“My mother used to say that buying real estate was a good investment because they don’t make more of it,” said Linda Kirsch, senior vice president at the law firm of Shuttleworth & Ingersoll in Cedar Rapids. “There’s a limited quantity out there, and real estate law all depends on who’s buying and selling it.”
The practice of real-estate law, as you might expect, can rise and fall with activity in the commercial and residential real-estate markets. Kirsch noted businesses aren’t expanding, for example, due to lack of confidence in the economy.
And there are local factors. One Cedar Rapids deal has been on hold throughout the uncertainty of flood-protection — and where and when levees might be constructed — along the Cedar River.
Still, Kirsch said, “Once people in Cedar Rapids see some of these public construction projects being completed, I think private transactions will start back up as a result.”
Joseph Schmall, a lawyer with Bradley & Riley, added that good things are happening locally to boost home-sales transactions.
“What happened with residential transactions had a really damaging effect on the number of new homes being built, but it didn’t slow refinancing,” he said.
Schmall thinks most of the refinancing opportunities have passed, but they did help make up for the lag in transactions.
When Matthew Adam, a lawyer with Simmons Perrine Moyer Bergman in Coralville, started practicing law 10 years ago, the real-estate market was booming.
“The practice area is very market-driven,” Adam said. “When the market took a downturn in 2007 and 2008, the whole real-estate process came to a screeching halt. In my opinion, real estate law is directly related to the economy.”
He said his real-estate practice is starting to take up 70 to 80 percent of his practice, at about the same level when he first started.
To practice real-estate law, Kirsch explained it helps to know other areas of law as well. Contract law can come into play as most real-estate deals start with a contract.
Title law, too, is applicable because it’s all about how real-estate titles are transferred and how liens attach to properties. Sometimes bankruptcy law is a factor because the property itself has gone into bankruptcy.
“As real-estate lawyers, we make sure titles are clear,” Schmall said.
During a real-estate transaction, lawyers examine the abstract and title for the buyer, and offer a title opinion. They’re sometimes involved in preparing documents such as a deed to transfer title, groundwater hazard statement or declaration of value.
Iowa is the only state where lawyers read the abstract and title — a compilation of deeds, mortgages, liens or anything else having to do with a real estate parcel — and give opinions in terms of the title’s marketability.
“In other states, they use title insurance,” Adam said.
“People may or may not be getting a good title, but they buy insurance. The insurance company insures over the risk that buyer doesn’t have good title.”
Other states also have different real-estate aspects, Kirsch said.
“For example, Colorado has a different taxing system because of water assessments that go along with transactions,” she noted.
On the commercial side, Schmall said most of his time is spent providing the same kinds of basic documents and opinions as with residential. The major difference, he noted, is that there often are tenants to be considered.
“When tenants are involved, you need to make sure you look at information from the lease. You might need more info from a tenant,” such as a copy of the tenant estoppel certificate, which confirms the lease and that there are no defaults.
Environmental concerns also are a common part of commercial property transactions. Real-estate lawyers often make sure environmental studies are completed by engineers who can offer a condition of the property and indicate any site contamination, for example, Schmall said.
During a commercial real-estate transaction, lawyers also may help ensure that a surveyor prepares a map showing the site, whether anything encroaches onto neighboring property and that it’s in accordance with proper ordinances.
Even though the majority of real-estate law is pretty straightforward, lawyers occasionally run into some unusual situations.
“There was a strip of land between neighboring property owners, but there was no evidence of ownership beyond 1910 or 1915,” Schmall recalled. “When you find something like that, you have to work to find out who owns it and perform what’s called quiet title action lawsuit to establish title.”
Kirsch was involved in a real estate transaction in which the obligation to pay taxes on a property was pushed down from the owner.
“The taxes weren’t paid, and the assumption was that the buyer was somehow in cahoots with the guy who was supposed to pay them,” she said.
But real estate lawyers have to be dealmakers, not deal breakers, Adam emphasized.
“It’s a transactional practice. You have to find ways to be creative at times and make sure you get the transaction closed for your clients,” he said.
“You can’t be a stick in the spoke.”