Do you need a real estate attorney?
Once you’ve put so much effort into the homebuying process, you want to finish strong during the closing. That’s why you hire a number of experts during this final stage to review the transaction and look out for your best interests.
Aside from a home inspector and other specialists, don’t forget to bring aboard a real estate attorney to help give you peace of mind – especially if you’re a first-time homebuyer who is unfamiliar with the entire mortgage process. Though many are wary of involving lawyers in their affairs, this is a case where adding their legal expertise should definitely benefit you in the long run.
Do you need a lawyer to buy a house, though? Given the important role property attorneys play throughout the homebuying journey — not just at the closing table, mind you — the answer is unequivocally, “yes.” Let’s take a closer look at what a real estate attorney does so you can see for yourself how these legal experts are worth every cent they earn.
What is a real estate attorney?
You might see real estate attorneys referred to in different terms — closing attorneys, mortgage lawyers and property attorneys, to name a few — but they all describe the same basic type of legal professional.
Real estate attorney defined
A real estate attorney is a lawyer who specializes in real estate law as it pertains to the purchase, sale and transfer of property.
That’s not to be confused with housing lawyers, who focus on matters relating to tenants’ rights, rental agreements and landlord disputes. Basically, if you’re buying or selling property, you want a real estate attorney; if you’re renting, then you should look for a housing lawyer.
What does a real estate attorney do?
Depending on what side of the closing table you’re sitting, a real estate closing attorney may focus on different priorities. But in general, their aim is to:
- Check that the terms of the transaction are agreeable
- Verify that the language contained in the contract itself provides suitable legal protections
- Ensure that their clients are not paying any undue expenses as part of the closing costs
Armed with a law degree and having passed the state bar exam, a real estate attorney has been trained to offer expert advice on your behalf. The most common benefits of hiring a real estate attorney include:
- Protecting your interests: Others involved in your homebuying purchase or home sale are not obligated to look out for your interests. A real estate attorney is. They can deal with any issues that arise and negotiate a productive solution or even amend a contract if necessary.
- Understanding and handling documents: Making sure the legal paperwork is in order and filed with the appropriate county is another task of your real estate attorney. They’ll handle legal documents that you may not have even known existed. The attorney will also ensure you don’t sign anything that could harm the value of your property down the line.
- Unusual transactions: Not every home purchase is a simple agreement between a buyer and a seller. The buyer might be dealing with a property that is owned by a bank or is being sold through a probate sale. The seller could have inherited the property and has little understanding of its value or its history. In these and other atypical, complex cases, paying for the expertise of a real estate attorney is highly beneficial.
When should you bring in a real estate attorney?
Many people — especially first-time homebuyers — think lawyers don’t need to get involved until very late in the mortgage process, when the terms of the sale need to be finalized. But, in reality, you should consult a real estate attorney as soon as you’re ready to make an offer on a new house. A good real estate attorney can provide valuable legal advice at every turn:
- Making an offer
- Reviewing the purchase agreement
- Assessing the home inspection report
- Negotiating the terms of sale
- Closing on the property
Making an offer
Although your real estate agent will help shape the terms of your purchase offer, it can be a good idea to have a legal expert give it a once-over before submitting it to the seller. Although real estate agents perform a valuable service with their knowledge of neighborhoods and comparable home sales, a real estate attorney will be able to answer and solve legal questions that arise during a home sale.
That’s especially true if you want to add certain contingencies to your offer. For instance, additional sale contingencies could protect your interests if you’re trying to sell your current home before closing on the new property and putting the proceeds from that sale toward your down payment. A lawyer specializing in real estate law can help you craft the specific language around these kinds of contingencies.
Reviewing the purchase agreement
Once the seller agrees to the preliminary terms of your offer, they’ll send over the purchase agreement for you to sign and put the home under contract. This document contains some very pertinent information like:
- Sale price
- Closing date
- Condition of the property
- Representations the seller makes regarding the property
- Your financing agreement
Sellers may include additional terms in these documents, including any appliances that will be left behind once they move or disclosures that have been submitted to the buyer.
Do not just rubber stamp your purchase agreement. Have a real estate lawyer look it over first and check for any potential issues. They may find that the seller has failed to provide required disclosures, for instance. Or maybe there’s something in one of those disclosures that gives them pause, like a notice of infestation, lead pipes or asbestos in the home.
Assessing the home inspection report
Home inspections give you a chance to look over the property and get a professional opinion on the state of the home before you buy. A good home inspector will pretty much always find something that needs fixing, no matter how new the construction is or how diligent the previous owner has been with routine maintenance and upkeep.
How do you know which problems are worth requesting credits for and which ones to just let slide? Again, your real estate agent will provide some input, but your attorney is another valuable source of insight here. If the defects are extreme enough, you may even decide to walk away from the deal completely rather than sink tens or even thousands of dollars into repairs and renovations.
Negotiating the terms of sale
Once the home inspection is completed, buyers and sellers typically have three days to a week to complete the attorney review stage. The exact amount of time given for this process varies from state to state — and some states don’t require it at all — but the idea is to give your legal counsel a chance to review all the available information related to the property and negotiate the sale terms.
If you want to request seller concessions or credits to help defer some of the cost of necessary repairs, your property attorney will negotiate that for you. The attorney also works with the title company to guard against any potential legal issues, such as encroachments on the survey or clouds on the title.
Closing on the property
At closing, you will be swamped with hard-to-understand documents, dozens of pages packed with legalese. A real estate attorney can help you navigate the morass. They’ll handle all of the financial paperwork with the home closing, including state and local taxes – paperwork that could overwhelm the average person. The attorney also ensures the fees noted are appropriate so you don’t overpay on your closing costs.
The real estate attorney will uncover errors, mistakes or potential issues that need to be addressed. Having expert eyes on the home contract and other paperwork is crucial to make sure they are 100-percent accurate. The attorney will usually be with you at the actual closing to make sure everything is as it should be. COVID-19 has complicated that aspect of the attorney-client relationship in recent years, though. It’s become more common for real estate attorneys to manage closing remotely and walk through everything over the phone.
Do you need a real estate attorney to buy a house?
More than a dozen states require that a real estate attorney be hired to be present at the closing (for some reason, they are predominantly on the East Coast and in the South). If you don’t live in one of those states, though, you can buy a house without any legal counsel. whether you’re the buyer or the seller.
Having said that, just because you can buy a house without a lawyer in some states doesn’t mean it’s a good idea. Remember, real estate attorneys look out for your best interests as a buyer. Without their involvement, it would be very easy to agree to unfavorable purchase terms, miss out on seller concessions or pay more than your fair share in closing costs.
What if you don’t have a real estate lawyer?
Forgoing legal counsel means you’ll take on all of that work yourself: reviewing contracts, negotiating sale terms and ironing out the details of your purchase. That is a lot to manage if you have no legal background or experience with the finer points of real estate transactions. But, yes, it is possible to go ahead with a home sale without the help of a real estate attorney — it’s just a pretty ill-advised move.
Even with all the work that real estate attorneys do for homebuyers, some folks may be tempted to go it alone for the sake of saving some money. But you may wind up paying more in the end by refusing to bring on legal counsel. That’s because your lawyer will negotiate closing costs with the seller’s attorney, including property taxes, government charges and, yes, even attorney fees. You’ll put yourself at a disadvantage trying to negotiate with an experienced real estate lawyer no matter how many episodes of “Law & Order” you’ve seen.
That’s to say nothing of the potential risk you run with your sale contract. Real estate attorneys know what terms are typical to include and can quickly spot contractual language that excessively favors the seller. The average homebuyer won’t have the experience or expertise to review a real estate contract and find those potential issues.
What is the cost of a real estate attorney?
Your real estate attorney cost will vary depending upon the lawyer’s experience and what part of the country the house is being purchased in. Real estate attorneys may charge a flat fee, perhaps in the $750 - $1,500 range, or charge by the hour.
Attorney fees are typically built into your closing costs, with each side paying for their own legal counsel. That’s not always the case, though. You may negotiate an arrangement for your seller to cover your real estate attorney costs or vice versa.
What’s the best way to find a real estate attorney?
You can always check with your area's American Bar Association to find qualified real estate lawyers near you. Also, contact those in the real estate industry for a suggestion by searching online for “real estate attorneys near me.”
Your real estate agent or loan officer may also be able to point you in the right direction. Always make sure to interview a handful of attorneys to find the one you’re most comfortable with and who you feel will represent your interests best.
In conclusion
A real estate attorney is a major asset to have in your corner when buying a house — that’s why we consider a mortgage lawyer to be an essential member of any homebuying team. This specialized lawyer can help solve issues from the moment you submit an offer to the closing table.
Although you’ll need to pay an attorney fee to get legal advice, it’s well-worth the expense. You’ll gain peace of mind knowing that you have a legal expert crossing every “t” and dotting every “i” in your contract, as well as spotting and addressing potential red flags that might come up along the way. Trying to navigate the complex mortgage process without any legal counsel could very well wind up being more expensive than any attorney fee ever would be. So, before you apply for a mortgage, make sure you have a lawyer lined up who you trust.