Learning Commercial Real Estate – Pam Goodwin, Shelby Beckman, Guest: Julia Barth, Aaron Siddique – S1E9 Real estate attorneys Julia and Aaron discuss the importance of understanding the risks and mitigators of buying and selling real estate, the due diligence process and how missing one checkbox can cost you tons of money. Outlining how to protect yourself and your assets, they detail the critical components of avoiding litigation.
Common real estate lawsuits include suing for specific performance, closing cost responsibility, commissions, roll-back tax responsibility and 10.31 exchange issues among many other reasons. Perform due diligence up front on the property regarding the tax history and implications. When a property is purchased with the intent of doing a zoning change. For example, an agricultural piece of land is going to be developed into a retail space. The city can do a roll back up to 5 years and charge tax on the property for the previous years as if it were a retail property. The party responsible for those taxes must be determined in the contract. Have more than on property of interest when doing a 10.31 exchange. The 10.31 exchange rules are very time specific so if one of the properties is unable to close, you have back up choices to avoid the tax liability. Look for a title company that has attorneys who specialize in real estate law. Not all attorneys specialize in real estate law. Every aspect of the contract is negotiable. If you are paying for the title, you can negotiate the title company of your choice. There is no law saying who must pay the title insurance. Typically, in Texas, the seller will pay the typical title insurance policy. Endorsements are typically paid by the buyer. These impact the function of the land, not the ownership, such as surveys and encroachments. Errors and Omissions (E&O) insurance is critical for brokers and agents. This type of insurance can cover when you make mistakes of error or omission like leaving something off a contract. It is your failsafe. If you are an active real estate broker and are doing deals, you should have E&O insurance. Do not wait too long with an E&O claim as they allow 30 days to address the claim. Brokers and Agents are sued over issues regarding land use like zoning. The buyer must know the intended land use as this is not covered by the title policy or Broker/Agent. Cyber fraud is rampant. Be careful when wiring funds. Cyber criminals will attach to realtors with unsecured emails. They grab the password information, follow the entire transaction and the moment wiring instructions go out, they intercept the email and sent different wiring instructions. If it happens, call the bank immediately. Talk to someone you know at the title company. Therefore, it is important to build relationships. Call the escrow office that you know. Make sure you recognize the voice. The person must leave wiring instructions in person at the title company.
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