215-904-3006

Upcoming Events

The Real Estate Law Group

The Real Estate Law Group

Contact Us

Frequently Asked Questions

Business Formation and Contract Law FAQ

1. How can I protect my personal assets from business liabilities?

To protect your personal assets from business liabilities, is recommended that you form a business entity such as a limited liability company (LLC) or corporation. Additionally, maintaining proper corporate formalities, using contracts with indemnification clauses, and securing adequate insurance helps shield personal assets.

  1. It depends on your needs:
    1. LLC: Best for flexibility, limited liability, and pass-through taxation.
    2. S-Corp: Good for small businesses wanting tax savings on self-employment taxes.
    3. C-Corp: Ideal for larger businesses planning to reinvest profits and seek investors.
Yes. An Operating Agreement defines the ownership structure, responsibilities, and dispute resolution among members. Without an Operating Agreement it will be difficult to even open a bank account nevertheless enter into contracts such as to purchase a property in the name of the business. It is one of the corporate formalities that must be adhered to in order to maintain the corporate shield which protects your personal assets from business liabilities.
You must file a Certificate of Organization (for an LLC) or Articles of Incorporation (for a corporation) with the Department of State and obtain an Employer Identification Number (EIN) from the IRS. . For Pennsylvania residents, we file all documents with the Pennsylvania Department of State’s Bureau of Corporations & Charitable Organizations. For Florida residents, we file all documents with Florida’s Department of State’s Division of Corporations
Certain contracts must be in writing to be legally enforceable. If you operate a business, you should consult with an attorney about what contracts and forms you are using. Using simple forms or contracts found online can be risky. First, your contracts should comply with the law of the state in which you are operating in order to adequately protect you from liability. Second, your contracts should be clear and unambiguous about the scope of the product or services provided as well as the cost. A lawyer can draft disclaimers, limitations of liability and indemnification clauses which will adequately protect you from the typical risks of your business.
You can but it is NOT advisable. While templates can provide a basic framework, they often lack the customization needed and therefore typically fail to protect your interests adequately. Having a lawyer draft your contracts is highly recommended.
The non-breaching party may be entitled to damages (compensation), specific performance (forcing the breaching party to perform) in some limited circumstances, or rescission (canceling the contract). However, it typically requires filing a lawsuit to enforce the entitlement to these remedies. Lawsuits can be expensive as well as time-consuming so it is important to consult with an attorney before signing any contracts.
It depends. Some contracts include a cooling-off period (like for door-to-door sales), while others may have provisions allowing cancellation under specific conditions. Otherwise, a contract is binding unless both parties agree to cancel.

A valid contract in Pennsylvania must have the following elements to be enforceable:

  • An Offer: A clear proposal by one party.
  • Acceptance: Unambiguous agreement to the offer.
  • Consideration: Something of value to be exchanged.
  • Mutual Assent: Both parties must intend to be bound.
  • Capacity: Both parties must be legally capable of contracting.
Yes, verbal contracts are generally enforceable, except where the Statute of Frauds requires a written contract, such as real estate transactions, agreements lasting more than one year and the sale of goods over $500.
The non-breaching party may be entitled to compensatory damages (compensation for monetary losses), specific performance (forcing the breaching party to perform) in some limited circumstances, or the right of rescission (the right to cancel the contract). However, it typically requires filing a lawsuit to enforce the entitlement to these remedies. Lawsuits can be expensive as well as time-consuming so it is important to consult with an attorney before signing any contracts.
Yes, but both parties must agree to the modification, and it must comply with any contractual requirements (e.g., written modifications required in the original agreement).
Generally, the statute of limitations in Pennsylvania for breach of contract cases is four (4) years but there are a variety of circumstances to be considered.
Generally, contracts can be oral or written, but Florida’s Statute of Frauds requires certain contracts to be in writing, such as real estate sales, agreements not performable within one year, the sale of goods over $500 and guarantees to pay another’s debt.
The aggrieved party may seek compensatory damages (financial losses), punitive damages (rare, only for fraud cases), specific performance (in cases where money damages are inadequate, such as real estate), and the right of rescission or reformation (canceling or modifying the contract). If fraud, misrepresentation, or undue influence is proven, the contract may be voidable by the misled party.
The statute of limitations is five (5) years for written contracts, four (4) years for oral contracts and four (4) years for the sale of goods.

Estate Planning Law FAQ

1. What happens if I die without a Will ?
If you die without a Will, then your assets will be distributed under the State plan, not your plan. The State plan is outlined in your state’s intestacy laws, which prioritize spouses, children, and other close relatives. The state decides, not you. Intestacy laws vary by state. Dying without a Will can cause headaches for your family and should be avoided if at all possible.
You can avoid probate in a variety of ways using tools like revocable living trusts, irrevocable trusts, joint ownership, beneficiary designations, and transfer-on-death accounts. But there are drawbacks to joint ownership, beneficiary designations and transfer-on-death accounts. For example, transfer-on-death accounts do not allow your loved ones to access your assets in the event that you are incapacitated. And joint ownership of real estate (by adding your adult child to the title to your home) means that they will use your cost basis when it comes time to pay taxes. If you have owned your home for a long time, there may be a significant difference between the value at purchase and the value upon death. Whereas, if your child inherits your property then they take the property with a stepped-up basis (market value upon death). So adding an adult child as a joint tenant with right of survivorship is not always the best option to consider. And if your life insurance policies name any minor children as beneficiaries that can be an issue as well. Establishing a trust is the best way to avoid probate AND protect your assets.
A power of attorney (POA) allows someone to act on your behalf in financial or medical matters if you become incapacitated. Every adult should have both a financial POA and a healthcare POA.
Yes, a Will is still important to handle any assets not covered by the Trust, appoint guardians for minor children, and serve as a backup document. However, having only a Will is not enough. For example, in addition to naming guardians in your Will, you should also have other legal documentation outlining your guardianship plan in detail. There are many documents that should be part of your estate plan depending upon your unique circumstances including different types of powers of attorney and directions about your wishes in the event of your incapacity or death. At The Real Estate Law Group, we refuse to create cookie cutter estate plans (i.e. a Will, Power of Attorney and Health Care Directive). If those are the only documents in your Estate Plan, you need to schedule a free consultation to discuss where your current estate plan is lacking.
Establishing a trust is the best way to both avoid probate AND protect your assets from a variety of pitfalls and unfortunate circumstances. For example, a trust could protect your assets in the event that you (or your heirs) experience financial difficulties and are being hounded by creditors. It can even protect the assets from bankruptcy. A trust could also protect your heirs from losing half of their inheritance due to a divorce (or all of it due to financial irresponsibility). There are many different types of trusts for different situations but generally speaking, a trust will protect your family’s nest egg better than any other estate planning strategy.

Revocable vs. Irrevocable Trusts
A Revocable Trust, also known as a Living Trust, allows the grantor (the person creating the trust) to maintain control and make changes during their lifetime. It helps avoid probate but doesn’t provide strong asset protection or tax benefits.  Whereas, an Irrevocable Trust, once established, generally cannot be changed or revoked. It offers stronger asset protection and estate tax benefits.  An Irrevocable Life Insurance Trust (ILIT) is a specialized type of irrevocable trust designed to hold a life insurance policy.  It is commonly used in estate planning to remove life insurance proceeds from the insured’s taxable estate, ensuring that beneficiaries receive the full benefit without estate tax consequences.

Testamentary vs. Living Trusts
A Testamentary Trust created through a Will and only takes effect upon the grantor’s death. It does not avoid probate but allows structured asset distribution.  Whereas, a Living Trust (also known as an Inter Vivos Trust) is created during the grantor’s lifetime and can be either revocable or irrevocable.

Special-Purpose Trusts
An Asset Protection Trust is often used by real estate investors because it shields assets from creditors, lawsuits, and divorce settlements. The less control the beneficiaries have over the trust, the more protection it provides.  A Special Needs Trust is designed for beneficiaries with disabilities to provide financial support without affecting their eligibility for government benefits.  A Charitable Trust is created to donate assets to charity while providing financial benefits to the grantor or beneficiaries. A Charitable Remainder Trust provides income to beneficiaries for a set time before the remainder goes to charity. A Charitable Lead Trust does the opposite by providing income to a charity for a set period of time before passing the assets to beneficiaries. A Spendthrift Trust prevents beneficiaries from mismanaging or squandering assets by restricting access to funds. A Qualified Terminable Interest Property Trust (QTIP) provides income for a surviving spouse while preserving assets for other beneficiaries, commonly used in second marriages. A Bypass (Credit Shelter) Trust helps married couples minimize estate taxes by allowing assets to pass tax-free to beneficiaries after the surviving spouse’s death. A Grantor Retained Annuity Trust (GRAT) allows the grantor to transfer assets while receiving annuity payments for a set period, reducing estate taxes.  A Dynasty Trust is designed to pass wealth across multiple generations while minimizing estate taxes.  If you are interested in learning more about using a trust in your estate planning, contact our office for a free consultation.

Real Estate Law FAQ

1. What are common legal issues in real estate transactions?
Common issues include title defects, undisclosed defective property conditions, easement restrictions, zoning restrictions, pending contract disputes or code violations.
Neither Pennsylvania nor Florida mandates that a lawyer participate in a real estate transaction. However, consider the fact that a real estate agent license can be issued in either state to someone with only a high school diploma. Representing a buyer or seller competently requires an excellent working knowledge of contract and real estate law, experience with drafting contractual clauses, good negotiation skills and an understanding of all the potential legal risks. Having a lawyer represent you in your real estate transaction ensures that your interests are protected. In some cases, hiring the attorney may not involve any additional legal fees if the attorney is additionally licensed as a real estate agent or broker.

Hiring a lawyer would be necessary in the following situations:

  1. If there is no real estate representing your interests as the buyer such as in an accidental dual agency situation.
  2. In complex situations such as estate sales, divorce sales, short sales and commercial transactions.
  3. When a property is For Sale By Owner (FSBO), hiring a lawyer is necessary to guide the sellers through the transaction from beginning to end.
  4. If a legal issue arises regarding a title defect or undisclosed easements or liens.
  5. If you are the buyer and one of the conditions of sale were multiple repairs and you are afraid that the seller will not have them all completed in time for settlement.
  6. If one of the parties (including you) wants to terminate the transaction and there may be a legal dispute over the good faith deposit (GFD) which is sometimes referred to as an earnest money deposit (EMD).

Many people make the mistake of signing a contract without any legal representation and then contact a lawyer to represent them at settlement.   Most common risks associated with real estate transactions occur prior to settlement although sometimes it may be necessary to escrow funds and sign an escrow agreement if certain conditions of sale have not yet been satisfied.

Title insurance protects buyers and lenders from claims against the property due to past title defects, unpaid liens, or ownership disputes. Most lenders require it, and it’s highly recommended for all buyers.
A 1031 exchange (under Section 1031 of the Internal Revenue Code) allows real estate investors to defer capital gains taxes by reinvesting proceeds from the sale of one property into another like-kind property. The exchange must follow strict IRS rules, including a 45-day identification period and 180-day closing deadline.
A home inspection is ALWAYS recommended prior to committing to the purchase of any property. You should not let a real estate agent convince you that making an offer to purchase a property AS IS means that you will get a better deal. This is a common practice in a competitive market. However, it is not a better deal if there are thousands of dollars of repairs that you did not anticipate or if there is an unknown defective condition which significantly reduces the market value of the property. Think of your home inspection, if conducted by a really good home inspector, as an instruction manual for your home. Good home inspectors will often provide cost estimates as well for repairs or replacements that you should anticipate in the future. This allows you to budget properly for major expenses, such as the replacement of a heating system. If you are purchasing new construction home you may think there is less of a need for a home inspection. However, even though most builders have a limited builder’s warranty period, making claims under such warranties are often problematic. Therefore, conducting an inspection prior to settlement is still highly recommended. Your home inspector may uncover simple mistakes made by the builder’s team and sometimes even structural defects are discovered. This allows the buyer to make a punch list of items that must be completed either prior to settlement or within 30 days of settlement.
In the event that there are repairs to be made by the seller post settlement, an escrow agreement is necessary. This requires that your legal representative advocate on your behalf to require that a portion of the seller’s proceeds be escrowed with the title company which shall not be released unless and until the repairs are made. It requires the drafting and signing of an escrow agreement outlining the terms of escrow. One situation where this might occur is where negotiations took place after the home inspection and the seller agreed to make certain repair, but those repairs were not all completed prior to settlement. Another situation where this might occur is when a buyer is purchasing new construction and there are still punch list items to be completed after settlement.
In Pennsylvania, there is a statute known as the Real Estate Seller Disclosure Law, which requires sellers to disclose known material defects on a form created by the Pennsylvania Association of Realtors (PAR). A home inspection is particularly important in Pennsylvania due to older housing stock and potential issues like radon, mold, or structural problems from freeze-thaw cycles. Florida has a law similar to Pennsylvania’s, but it is less formalized. Florida is more of a “buyer beware” state, making inspections even more critical. Sellers must disclose known issues, but hidden problems that the seller did not know about (e.g., roof leaks, sinkholes, flood risks, termites) can be costly. In Florida, sellers of residential property are required to disclose known defects that materially affect the value of the property and are not readily observable by the buyer. This duty was established by the 1985 Florida Supreme Court case Johnson v. Davis. Unlike Pennsylvania, Florida does not have a statutory seller disclosure form requirement, but many real estate transactions still involve voluntary disclosure forms provided by real estate associations or brokerages. Failure to disclose known defects can lead to legal liability for fraud or misrepresentation. Inspections are typically part of the due diligence period in an Agreement of Sale and can be a written into the contract as a contingency. Additionally, if purchasing a property with lender financing, lenders may require specific inspections (e.g., termite, radon, structural). Also, due to Florida’s climate (humidity, hurricanes, high water tables), wind mitigation, four-point, and termite inspections become more crucial. Insurance companies often require a four-point Inspection (roof, HVAC, plumbing, and electrical) for homes over 30 years old.

Subscribe to our monthly newsletter, "REAL News" and stay up-to-date and informed.

Quick Links

Resources

Contact Info

Copyright © 2025 by The Real Estate Law Group | All Rights Reserved.