As readers of these posts know, Jason Hartman advocates diversifying your rental real estate investments by purchasing as many properties as you can in as many different markets as possible. For some investors, that means buying properties outside the state they live in. Because real estate law varies from state to state, it’s essential to be aware of the regulations that govern real estate sales and rentals in your property’s local area,
Real estate law is actually a broad field that covers statutes and regulations pertaining to land, structures on a piece of land and any changes or improvements that relate to the land and its buildings, such as putting in wells and fences, adding structures or making repairs and renovations. In some cases, intangibles related to the property may also be involved, such as rights to airspace over the land. Real estate law governs not just aspects of a piece of real property, but also any transactions involving it, whether by inheritance, sale or exchange.
Some aspects of real estate law are established by federal statutes and regulations of bodies such as the US Housing and Urban Development. The US Fair Housing Act is one example, making it illegal anywhere in the country to deny housing to anyone on the basis of race, sexual orientation, religion, disability and other characteristics. But in most cases, statutes affecting real estate in all its forms are established on the state and even municipal levels.
State-level real estate laws govern most aspects of real property transactions, such as taxes, agreements to sell and buy, and the filing and disposition of deeds. Another set of state laws, Landlord-Tenant law, establishes the rights and responsibilities of both landlords and renters and establishes penalties for violations, such as unlawful evictions or breaking a lease. These statutes can vary widely, so it’s essential to know what applies in your area before creating leases or rental agreements and accepting new tenants.
Another area of real estate law largely conducted on the state and municipal levels involves building standards and housing codes. These statutes pertain to maintaining structures in a safe condition, zoning restrictions, permits for modifications or new construction, and accessing municipal utility and sewage lines. Although general guidelines are established on the state level, variations in city codes exist to accommodate local conditions.
It’s always wise to research the legal aspects of any transaction, and to keep abreast of the local regulations that govern your investment properties. But if, as Jason Hartman recommends, you’re diversifying your rental real estate holdings to protect against losses concentrated in just one market, you may have some extra homework to do in order to stay on the right side of state and local real estate regulations. (Top image: Flickr/PrimeImageMedia)
The Jason Hartman Team
