What does a real estate lawyer do?
A real estate attorney can ensure the legality of a real estate transaction, review and explain the documents involved, resolve disputes, and most importantly, save you from making costly mistakes. Here’s more information on the role of a real estate attorney, who represents the attorney, expected costs, and how to find one you can trust.
What does a real estate lawyer do?
A real estate attorney specializes in property issues, including buying and selling homes, ownership, management, compliance, litigation, and title issues. In a settlement, a lawyer also ensures that the agreement for his client accurately reflects his understanding of the agreement, says Elizabeth Whitman, managing member of Whitman Legal Solutions, LLC, in Potomac, Maryland.
To do this, a real estate attorney has several responsibilities, says Bruce Ailion, real estate attorney and realtor at Re/Max Town & Country in Atlanta.
These services may include:
- Confirm that ownership is properly vested in the seller of the home
- Identify any unpaid loans, liens, disputes or other claims against the property and work to settle them, as well as discover restrictions and covenants of deeds and any breaks in the chain of title
- Setting up title insurance
- Negotiate and review the real estate contract to determine how the money will be allocated
- Prepare the deed, disclosures, mortgage or note to secure the debt following the instructions of the mortgage lender and explain the terms to his client
- Look for liabilities such as taxes, utility fees, and homeowners association fees and prorate them based on how they were assigned in the contract
- Prepare a settlement statement showing the buyer’s funds (or provided on behalf of the buyer) and charges for all parties involved, such as agent’s commissions, attorney’s fees, underwriting fees, taxes, title search fees, loan discount points, etc.
- Facilitate closing and possibly accommodate seller and buyer to sign documents and collect government ID
- Confirm that the parties have fulfilled their obligations under the contract and assist in the resolution of disputes
Real estate attorneys can also provide valuable advice to a buyer and seller engaged in a sale by owner transaction. In this scenario, attorneys can draft and review the purchase agreement and help guide the transaction through to closing.
Who represents a real estate lawyer?
There are usually a few attorneys involved in a real estate transaction: a buyer representative, a seller representative, a mortgage lender representative (if financing is involved) and potentially a title company representative.
“A real estate attorney cannot represent both buyer and seller,” says Whitman. “In most home purchases, it is common for at least the buyer to have a real estate attorney. In some states, an attorney must be involved in at least part of a real estate transaction, usually to resolve property issues. title or deed.
When do you need a real estate lawyer?
Both buyers and sellers can benefit from hiring a real estate attorney, whether the transaction is related to a home for personal use or as an investment property. Investment properties, in particular, “involve tax considerations that most buyers and sellers aren’t equipped to handle on their own,” says Whitman.
Many states require you to hire a real estate attorney, at least to help you with closing duties. These states include:
- New Hampshire
- new York
- North Carolina
- North Dakota
- Rhode Island
- Caroline from the south
- West Virginia
Whether mandated or not, a lawyer specializing in real estate can however be a valuable ally, especially for the buyer, explains Shavon Jones, a lawyer based in Miami.
“Waiving the services of a real estate attorney comes with many risks,” Jones says. “I’ve had people come to me when deals have failed, arguing over deposit money or who’s going to pay for a leaky roof or a crack in the foundation. I’ve seen sellers receive better offers and look for ways to renege on the deal they signed with the current buyer as well. »
If you plan to work with a lawyer, consult your lawyer well before signing a purchase agreement.
“Many sellers and buyers wait until they have signed the purchase contract to hire a lawyer, but at that time they may have committed to unfavorable contractual conditions for which the lawyer could have helped them” , says Whitman.
When hiring a lawyer, be clear about what you want them to do (for example, help you write an offer) and make sure you understand what their workload looks like in terms of the processing yours in a timely manner, and how and what to charge for.
How much does a real estate lawyer cost?
The cost of a real estate attorney varies depending on the amount of work required, the attorney’s level of expertise, and location. Most attorneys charge an hourly rate, but some might accept a lower flat rate if they have only a limited role in the transaction, Whitman says. Some attorneys deal strictly with closings, usually for a flat fee.
According to Jones, a real estate attorney hired to simply review and modify a contract could be hired for around $500 or so.
“For nut soup representation on a small home purchase, including transactions that don’t involve a real estate agent, consider spending around $2,500 to $3,000,” Jones says.
In the Atlanta market served by Ailion, attorney fees range from $550 to $1,150 for a standard closing. If the transaction involves complicated title issues, this fee can increase from $195 to $595 per hour.
“In some cases, the attorney may end up charging a lot less money than the typical 6% commission on the sale price you would otherwise pay a real estate agent,” adds Jonathon Byington, professor of business law at the University of Montana.
No matter how much your lawyer charges for their services, you will have to pay the fees before or at closing.
Should I hire a real estate lawyer?
Because a home represents such a large financial commitment, there are inherent risks. Although going without a lawyer saves you money now, there could be costs or losses down the line.
“People who don’t hire a lawyer risk contract revisions that aren’t in their best interest, errors in their mortgage documents, or title or investigative issues that aren’t covered by the title insurance,” says Whitman.
“You may not get all or part of the property you thought you were buying,” adds Ailion. “If the transaction is complex, it is never a good idea to go into this transaction alone, because the risk of loss is too great.”
“In one instance, a couple was trying to buy their first home — a historic home that had originally been built without a bathroom,” Whitman recalled. “When they received their survey, they learned that part of the only bathroom in the house was built on the neighbour’s land. A real estate lawyer was able to sort out the situation so the buyers didn’t have to worry about their neighbor or local zoning officials forcing them to move their bathroom.
In another scenario, a different first-time buyer has not received all of the co-ownership documents from the seller, as required by state law.
“The attorney identified the issue and requested the additional documents,” Whitman shares. “After reviewing them, he found that the condominium association was underfunded and that the condominium charges should be increased considerably soon. The buyer was able to use this information to negotiate a reduction in the purchase price.
How to find a real estate lawyer
Ask family, friends or colleagues for recommendations, or ask your real estate agent for a recommendation. You can also contact your state bar or a local title company, or do a simple Google search (albeit with proper verification), Byington says.
Carefully review at least a few real estate attorney candidates with the following questions:
- Are you experienced in this type of real estate transaction?
- How many real estate transactions have you completed in the past year?
- Are you a member of the real estate section of your local bar?
- Which title insurance company are you authorized to represent?
- Are you on the list of approved loan closing lawyers of several major banks?
- How much do you charge, and is it a flat rate or an hourly rate?
- Is there a difference between what you charge for an all-cash transaction and a funded transaction?
- When are you available? Are you available on weekends (usually when the buyer is looking for a house)?