Working with Attorneys

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Because the area is so specialized, it is not as easy as you think to find legal counsel that have specific knowledge of your hard money / private money loan transaction.   

Following are different types of attorneys involved in the private money lending area and some tips about how to find the right counsel for you.  In most cases, your private money lender (PML) will refer you to the right counsel as you need them.

General - General  counsel will help you with everything from preparing resolutions, forming entities, and keeping corporate records.  This counsel should be independent of your PML’s attorney so you receive objective advice.

Loan Documents - There are attorneys who specialize in loan compliance and preparing loan documents and guarantees specific to your investment.  Your PML  works closely with this counsel and will refer you when needed.  Commercial loan documents are rarely standardized as is the case with residential documents.  The larger the transaction, the more complex and the more expensive it will be to prepare the documents.

Bankruptcy - If the borrower on your loan files bankruptcy, you will need bankruptcy counsel to file motions, and respond to requests made by the bankruptcy petitioner.

Title Insurance - Having a title policy without endorsements is like driving a car without air in the tires; you won’t get very far if you have to submit a claim.  A good title attorney will help you craft or select title endorsements which coincide with the type of collateral in which you are investing.

Collection - Presumably the loan servicer is collecting monthly payments, but if there is a foreclosure, and a portion of the loan becomes unsecured, or you need to pursue a guarantee, an attorney specializing in collections will be  beneficial.

Purchase and Sale Agreements - If you are purchasing a note, or a property as part of the loan transaction, find counsel with specific experience in drafting loan or commercial purchase and sale agreements.

Selecting the right attorney for the right job will save you time and aggravation.  The specialists in these areas will likely charge more than a general attorney, but because of their highly specialized knowledge, they will save you money in the long run because less research will be involved to tackle problems that may arise.  The best way to find specific attorneys is by “word of mouth” and referrals from other attorneys, PML’s or investors who have used these attorneys in the past.  Frequent panelists at respected/established seminars and conferences can also be a good source.  While the internet may also be a good starting point in your search, don’t hire anyone based solely on what you see or read online.  Good references from trusted sources are key!