this high cost this is why a letter of intent is often used for initial negotiations on large deals. 

If you are talking about a three unit building a more basic contract is acceptable.

Thanks Chris, Ned. Really appreciate your response. This is a 4 unit property and priced less than $400k. To quote the agent and his brokerage attorney - they suggested using an attorney to draft the following - "Short addendum to cover things like a (i) pre- and post-closing indemnity, (ii) seller representations and warranties, (iii) an assignment and assumption of leases, (iv) establishing a duty to collect past due rents, (v) Seller’s delivery of a “rent roll” and update of same on or at closing, etc., could all be included in a short addendum."

Will a standard PAR form cover these?

@Anand S. a good experienced agent can do this for a lot less on a standard PAR form. You can put in any reasonable contingencies you would like. They would not have to represent you only as a transaction agent

Originally posted by @Alex Deacon :

@Anand S. a good experienced agent can do this for a lot less on a standard PAR form. You can put in any reasonable contingencies you would like. They would not have to represent you only as a transaction agent

 That would have been my expectation as well. Thanks for validating that, Alex. 

@Anand S.

You can probably take care of most of these using the PAR forms for a 4 unit. A few comments:

  • The default PAR form already deals with (ii). I would review the form and ask if you really want some other kind of representation and warranties. For example, if you are buying from an estate of dealing with some other odd issues, you may want the seller to make other representations. 
  • (iii) is also somewhat dealt with in the PAR form. The PAR also provides a tenant-lease addendum (or something like that). I would review that form and consider using it. 
  • For rent roll, you can provide the form and ask them to sign it. For a 4 unit, I'm not sure if a rent roll is a deal breaker. 
  • I'm not sure I see much value in (iv) but I suppose it can't hurt. 
  • For (i), you can require indemnification. My default, pro-buyer form requires it. That said, you do want to consider the practical realities of enforcing an indemnification clause.  

Aside from all the above, I would want to see the tenants sign some kind of estoppel certificates. That's probably more critical than a rent roll.

For a 4 unit deal, you probably can do without a lawyer. But then, I have no idea what your experience level is. Maybe you want to hire one if you are nervous. I also have no idea if there are other oddities with this deal that's motivating your agent to push you towards hiring a lawyer. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information

@Anand S. Side quick, where did you find this deal, if you are willing to share publicly or privately?  I too am looking at Pittsburg area to invest.  Thanks