At 2nd Wind Llc. we are dedicated to equipping our investors with the best information possible to be successful in real estate. One of our partners – Borders And Borders attorneys have agreed to sit down with us and answer a few common questions about what they do and why Attorneys are imperative to a smooth real estate transaction.
Harry B. Borders joined the firm in 1991 after graduating in the top ten percent of his University of Kentucky law school class. Harry also has an engineering degree from the University of Louisville. In addition to real estate closings, Harry sets up companies (limited liability companies and corporations), handles IRS section 1031 tax-deferred exchanges, and works closely with real estate investors. Harry is a frequent instructor of real estate law courses at the Greater Louisville Association of Realtors. He is a member of the Louisville and Kentucky bar associations. Harry is also a member of the Kentucky Real Estate Investors Association.
Harry travels annually to Central America with Hand in Hand Ministries to help build hope for the poor of the region. Harry has four children.
Q: Harry, what was it that lead you down the path of real estate? I followed my dad and my brother into the business. Dad told me NO, so I had to go to mom who convinced him to let me in!!! 🙂
Q: How have you grown your client base over the years? Our philosophy has always been “if you worry about the money, you’ll always worry about the money. If you worry about the client, you won’t worry about the money.” And so far, that’s worked out well for us.
Q: Given that Kentucky doesn’t require an attorney to oversee a real estate transaction, why do you think it is still important to have one? Personally, I think it’s crazy attorneys are not required in Kentucky for real estate transactions. Every single closing we do, we give legal advice to buyers and sellers. Unfortunately, in Kentucky, the person cutting my hair has more state supervision than folks doing real estate closings in Kentucky. Sad but true. A bad haircut is cured in about 2 weeks. Not so for a bad closing. That could cost hundreds of thousands of dollars. 100% of our closings are handled by attorneys.
Q: What are a few common legal issues that arise in a real estate sale? How should the buyer take title? If fee simple or in survivorship? Should sellers consider a 1031 exchange to avoid capital gains taxes? Do investors need LLCs for their business or not? What type of contract should I use when buying real estate?
Q: What activities do you perform leading up to a closing? We run a title exam, clear any liens on the title, obtain payoffs for any liens, and prepare documents for closing.
Q: What is the biggest lien or title defect you have ever come across? It is not uncommon for sellers to have 1M IRS liens against them. But we also see many little issues that can kill a deal if you don’t know how to find a solution. Anyone can do an easy closing. We specialize in easy AND difficult closings.
Q: Why is title insurance so important? A post-closing title issue can be VERY expensive. Title insurance covers these issues, including attorney fees and court costs. I buy title insurance 100% of the time I buy and investment property, or a primary residence. It just helps me sleep at night.
Q: What is your biggest piece of advice to an investment real estate newcomer from the perspective of a real estate attorney? Surround yourself with a team of experts… mentors, lenders, attorneys, insurance company, etc. and most importantly, ASK QUESTIONS!!!! We’ve all learned “the hard way.” It’s likely we can teach new investors how to avoid the issues that many of us have learned the hard way. And, do NOT have paralysis by analysis. Do your homework, and GO DO IT!!!