If you’re planning to buy or sell a house or a rental investment property, you might consider hiring a real estate attorney.
A real estate lawyer can provide legal protection. They can help you navigate the home-buying process, which can be complex.
In fact, many states require a real estate lawyer to be present at closing.
Even if you live in a state that doesn’t require you to have a real estate attorney, it’s important to have one by your side.
But it’s also important to know who you’re dealing with, what they can do for you, and what’s in it for them.
Real estate attorneys can help structure transactions and closing. They will review documents well in advance before the closing to make sure there are no errors.
Real estate lawyers, however, can only represent one of the parties. The buyer and the seller’s interests can often be in conflict. Therefore, the attorney should never represent both parties.
Besides representing you in sales transactions, real estate attorneys can represent you in a courtroom as well.
During the home-buying process, disputes between the buyer and the seller may arise that will have to settle in court.
The real estate attorney’s qualifications
A real estate attorney, just as any lawyer, has attended 3 years of law school. In law school, they take courses in law in general, including real property and other real estate classes.
During law school, they may do internships at law firms which specialize in real estate law.
Once they graduate law school, they take to bar exam in the state they want to practice in.
Once they become licensed to practice, they can work in a law firm specializing in real estate law.
The real estate lawyer’s fees
A real estate attorney can charge by the hour or a fixed fee. How much their charge for their services depends on their reputation, their level experience, the level of complexity.
Regardless of the fee, your attorney will discuss it with you. Their hourly fee is typically between $150 to $350.
They’ll draft a retainer agreement and make the necessary disclosures before you can retain them.
The attorney’s role in real estate transaction
Real estate attorneys can have many roles. Their roles will vary depending on whether it is a simple transaction or a complex one, and whether a real estate broker is involved.
In some cases, a real estate broker can handle many aspects of real estate transactions. If that case, the real estate attorney’s role is often limited.
In other instances, the real estate lawyer plays a crucial role in all phases of the real estate transaction.
Nonetheless, a real estate attorney’s roles include acting as a legal counselor, negotiator, advisor and coordinator.
Real estate attorney as a legal counselor
A real estate attorney acting as a legal counselor can handle drafting the proposed contract. If there is a broker involved, the broker will prepare the contract.
But, your attorney will review it for any proposed changes. Your lawyer can also draft the deed and examine title documents.
If you retain a real estate agent or broker, your attorney may also review the broker’s agreement before you sign it.
Real estate attorney as a negotiator
If you hire a real estate lawyer before you sign a contract or before engaging in any contract negotiations, your attorney will assume that role. All communications from the other party or his or her attorney will be directed to your lawyer.
Your attorney will negotiate proposed changes to the contract, including the price of the house. They will review any mortgage contingency clauses.
In addition, your real estate attorney can negotiate the following matters:
- Personal property to be included;
- Repairs before closing;
- The closing date;
- You may not get a mortgage commitment within the stipulated date in the contract. So, your attorney may negotiate an extension of time to obtain the mortgage;
- You may need an early possession of the house. Your lawyer can negotiate that.
Real estate attorney as an advisor
You, as a client, may not need strict legal advice. You may just want your lawyer to be present for general advice. If you’re a first time home buyer or an elderly buyer, your attorney can also act as an advisor.
Real estate attorney as a coordinator
Your attorney can also act as your coordinator. Residential closings involve a lot of steps. And not everyone involved will follow them.
So, one of your real estate lawyer’s role is to contact the brokers, the title insurers, the mortgagees. They will also monitor the progress of obtaining financing, title policy, etc.
They will also contact the other attorney to make sure all parties are ready for the closing.
Your attorney’s responsibilities before closing
If you hire a real estate lawyer to represent you either as a seller or buyer, his or her responsibility before closing include the following:
- Make sure you, as a buyer or seller, can fulfill the requirements imposed by the real estate sale contract
- Review the title insurance;
- Check the mortgage commitment;
- Monitor status of the contract contingencies;
- Examine closing documents for accuracy;
- Coordinate closing date and time with the mortgage lender, seller and buyer’s broker;
- If buyers will not attend the closing, obtain power of attorney for property to cover documents to be signed at closing;
- Get wire instructions for payment of balance due at closing
In case a dispute arises between the parties, the real estate attorney can represent you in court.
Issues that might arise include damages and earnest money forfeiture, specific performance, misrepresentation, etc.
Do I need a real estate attorney?
Some states require a real estate attorney to be present during closing. They include Massachusetts, Maine, Alabama, Connecticut, Delaware, Georgia, Florida, Kansas, Kentucky, Virginia, West Virginia, South Carolina, Rhode Island, Pennsylvania, New York, North Dakota, Mississippi, New Hampshire, and New Jersey.
If you don’t live in any of these states and the District of Columbia, it’s really up to you if you want to hire a real estate attorney. If you’re just trying to save money and can barely afford to buy a house, you’re probably don’t need a real estate lawyer.
But if your real estate transaction is complex, a good real estate attorney can be an asset.
The bottom line…
Some states do not require you to have a real estate attorney during closing. However, it’s worth the cost hiring one especially if you’re buying a house in foreclosure.
Work With A Financial Advisor Near You
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