It’s not always easy to buy or sell a house. There are many laws that regulate real estate transactions. They vary across the country. A licensed real estate attorney should be added to the steps to closing on a home, even if the state does not require one.
Even if an attorney is not required, there are complex situations in which an agent may recommend that you hire one. You may face certain obstacles when closing the deal, such as if you are selling a property on behalf of a relative who has died or buying a property out of state.
You won’t want any delays in the largest transaction of your life, regardless of whether your situation requires an attorney or your state requires it.
The complex role of a real estate attorney at closing
Real estate attorneys can be thought of as “fact-checkers” in many ways. Agents may often rely on an attorney’s best judgment regarding everything, from initial contracts to the breakdown and final closing costs.
“Most of them do much more than push the paper and say, “Sign here.” Terry Hart, a top agent in real estate with 16 years of experience selling homes in Georgia (one of 18 states that requires an attorney at closing).
Review and draft closing documents
Hart states that the primary function of an attorney is to review and sometimes draft titles and contracts, as well as facilitate the closing process. Title companies are often responsible for these steps in states where participation is not required.
Transfer property title
Attorneys review public records about a property to determine if there are any liens or other problems that could affect the title.
Find a solution to legal barriers
Unexpected closing obstacles, such as a lien on a title or disclosure issues, are more common than people think. According to the National Association of Realtors, 30% of home sales were delayed by contract issues, including financing and title issues.
In 5% of home sales, either the sellers or the buyers terminated the contract. These complications can be identified and addressed by attorneys during closing procedures.
Mediate contract disputes
An attorney can act as a mediator between sellers and buyers in contract disputes. An attorney can review the sale documents and give both sides an objective, legal view.
Hart says, “I call the attorneys with whom we work on a daily basis when I have a buyer/seller in a dispute over something and I need clarification on the actual contract.” She states, “Sometimes they are the voice of reason.”
Assist your agent in the legal aspects associated with closing
Although both attorneys and agents are well-versed in the real estate market, each has their own set of credentials. Agents are not licensed to give legal advice if there are any problems with your home sale.
In fact, it would be a violation of the law. An agent may rely on an attorney’s knowledge to fill in the gaps.
All parties can rest assured
Real estate attorneys are able to provide peace of mind by sharing their knowledge and experience. They protect clients and help to streamline the closing process so that there is no legal dispute.
Hart says, “I believe it gives the consumer a sense of security to know an attorney has looked through everything.” She says, “The more eyes that look at it, the better.”
Find out what your state laws say regarding real estate attorneys
The state laws determine whether an attorney is required for closing and how involved the attorney should be in the process. Louisiana is one example of a state that requires a real estate attorney in order to inspect and certify the title.
Georgia’s court decisions from 1989 and 2000 ruled that a licensed attorney must conduct closings in real estate transactions and be in complete control of the process.
Depending on where you live, some states have different laws and customs. New Jersey has a northern region where attorneys are involved in real estate. This is different from the south.
If an attorney is not required for closing, another professional (e.g., an escrow company, settlement agent, or real estate agent), will take care of closing responsibilities such as title transfer and the drafting of closing documents. Even if your state doesn’t require an attorney to be involved, it may still be a good idea to hire an attorney for closing.
This is true for Hawaii, where the history of the island’s land division and recording processes has shaped property descriptions, disclosures, and even the terminology used today in real estate.
You can also consult a top realty agent in your area to learn more about the local norms for your region. Keep in mind that laws are subject to change year-to-year.
The average cost for a real estate lawyer
Avvo, an online marketplace that offers legal services, reports that residential real estate transactions are typically handled by attorneys who charge between $150 and $350 per hour. Some attorneys will charge a flat fee to assist with real estate transactions.
These costs can be anywhere from $950 up to $5,000. Usually, the buyer pays the fee. However, they might negotiate with the seller to cover the cost in certain cases.
You will be responsible for paying the closing statement fee. Although it is a significant addition to your final bill and can be costly, an attorney’s experience can protect you from legal problems and save you thousands.
Hart clarifies that regardless of who pays, the attorney doesn’t always represent either the seller or buyer. Hart clarifies that the attorney is actually representing the lender. Hart explained that the attorney’s job is to protect the interest of the person who holds the cash. This is often a mortgage lender.
Hart advises buyers and sellers to get an attorney to represent them when they are trying to sell their home or pursue cash deals.
Here are some reasons to hire a real estate lawyer for your home-sale transaction
No matter what your state laws are, there may be a situation that requires the assistance of a real estate lawyer.
Hart says, “I hate to see people put themselves in situations where they could be potentially putting themselves in danger.” Hart advises sellers to get an attorney if the sale of their home involves any of the following:
- The original owner of the home has died.
- The seller is going through a divorce.
- The buyer is moving to another state or the homeowner is selling from out of state.
- Financial complications can arise, such as a lien on the title or a judgment on it.
- The bank owns the property.
- The home is a for-sale-by-owner (FSBO).
- Tenants are involved.
- The property has been damaged.
- A buyer-seller dispute exists (or the potential for one).
Before you hire an attorney, consult a top realty agent
It can be difficult to buy or sell a house. You should also be aware that laws can vary from one state to the next. Before you sign any closing documents, you will want to do your research.
Search engines such as Avvo or FindLaw can help you find a reputable real estate lawyer. To find licensed attorneys by zip code or specialty, you can also visit your state’s bar association website.
Talk to a local real estate agent before you start looking for legal representation. They can refer you to other agents and provide information about your state’s laws.
Conclusion
Buying a home can be an exciting yet intimidating experience. It’s important to make sure that the process is done correctly and that your interests are protected. To do this, it can be beneficial to work with a real estate attorney.
They can provide valuable legal advice, review all legal documents to make sure everything is in order, and help you negotiate the best deal. Ultimately, whether or not you need a real estate attorney to help you close on a home depends on your individual situation.