Questions on Buying Rental Property Laws
I wish to buy a rental property that has just been placed into foreclosure in Iowa. What is the legal procedure for this and are there any pitfalls that I should be aware of?In Iowa, foreclosures are made through the court and, typically, the lender gets the property back. They can sell the property legally only post foreclosure, and they may list it with the realtor or advertise it to the public. If you wish to buy a property placed in foreclosure, you would need to locate the lender and express interest in the property. The lender may also be able to tell you who is filing for foreclosure. You have a right as a tenant to at least 90 days notice or balance of lease. If you are considering buying the property, you may also want to see if you pre-qualify for a loan. Once you purchase the property, you may want to get a title policy which will ensure good title and no liens on the house.
In Pittsburgh, is it safe to purchase a property without a personal inspection, from a liability standpoint?If you buy the property without inspecting it, you would be liable for any damages that occur after the purchase of the property as you would be stepping into the shoes of the former owner. If there were any unsafe conditions when the former owner leased the property, you would be responsible for them going forward.
It may be wise to hire a real estate attorney to represent you in the transaction. You may limit any personal liability by purchasing the title under an LLC name or a corporation. Conducting an inspection immediately on possession and remedying any problems will protect you against any potential claims of violation.
You may add terms to the purchase agreement which state that repair costs are warranted against by the former owner. Again, as part of the agreement, you may hold a sufficient amount of the payment owed to the former owner in an Escrow account for a year to ensure that he/she complies with the agreement.
I am buying a rental property along with my son, where the property will be under his name for ease of conducting business with the county, post which my share will be transferred through a quitclaim deed. How does the deed specify what percentage each of us own?Your son is right when he says that by signing a quitclaim deed he would be able to transfer your share of the property in your name. However, if he does this after he marries or gets a mortgage on the property, his wife—or the lender in the latter case—would also have to sign the transfer of ownership. While your son’s intentions may be good, there are several factors involved that may not protect your financial interests.
For instance, if your son were to die unexpectedly, the property would pass through his estate and may go to someone other than you. Also, if he gets into financial problems, you may lose all your investment on the property to creditors. Your investment would also be at risk in the event that your son and you have a falling out.
The most sensible option may be to form a corporation to own the property with 50% ownership of the stock. Or, you may sign a deed as joint tenants which will imply equal ownership. If you wish to have a different percentage of ownership, either the deed must state this, or you should have a written agreement thereof.
Do I need to hire a licensed real estate agent to manage my rental property and collect rent?You would need a licensed real estate agent only if you wish to have someone perform leasing and collect commissions on your behalf. These agents will secure tenants when the unit goes vacant. Typically, they are paid a flat rate and not commissions in order to avoid confusion with payments. However, if you only wish to have someone watch over the property and collect rent, they will not require a license.
How can I mitigate any liability arising from buying a rental property on Sodus Bay that opens up onto Lake Ontario, which can be dangerous?Your options would be to buy the property under an LLC which would limit your liability to this property alone and buffer risks on any other assets you may own. You may also create a Rental Agreement stating that the renter assumes all inherent risks in renting the property near the bay and will release and indemnify the owner from any losses, claims, or damages suffered as a result.
There are several measures you can take to secure your rental property from claims. An airtight lease agreement is a good start. It is also important to issue proper real estate legal disclosures to your tenants especially since each state has different laws regarding what must be disclosed. Get in touch with a Legal Expert to check local real estate and landlord laws when buying a rental property.