Contracts?

6 Replies

Hello everyone,

I just wanted to know if there is a 1-stop-shop for all the contracts needed, from start to finish, to close a deal? I know there are different contracts for different kinds of deals (like sub 2, lease to buy, owner financing, etc) - but is there a 1 stop shop for all of these contracts that I can download, and use as needed?

I'm just a little confused on where to go next. I have been talking to sellers as well as started building my buyers list for my area, but I'm not sure what to do next, after myself and the seller agree on a price. Which forms do I fill out first? Do any contracts HAVE to be signed in front of an attorney? Does the attorney provide these contracts?

I'm looking for contracts for both me and the seller, as well as me and the new buyer.

Thanks all,

-Nathan

Nope, no such place, doesn't exist, won't happen, no way Jose, why?

There are 50 states, all have different laws. Not all strategies are legal everywhere. Don't you just love state's rights?

All RE is local, meaning different ordinances, filing requirements and customs. Even the margins on documents to be filed will vary at a county level, one may want 2" at the top, another 2 1/2" another may want 3", it's not just the covenants of an agreement but also how the document is physically laid out.

While the basic laws of contracts in business apply to all states, that won't constitute any real estate agreement, but all good agreements will contain these basic requirements.

Actually, these are very important aspects mentioned why there are not universal RE contracts. Local customs are probably the most important area to pay attention to.

I can't really say newbies must have contracts reviewed by a local attorney before they use them in an area, maybe I could. If I said you must, that seems like it's some law, it's not (geeez, but it could be) but it is a law in common sense IMO. So, I just say you should do that.

Don't have $50 to ask an attorney to look at your contract for 2 minutes? What makes folks think the can deal in a regulated industry where tens and hundreds of thousands worth of a product are transferred and getting into the business can be done for the cost of lunch?

Military folks can have a JAG officer look at a contract, they may not advise in your business dealings but they can look at it as to its form.

Many attorneys will look at the "form" for nothing, buy a few beers at their hang out and ask them to help you out, they are human, LOL.

But, when you ask, ask them to look at a contract as to its form (legal requirements as to structure, margins, headings, general covenants and signatures or aspects of any notary required) but also to content. Asking them to bless your contract as to content means you want them to address each statement, the intent and meanings of the agreement. If you don't ask, they may glance at it, say it's fine and hand it back to you.

Contracts off the internet can be had. Legal Zoom says they have contracts for all states (but not all types of contracts). I'd bet my law degree, if I had one, that any contract off the internet will never address the finer points of a good contract for any local RE operation, I would never use one! Such are what may be called a "go by" something to begin with, to use and then modify for specific transactions in certain areas.

By getting a standard real estate sales contract in your local area, like from a Realtor, you can then see what may need to be used to comply with local law or custom. For example, you might see that a seller is required to have a septic inspection and be responsible for it passing inspection, being certified before they may pass title. No guru contract will have such matters addressed and failure to comply could stop your deal, or even nullify the deal.

Bottom line, see an attorney before you start. :)

@Bill Gulley Thank you for the response! I figured it'd be too good to be true for such a thing to exist. I'm going to contact a local Real Estate Attorney and see if I can get some more information from them. Thanks for the advice!

Hi @Bill Gulley I would imagine that you have some real estate networking groups in your area. I'd go to those and find some experienced investors...they probably have blank contracts they use that they'd be willing to give you.

Originally posted by @Scott Hearne:
Hi @Bill Gulley I would imagine that you have some real estate networking groups in your area. I'd go to those and find some experienced investors...they probably have blank contracts they use that they'd be willing to give you.

I've been doing it so long that I have my own library and I write my own, but don't tell anyone. I had changes made to our local BOR contracts as they had not addressed financing issues and several attorneys changed their boiler plate forms from suggestions as well. This is not a beginner aspect to be involved with and I obtain opinions as to common practice changes as well. I'd say the biggest issue new investors have in trying to write contracts is that fail to really understand the risks involved and tend to devise contracts that are too favorable to them. Any contract may be weighted toward one side or another, but is should be rather slight and not be viewed as predator or unfair, that can cause problems if you try to enforce the terms. So, best way to go is to get local expert guidance from an attorney. There are some really horrible contracts used by some investor types here, just because some old operator has used something for decades doesn't mean it's a good contract, in fact, it should be a red flag as things change and many just keep doing what they have always done. :)

@Bill Gulley I think if youre able to spend a few bucks that would be a good way to go, that is, assuming, that you have a good real estate group in your town that can refer you to an attorney. Otherwise, you probably can find someone on biggerpockets. The attorney would have to be someone who does a bunch of work with investors though...a "regular" real estate attorney wouldn't be as useful.

Might be a possibility, Marion, Iowa might have a good REI group, they may have an active attorney who is affiliated with them, I can't say.

Trouble is, I spent over a decade cleaning up "investor contracts" in a 7 state area. I'm sure that somewhere there would be an investor, layperson who could write a good contract from scratch, I've just never met or seen one. I've seen contracts written by Realtors, by car salesman, by insurance agents and even a few loan officers, I wouldn't use any of them, they are usually penny wise and pound foolish. I've also seen some pretty poor documents from boiler plate salesmen.

A local real estate attorney will be fine if you aren't trying to do unconventional, messy, wild and crazy transactions. As I've mentioned before, I know personally a really investor friendly attorney, he's still serving time in prison. You don't want to get involved with a yes man type attorney that impresses you with justifications to do just anything as they get a check. I'm not going further on this topic as contracts and the use of attorneys has been drilled to death on BP.

Certainly can't toss all investor in one boat, there are some very astute and professional operators, then there are those who are not. Taking advice or legal advice or contracts from just anyone isn't prudent, anything might help as I mentioned above. Sit down and put your stuff together and then see an attorney.

The perception that a good attorney is expensive in obtaining a contract has another consideration. If you are serious about investing, a contract is a cost of doing business in an area. Say you spend $500 to get a good contract that meets local needs and are told what you can modify and change for given situations. You do just 100 deals with that contract, your cost to be compliant, meet legal requirements, have an enforceable agreement and be confident in your dealings then becomes $5.00 per deal, 500 deals is just a buck a deal. Even if you only did 5 deals, $100 isn't a big deal for the benefits of doing things right. Besides, most aren't expensive around here for these types of matters.

I was on the phone with a Dallas area attorney concerning a commercial deal, we got off on other real estate matters and had a good chat, exchange of ideas, TREC issues and that cost me nothing ! :)

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here