A question I was asked: “As an investor in real estate, wouldn’t I save money using legal forms off the internet instead of hiring a real estate attorney?”
The internet makes it easy to go online and download a legal form. Need a lease? Go online. Need a deed. Go online. Want a land contract, purchase agreement or option to purchase? Go online.
Only Basic Contract Needs
Many attorneys are discouraged by the internet. Not me. The internet is the “gift that keeps on giving” for seasoned real estate and finance attorneys just like me. That’s because, at their very best, online forms only address the basic contract needs of any transaction. What do I mean by that; well, here is an example.
Potential Personal Liability
I have a real estate investor purchasing a land contract. The property is an 18-unit apartment building. The seller gave my client a land contract that he pulled off the internet. A 7-figure-transaction without an attorney-approved form. This land contract had, of all things, a promissory note. In Michigan, you don’t use a promissory note when you have a land contract. It creates more personal liability for the buyer.
The transaction did not have a purchase agreement. “Yes” you need a purchase agreement that spells out the terms of the transaction. The land contract is the financial instrument in lieu of a mortgage.
Finally, the terms of the land contract did not address the seller’s current HELOC (Home Equity Line of Credit), nor did it have provisions as to what happens if the Seller defaults on his underlying bank loan, or whether he can still draw off the equity line of credit.
Having a legal form is not a substitute for having an experienced attorney review and comment on your legal documents.
If you choose to avoid using attorney-approved real estate documents tailored to your specific transaction when you are investing thousands, if not hundreds of thousands of dollars, You may not see the consequences of using poor documents right away, but the legal vomit will creep up on you at some point. I make a large part of my living cleaning up after legal vomit. Those people who are watching this, who have paid the price for self-induced legal debacles, are shaking their heads in agreement. Take your form over to a real estate attorney.
So do yourself a favor. If you want attorney-approved legal forms for Michigan real estate and loan matters, check out Provenresource.com.