If you’re buying a house, considering the pros and cons of renting vs. buying or selling a property, you’ll need to ensure a smooth transaction. One key player in the home buying and selling world is a real estate attorney who can guide you through the process.
What does a real estate attorney do?
Real estate attorneys specialize in the legal issues involved in property. This can include buying and selling, title disputes, ownership, compliance, and more.
In the home transaction area, both the buyer and the seller can hire a real estate attorney to protect the prospective parties’ interests. The lender can also hire a real estate lawyer.
Real estate attorneys can handle more parts of the home purchase such as:
- Identify issues with contingencies in a contract
- Check title issues
- Advise you on the best approach to legal issues, like selling a home when the owner is deceased or splitting proceeds after a divorce
- Identify loopholes in a purchase agreement and recommend how to close them
- Check buyers’ offers for red flags, including legal issues that could happen if you sign an incomplete or sloppy purchase agreement
Pritchards & Co. Law Firm, LLP. states:
“Clients are often surprised by the amount of paperwork in a purchase or sale deal, which can feel overwhelming. Real estate is an area of law struggling to go green. It can feel like you are signing your life away. Don’t panic – it’s our job as your lawyer to ensure you understand everything you sign and clearly understand how your purchase or sale will work.”
Do I need a real estate attorney?
You may want to hire a real estate attorney for several reasons. A real estate attorney will provide legal representation and guide you through a complex transaction.
If you are not sure whether you need a real estate attorney, this information will help you to make the right decision:
You buy or sell a property in a state that requires a real estate attorney
Many states have laws mandating the involvement of a real estate attorney and require them to be present at closing. Remember that regions within these states can also have local rules regarding real estate lawyers’ involvement in these transactions.
Here is the list of the states that require these professionals to be part of the process:
- District of Columbia
- New Hampshire
- New Jersey
- New York
- North Dakota
- Rhode Island
- South Carolina
- Vermont, Virginia
- West Virginia
Why buyers should hire an attorney:
- You’re buying a property in another town or state.
- You’re buying a property that is a foreclosure or a short sale.
- You’re buying a commercial property.
- You’re buying a property in an area that is prone to natural disasters like tornadoes, hurricanes, or floods.
- You’re buying a property that has safety hazards or structural damage.
Why sellers should hire an attorney:
- You’re selling a property that is in distress.
- You’re selling FSBO (for sale by owner).
- You’re selling commercial property.
- You’re the heir or executor of a property whose owner is now deceased.
- You have liens on the property.
If any of the above statements apply to your situation, consider hiring a real estate attorney. Some experts suggest hiring a real estate attorney regardless of your case, to have an extra level of safety.
Timoney Knox, LLP advises:
“When something goes wrong, it’s often good to have the advice of an attorney and to have a lawyer’s negotiating skills as well. More often, even when the transaction goes smoothly, a lawyer can help you understand all of “the paperwork,” like Agreements of Sale, Addenda, Title Reports, and Home Inspection Reports.”
Ludlum Law Firm states:
“In many cases, a real estate lawyer can help iron out a real estate transaction’s details while you are in another location. Real estate attorneys can work with you throughout different steps of your property buy or sale while collaborating with real estate brokers. If you’re an out-of-town buyer, you might hire a real estate lawyer to serve as your representative. It will ensure everything is done correctly while following local laws and ordinances as you wrap things up from a distance.”
Purchase contract review
A real estate purchase contract is a legally binding document with a lot of legal jargon that dictates the terms of a transaction. A review can help clarify the terms of the real estate contract. While real estate agents are there to help you complete a purchase contract, an attorney can check the terms and interpret the legal language to help you avoid possible problems later and ensure that the contract terms are favorable to you.
Legal Nature states:
“The first time you glance at the purchase agreement for the property you intend to buy or sell, you may feel overwhelmed. Often a lengthy document, the agreement may contain several unfamiliar terms and concepts. It is imperative that you fully understand these concepts before you sign.”
Closing disclosure review
Closing a real estate transaction involves a lot of paperwork and many signatures. Reviewing your closing documents can help protect you from costly mistakes and fraud. It can be hard to track every expenditure when you conduct a six-or seven-figure transaction.
A real estate attorney can review your documents to clarify anything you don’t understand.
The homeownership website Better explains:
“A simple way to think about your Closing Disclosure is that your Loan Estimate tells you what you might pay, while a Closing Disclosure tells you what you will pay. This document is the final bill of sale on your home loan and closing costs. It shows you the full cost of your home loan—including the terms, projected monthly payments, fees, and cash to close.”
A real estate lawyer can review divorce documentation to ensure the proper transfer during a divorce settlement.
Property with liens
If you’re buying a home with a lien on the property, an attorney can ensure that your title will be legally transferred and cleared.
Liens on real estate are claims against the property to secure debt payment. If a person owes money to another person or entity, the creditor may place a lien on the debtor’s property for the value of the debt. The property becomes a potential payment source if the debtor fails to pay off the debt.
Purchasing a home at auction requires a professional to help make sure you’re getting a fair deal and that you’re legally protected.
Purchase from a bank
Buying property from a bank (like a short sale or foreclosure) should involve the help of an experienced real estate attorney to ensure any liens or title issues are resolved.
Real Estate Witch says:
“Most experts agree that if you’re doing a “vanilla transaction,” then you don’t need a real estate attorney. So if you’re buying new construction, a pristine property, or signing a regular lease, using the standard forms and listening to your real estate agent’s advice should be just fine.”
Questions to ask a real estate attorney before hiring
Hiring a real estate attorney when buying or selling a property can protect you from many mistakes. But with so many real estate attorneys available, how do you choose the right one? Be sure to ask the following questions to narrow down your search.
What credentials do you have?
When interviewing a real estate attorney, always ask about their license. You might assume that your real estate attorney has proper credentials, but that might not always be the case. You can check their license through your state’s bar website.
What experience do you have?
Different real estate attorneys have varying levels of experience. Ask your real estate attorney how long they have been practicing law and how many years they have been working on real estate cases.
You should hire someone who has worked on many real estate cases and knows the local real estate market.
What are your rates and fees?
Always make sure that you get attorney rates and fees in writing. Shop around to find a lawyer that offers the best services at the most reasonable cost.
Before hiring a real estate attorney, find out their rate. Some lawyers charge between $150 and $300 hourly, while others have a flat fee that depends on their work on a given case.
What is your availability?
In a busy real estate market, attorneys might not have time to attend your closing. Ensure that your attorney is available for your closing date and that they’re available whenever you have questions.
Are you the only one who will work on this case?
An individual attorney might handle your case independently, but it’s not always the same if they work for a bigger firm with a large caseload.
Some lawyers hire paralegals to help draft contracts and other documents. Ask your lawyer if they will have anybody else assisting them with your case. You should always meet everyone who will be helping your lawyer. Meeting the entire team is an excellent way to ensure they are a good fit and you can trust them.
There is No Crisis advises:
“Before getting into any tangible transactions, it is important that you meet your prospective attorney face to face. Here you will get a feel of what they can really offer. This is your opportunity to ask them whatever you want so that you are clear on everything before making any engagements. This will also give you a chance to assess them.”
Meet with several real estate attorneys and ask how they can assist with your case. Some attorneys offer a free consultation which you can use to tell them more about your case and bring your documents.
You might want to look elsewhere if a lawyer seems too busy or hasn’t worked on too many real estate cases. Take your time to find the best real estate attorney for your situation.
Halt.org Law Directory recommends:
“When you look at reviews, make sure the attorney has happy customers and that they have a solid track record. By doing your homework early, you can weed out the attorneys you’re not interested in. Make a thorough list of those you want to pursue further, then narrow your list down from there.”
States that require a real estate attorney
Nearly half of the states require a real estate attorney to be present during the closing. When you buy a home, check your state’s requirements. It’s also a good idea to check local and regional requirements.
Superior Notary Services states:
“Several states have laws on the books mandating the physical presence of an attorney or other types of involvement at real estate closings, including Alabama, Connecticut, Delaware, District of Columbia, Florida, Georgia, Kansas, Kentucky, Maine, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New York, North Dakota, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, and West Virginia. This list is subject to change based on newly passed legislation.”
If you want to check the state-specific property and real estate laws, visit FindLaw and choose the state you want to verify from the list.
Real estate agent vs. real estate attorney
Here are some essential differences between a real estate agent and a real estate attorney that you should know.
What a real estate agent does
A real estate agent can help you to find home inspectors, negotiate with stakeholders, and create contracts. A real estate agent can’t represent you legally during negotiations or signing documents.
Real estate agents get paid by commission, meaning they’ll get a certain percentage of the profits once a home sells. Your agent doesn’t get paid until the transaction closes, so it’s in their interest to make things go smoothly.
What an attorney does
A real estate attorney will help you navigate the legal side of buying or selling a property. When it comes to real estate laws, one size doesn’t fit all. Real estate laws can vary from state to state.
A real estate attorney can help you understand your state’s real estate laws and check your documents for red flags that could have legal consequences. But they can’t help you determine the value of your home or participate in negotiations with a buyer or seller.
A real estate attorney can charge by the hour or a flat fee, depending on the case.
The BREL Team explains:
“The Listing Agent’s goal isn’t to get you the RIGHT house; it’s to get you to buy THIS house. Having your agent means they are motivated to find you the perfect house in the perfect neighborhood, no matter how long that takes.”
Real estate attorneys provide legal guidance when buying or selling a property. If you live in a state that doesn’t require a real estate attorney for closing, you could do everything yourself, but there’s always a risk of exposing yourself to financial fraud or legal liabilities.
Research the market in your area and interview several real estate attorneys. Remember that when you buy or sell a property, the financial repercussions will always fall back on you. The more you know about real estate, the more confident you’ll be during the transaction, whether you have a lawyer by your side or not.