"A CHOICE OF LAW: REAL ESTATE IN ITS MANY FACETS AND OPPORTUNITIES"
Steven B. Bashaw
McBride Baker & Coles
One MidAmerica Plaza - 10th Floor
Oakbrook Terrace, Illinois 60181-4710
Tel. (630) 954-7588
Fax. (630) 954-2112
You have just passed the bar exam. You are exuberant and eager to embark on your life as a lawyer. The point at which you are now in your professional life is one of sheer magic. It may not seem so, but it is. I recall quite clearly the days when I, too, wanted nothing so much as to simply BE a lawyer; go to court; to do all the things I had studied so long and so hard to do, and yet knew so precious little about. "If only I was a lawyer, then everything would be fine," I thought to myself. And then I was... like you are now. That memory is fresh and clear in my mind. It is, quite frankly, one I visit often -- when the day-to-day grind of making a living, and dealing with clients, and all of the mundane things that I would have once given anything to have to do simply wears me down.
So, my first advice to you as you begin your career as a lawyer is to savor these days. Take a careful look around you. Memorize these moments, these feelings, this excitement and this anticipation. Make sure you can recall the ecstasy now, with ease and clarity, so it can sustain you in the years to come. The practice of law is a calling unlike any other. It has great challenges and great rewards, and yet it too has its ugly and tedious days, when the lure will seem so far away -- unless you survey the landscape now so that it is safe in your heart for when you will need it later.
In those early days, I only knew I wanted to be a lawyer. I didnít know what kind of a lawyer I wanted to be, and I certainly didnít have the faintest idea of all the possibilities. I worked for a firm that concentrated in real estate litigation; mortgage foreclosures. I had enjoyed my real estate classes in law school, and I had a wife and a child, and when a job offer was extended to me I took it more because it was presented to me than as a matter of choice. Had I known then what I know now about real estate as an area of practice, I would have made the same decision for a million other, different, better reasons. I was fortunate to be blessed to be in the right place at the right time to practice in what I think is the best of all possible areas of the law; real estate. Real estate as an area of practice is as varied and limitless and as full of potential as you can possibly imagine, and I would like to share with you, at the beginning of your legal career, what I have come to know after almost 25 years of practicing as a real estate lawyer.
The first real estate "case" I brought into my firm on my own was a residential real estate closing. A friend of my motherís that I had known since I was a young boy asked me to represent her in purchasing a retirement home on a lake in northern Illinois. I was both honored and proud that she called on me. I try to keep that same sense of appreciation even today when people ask me to handle their closings. While you will undoubtedly hear from other attorneys that "closings" are "loss leaders" that are simply unprofitable, I think it would be unfortunate for you to not have the experience of helping someone buy or sell their home. It is my opinion that perhaps next to an adoption, there is nothing more personal, intimate, and satisfying that we as lawyers can do than to represent our clients in a residential real estate transaction. I can guarantee you that there is nothing that can be more impressionable upon them; either for good or bad. If you handle their closing well, you will be their "lawyer for life", if you do not do a good job, you will never see them again. Buying and selling a home is one of the most stressful events in a personís life. The process and paperwork of the transaction are overwhelming to someone not familiar with them, and this is where a conscientious, sensitive, and competent attorney can be the most important person in the clientís life. But there are challenges. Knowing the intricacies of local custom and usage comes primarily from experience. The pitfalls of attorneyís modification, disapproval and inspection provisions contained in most contracts are well catalogued in the most recent appellate decisions. Do not take this area of the law too lightly and presume that anyone with a law degree and license can handle a closing. There are no less than six different ways to calculate a real estate tax proration (each with a different answer), and knowing that you need a water certificate, zoning certificate, city transfer tax stamp and well and septic test in certain areas will turn you into someone who puts a checklist with each and every file. And, unfortunately, most of your clients will never appreciate your thoroughness, most title company employees work from rote rather than understanding, and lenders, inspectors, and condominium management personnel have no appreciation for the fact that you need their documents "yesterday". And, of course, donít forget to diary each and every mortgage contingency expiration date so your client doesnít lose their earnest money. When you have all of that done, you might actually get to practice law and analyze a restrictive covenant or convince a title company examiner to insure over an encroachment that simply canít be removed prior to closing so the lender will fund the transaction.
My motherís friendís closing did not go perfectly. Even though she lived at the top of a thirty foot cliff overlooking a lake which was only six feet deep at its deepest point, the lender required that we obtain flood insurance; something I had not anticipated. I learned more about flood insurance that day than I ever wanted to know, and we were able to obtain a policy within the three day recission period. But it was a lesson that I recount to young associates even now.
Handling residential real estate transactions is a matter of being sensitive, extraordinarily efficient if you are to be even marginally profitable, and learning how to get things done at the closing table.
Commercial and industrial real estate transactions are a completely different animal altogether. Here, instead of battling mortgage contingencies and inspections followed by estimates for the cost of repairing the roof, your best dayís work will be using a "compare write" software application to analyze the differences between the standard office building buy-and-lease-back contract your supervising partner gave you as a template with that drafted by the lawyer on the other side. The reference to checklists and standard customs and a reliable mentor at a title company necessary for residential transactions will come in equally handy, but the stakes are higher. You will have to broaden your horizons to encompass escrow closing instructions, zoning variances and building codes, limits on land usage imposed by deed restrictions, and covenants and conditions that run with the land. If you have an abiding love for details, you will be enamored with the due diligence stage of a large project that includes reviewing and summarizing leases, permits and project approvals, zoning and building ordinance compliance issues, financing commitments and title exceptions. Your daily jargon will consists of "FAR ratios", (floor area ratios that relate to the ratio of the square footage of improvements to the lot size), side yard and set back lines for those improvements, and easements for utilities. You will spend far more time with title examiners, architects, and surveyors than most people, and come to know that commercial transactions "gather momentum" rather than move steadily to closing like residential transactions. The clientís expectations are less reasonable in these larger transactions, demands are increased, and the potential for dispute greater. It is imperative in this type of transactional practice that you develop a sense to determine the clientís expectations in a clear and concise fashion early in the representation. This is absolutely critical. The "need" to close that clarifies residential transactions is replaced by the love of the "deal". If YOU love the "deal", commercial transactions are the place for you. You will find the clients more appreciative of your talents. They come back more often. And, the profitability margin is greater. But, above all, you must understand your client and his or her requirements and expectations, relative to the abilities and commitment of the other side of the transaction, to be successful.
Litigation opportunities in real estate abound. Every defaulted contract is, unfortunately, a potential piece of litigation; although often the emphasis is upon attorney malpractice these days. All too often suits to recover earnest money or specific performance litigation is necessary to bring a failed transaction to a conclusion. These cases can give a real estate lawyer who has a bent for litigation the ability to develop a strong practice based upon referrals from other lawyers. Most transactional attorneys do not litigate. They do, however, need good litigators to whom they can refer their litigation clients when a transaction fails or title issues arise. Partition Suits, Bills to Quite Title, and Declaratory Judgment actions are the arsenal of a real estate litigator. A transactional attorney whose client is thrust into litigation or chooses to enforce the terms of a contract wants to be able to send his client to a competent litigator that will get the job done and return the client no worse for the experience, if possible. If you are known for your abilities to resolve disputes, and respect the relationship the referring transactional attorney has with his or her client, you will find your litigation practice grows quickly.
Financial institutions and contractors are also a source of very stable and steady litigation work-flow once you have established yourself in this area. Your practice can take the form mine does, in representation of banks, mortgage bankers and other lenders in mortgage foreclosure cases, or you can develop a clientele of building contractors, subcontractors and materialmen who need to enforce their rights under the Mechanicís Lien Act. Both mortgage foreclosure and mechanicís lien cases are fairly technical and require expertise, the ability to manage and control a process consisting of a number of intricate and interrelated steps, and some fairly intense documentation production. They also require a sensitivity for timing. Both are, nonetheless, nothing more than "fancy collection work", in "better" courtrooms, where there is more money at stake, and which provide potentially better compensation for the attorney on an hourly or flat fee, rather than a contingency, basis. There is a great need for attention to detail and, unfortunately, the greatest profitability often lies in developing a "volume practice" which actually mitigates against being a good lawyer. But, the benefit of real estate litigation over general collection work is patently clear: When a lawyer obtains a judgment in a non-real estate matter, there is still the huge hurdle of collecting the sums due by citations and post-judgment actions. When a judgment is obtained in real estate litigation, however, the next step is a levy or foreclosure sale of property that presumably has value, doesnít move, can't be hidden, and doesnít have to be seized or detained. If you enjoy "being right" and controlling the pace of litigation, I suggest mortgage foreclosure work. There really are few defenses available to defeat your clientís right to recovery upon a default, (presuming you represent reputable lenders, of course), and the courtroom practice consists largely of appearances on the "motion call". If you enjoy the Ďdealí or want a little more risk in your litigation life, give mechanicís lien work a try. There are many more "issues", both factual and legal, and a far greater opportunity to experience interesting controversy. Both of these practices also generate exposure to bankruptcy litigation as defendants choose to reorganize or workout when the litigation becomes intense, but this is simply another opportunity to broaden your horizons should you find that straight real estate litigation is a little too routine for your tastes.
There is nothing we as a people are more passionate about than protecting our rights in our real estate and our right to use it as we see fit. If you perceive a litigation practice as innately having that kind of passion, then real estate litigation relating to boundary disputes and land use will be very attractive to you. One of my most trying and rewarding cases over the years was litigation over a boundary dispute between a number of neighbors. The "real" dispute, of course, had nothing to do with the fact that someoneís driveway encroached over a number of lot lines, and far more to do with some insult given or taken years ago, but the focus that brought everyoneís energy and time and money and attorneys to bear was the meandering roadway. The case took years to complete in the motion courts and discovery. The attorneys became almost as professionally courteous to one another as the litigants were disrespectful. The case was finally settled in a pretrial conference following an awfully close decision on a summary judgment motion, and neither side was overjoyed with the final resolution, but I do strongly believe that the days spent in court might have otherwise been spent in violence among the neighbors. Once each of them had their "day in court", and got an opportunity to say publicly to a Judge as an authority figure what they had harbored in their anger for so long, the case almost resolved itself on a very reasonable basis. Iíd like to tell you that the neighbors lived in harmony thereafter, but the truth is that two of the five moved away shortly thereafter and the others just got complacent. I count two of the adverse attorneys among my good professional friends to this day, however, and we have drawn on the relationship we developed in that case to work well together (both on the same side and as adverse counsel) in other matters since then.
If neither litigation or transactional work appeals greatly to you, I would still recommend real estate law as an area in which opportunities for administrative, governmental, and "in-house" work abound. Administrative law work on either the private or public sector side in zoning, tax appeal or building ordinance compliance can combine the most attractive elements of law, politics, and urban development without the extraordinary pressures of practice in a private law firm with its minimum billable hourly requirements. While still offering the challenges of dispute resolution, these real estate law positions can also allow one to have a family and personal life. There are quality real estate related positions in federal government with HUD, the Veteranís Administration, and secondary mortgage market participants such as Federal National Mortgage Association, Government National Mortgage Association and the Federal Home Loan Mortgage Corporation. The Illinois Housing Development Authority and various community organizations have real estate law positions that combine the political and real estate arenas. Real estate finance, brokerage, marketing, leasing, and developing enterprises require the specialized skill of real estate lawyers on an on-going basis and internally as decision makers. McDonaldís and Inland Real Estate are two prominent examples of national businesses that locally employ real estate lawyers "in-house" and also turn to outside firms for their services. There are trade associations such as the Mortgage Bankerís Association of America and Illinois, the National Association of Realtors and specific national brokerage firms, title companies and management agents; all of which offer differing opportunities, differing environments and emphasis, but all having one of the myriad of facets of real estate law as their focus.
Regardless of the area of the law you choose as best suited to your professional development, there are three things you will need to succeed, and no where more so than in real estate law: (1) A firm, company, or agency that will support you in the exploration of the possibilities that open and present themselves to you, (2) A strong and supportive mentor who will train and teach you the "ropes" and help you learn from his or her experience, good and bad, as well as your own, and (3) Clients with whom you can grow and develop with professionally. I believe that the best of these three elements can be found in the arena of the practice of real estate law. But then again, I AM a real estate lawyer.
The only "bad" reason I can think of for choosing real estate as an area of concentration is the often spoken misconception that real estate is a stable framework of case and statutory law that can be grasped, learned and then tucked safely away because it doesn't change much. While the statute of frauds does date back to the seventeenth century and the rule against perpetuities you studied in law school exists in substantially the same form today as two hundred years ago, there is nothing further from the truth than supposing that real estate lawyers do not have to constantly watch the appellate court advance sheets and legislative bulletins. Real estate is such as pervasive part of peopleís lives, our financial and political institutions, that it is always in flux. Each year for the past four we have witnessed fine tuning in tenancy by the entirety, for example, after that form of joint ownership was resurrected following an eighty year hiatus and then promptly abused and misused to defraud creditors. Lead based paint disclosures have spawned lead based paint private cause of action litigation. Recently, even the Fair Debt Collection Practices Act has almost daily impact on anyone who attempts to collect a debt by resort to the sale of real estate. If you do choose to practice real estate law, know that it will important to continue to learn and broaden and sharpen your legal skills both on a practical and professional level. Keep up with continuing legal education. Attend seminars that touch on developments in your areas of concentration and delve into areas on the perimeter of what you are dealing with so that you can be prepared. The Illinois State Bar Association Real Estate Law Section Council can be an excellent resource the developing areas in case and legislative law. The Illinois Institute of Continuing Legal Education can offer you affordable access to practical understanding and procedures used by recognized experts in the various areas, as can your local bar association. The Chicago Daily Law Bulletin has articles on developing law everyday that are worth your reading, and the bar-related title companies such as Attorneyís Title Guaranty Fund publish monthly newsletters to keep you up to date.
I have often thought that real estate law "chose" me more than I "chose" it in my own professional life. I always knew I was on the "real estate path", but I never really looked down at my feet to see where I was going, because I was too focused on the horizon. Had I looked carefully at that path, I am certain I would have chosen it nonetheless and as a conscious decision. Today, after almost twenty-five years on that path, I can tell you most sincerely that it is a good path, and one that I recommend to you for all of its breadth, and wealth of variety and opportunity. I think there is nothing finer than when asked "Just what kind of a lawyer are you?" to respond with "I practice real estate law". That seems to leave them smiling with appreciation and admiration for one who engages in a segment of our profession that is constructive, important on a day-to-day basis at a number of levels in our society, and necessary in so many ways to our lives.