ALWAYS use an attorney when getting started in real estate investing. When I first started in REI, I realized houses are easy to purchase and homes are easy to sell. I have purchased houses with no equity, houses with $100,000 equity and houses with equity everywhere in between.
Before I purchased my first property I went to the top real estate ettorney in my state and had her prepare all the documents required to legally purchase and sell properties to protect both the buyer and the seller. Then I took this paperwork to several escrow companies (title companies) and had them review the paperwork to see if they would accept the paperwork when the time came for the buyer to re-finance the property or for me to sell the property outright. They accepted the paperwork without question.
No matter which state you live in, you have elected legislators that pass laws in your state. The state statutes contain these laws passed by the legislators. These laws vary from state to state. In other words, what works for me in my state may not work for you in your state for “true “protection. You could use what I call “generic paperwork”. However, I do not know if this paperwork will protect you and the new buyer or your seller in your state. Maybe some of the attorneys that post here would have an answer.
I was reading an article where the seller wanted his attorney to review the paperwork. Occasionally you will run into this situation. One person used his sales skills to overcome the objection by saying, (I will paraphrase here) “is your attorney going to live here and make your payments?” He got the deal. What I use is, “This paperwork was prepared by the foremost real estate attorney in our state. I am sure your real estate attorney knows her. It will only take a few minutes to call your attorney and have them talk together now on my dime.” What do you think the chances are that someone has a real estate attorney? Besides I had the best and that was enough to close the deal.
There is a military base where I live. I purchased quite a few of their properties, which had V.A. loans. Made my life easier. Military bases are a good place to prospect for motivated sellers, as military personnel are transferred quite frequently. I found that military people would say, “I will need to have your paperwork reviewed by the Judge Advocate General's (JAG) office”. For one thing it is free; so why wouldn't they use that free legal advice. The JAG office never turned down my paperwork. I received a call one day from the Colonel in charge of the JAG office. He explained that he had just received orders and needed to sell his house quickly, would I be able to help him? I asked him if he needed to review my paperwork. He laughed and said, “it would not be necessary.” I purchased the house.
When one of my buyers was in default, I obtained a simple Five Day Eviction Notice. When I went to court the buyers had an attorney. He said something about an “Equity Issue” and then recited a state statute I never heard of. The judge said this should be in District Court not Justice Court , no simple eviction. I went to the state statutes and read that law. Wait a minute here; this statute referred to a “Trust Deed” not a Contract for Deed. In my state, a Contract for Deed (CFD) is a stand-alone document. Meaning the way the contract reads is how it is interpreted by the court system. It contains the wording stating if the buyer defaults then the seller (that's me) becomes the landlord and the buyer (that's them) becomes the tenant. When I went back to court and their attorney brought up “equity issue”. I replied “the court system recognizes this document (CFD) as what is says is what it means (not very legaleze) and has nothing to do with State Statute XYZ which is an equity issue concerning trust deeds”. The Judge took a fifteen-minute recess, came back and said “can your client be out of the house in 48 hours?”
I just read where a young lady just starting out in REI was charged with selling real estate without a license. She was selling a house she just purchased and was turned in by a real estate agent. Her T/B's (I think this means tenant / buyers) moved out because they became panicked. A real estate investigator talked to her so she sought legal advice. Two attorneys advised her to plead guilty and said it was just a misdemeanor. One attorney said it was a novel case and would take it for a charge of $1,500. She doesn't know what to do. I do not know what the outcome of this case will be. I would bet, if she started with an attorney, she would be suing the real estate agent for filing a false criminal complaint, “torts” and other charges. I do feel empathy for this lady.
Also, when you get ready to sell your portfolio of houses, when you are ready to retire or just want out, your buyer or buyers will have the paperwork on the houses you own reviewed by an attorney. If the paperwork is in order, it's an easy sell. It worked for me.
I'll say it again, when you are first starting out in REI, I would advise that you also consult with an attorney in your state or see if any of the attorneys who post on this board can prepare the “proper” paperwork you will need. I have often said, “I am not fond of them (attorneys)”, however I'm not crazy enough not to use one when necessary.