Hiring a real estate attorney may not be a must in some states but talking to an attorney saves you from unnecessary stress and losses.
At some point, it would be easier to talk to a lawyer before purchasing a home to understand the whole process. You may be surprised by all the unfamiliar legalese in buying a home. Some states actually require you to hire one, but it’s still useful to hire a lawyer even if it is optional.
Before diving into the process of hiring your real estate attorney, here’s a background on what a real estate lawyer do for first time home buyers like you.
What is a real estate attorney?
A real estate attorney is a lawyer whose specialty lies with the law governing the transfer of properties. Here’s a simpler real estate lawyer definition – an attorney who practices real estate law.
Your lawyer should make the real estate buying process less stressful for any home buyer. An experienced professional will help you avoid legal issues that may delay your closing or lead to any loss on your part.
What does a real estate attorney do?
A real estate attorney can assist you in buying a property, selling a property and in refinancing. In some cases, your real estate attorney will be present at closing.
What does a real estate lawyer do at closing?
Your lawyer’s role depends on whether you are the buyer or the seller.
What does a real estate attorney do for a buyer?
After you sign the Offer to Purchase, you should hire a real estate attorney to help you understand the contract. Here are some of the things that a real estate attorney will do for a buyer:
◙ Title search. Your lawyer makes sure that there are no liens, easements, covenants or any issue which may affect your right to use the property as you wish.
◙ Get title insurance. A real estate attorney will arrange the insurance to protect you from losses because of defects in the title.
◙ Register the property in your name. Part of your lawyer’s responsibilities is to ensure that the property has been registered under your name and that you have no liabilities other than your mortgage.
◙ Facilitate financial transactions on closing day. Your lawyer should also clarify the terms of your mortgage with your bank and make changes as needed.
◙ Draw up and register all the required documents including the Statement of Adjustments.
◙ Accompany you on closing. Your attorney will be present during the closing and they have to go over the documents you need to sign.
What does a real estate attorney do for a seller?
Here are some of the things that a real estate attorney will do for a seller:
◙ Do a title search. Your lawyer needs to check for defects and to correct them.
◙ Prepare sale and purchase agreements. Your attorney may also negotiate the terms with your buyer or his or her legal representative.
◙ Draft the deed of sale, Statement of Adjustments and other legal documents. If you are out of the country or away, your attorney will also prepare a power of attorney for your representative.
◙ Arrange for security deposit transfers and insurance certificates, if needed.
◙ Be present on closing. You will need your real estate lawyer for closing because your legal representative will review all the documents at closing before you sign them. Your lawyer will also deal with all the financial transactions.
◙ Give you the check for your home’s sale. This amount would be what’s left after deducting mortgage costs and fees paid to your real estate agent and lawyer.
Aside from helping buyers and sellers, a real estate attorney can also assist on refinancing. This transaction will also require a title search to protect you and the lender. Your lawyer will also register the mortgage for your new loan and draft the Trust Ledger Statement.
Real estate attorney vs title company
A title company provides title insurance and escrow services when you purchase or sell a property. Many title companies are owned by lawyers or part of a law firm. While the company may have a legal retainer, most of its staff are paralegals and real estate experts who do not have law degrees.
A title company may be enough in a simple transaction, it cannot provide legal advice or make changes in the sale contract if there is an issue.
If there are serious problems with the contract, a title company may refer you to a lawyer to resolve the issue.
Realtor vs Real Estate Attorney
Whether you are looking to buy or sell a home, realtors can help you find your dream home or assist you in listing a property for sale. They act as a negotiator between you and the potential buyer or seller.
A real estate attorney looks into the legal aspects of the transaction such as title issues and zoning rules. When necessary, a real estate attorney will also act as a negotiator.
Realtors may represent both the buyer and seller. Attorneys, on the other hand, can only represent the buyer or the seller.
As to payment, your realtor gets paid only when you close the sale and they usually receive 5% of the sales price. Meanwhile, your lawyer gets paid whether you complete the deal or not.
Why do I need a real estate attorney when I can just hire a broker?
Some states require the presence of an attorney during closing. Even in a simple residential sale, you may still need a lawyer to go over the documents to make sure everything is in order. The ideal scenario would involve having both a realtor and a lawyer.
There are also cases when it’s enough to have a real estate attorney. For instance, if you are selling your home and you already have a buyer, hiring an attorney may be more cost-effective as you won’t have to pay the commission to the real estate agent.
Can my real estate attorney be my realtor?
While it may be legal for a real estate to be a broker at the same time, it may not be necessarily ethical. If your broker happens to be an attorney, he or she cannot be your legal representative. Likewise, your attorney cannot be your broker.
Do I need a real estate attorney?
Hiring a lawyer is part of the real estate transaction in the following states:
- ◙ 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
- ◙ West Virginia
The law may also vary within these states. Georgia, New York, North Carolina, and South Carolina, for instance, requires the involvement of a lawyer in all stages. In some states, a lawyer may only be necessary during closing.
Other states like in Nevada or California, title companies or brokers can close the deal although it may still be useful to hire a lawyer especially if it’s a commercial, bank-owned or problematic property.
How much does a real estate attorney cost?
Real estate attorney fees depend on how complicated the transaction is and your lawyer’s expertise. Some attorneys charge by the hour while others prefer a flat rate.
Often there is a base fee depending on the type of home you’ll buy. Prices can vary if you’re buying a condo or a detached home. Aside from that, you have to pay the registration fees and disbursements for expenses like searches, photocopying, carrier fees and faxing.
Real estate lawyer fees usually charge hourly rates between $150 to $450 per hour or a flat rate. To secure the services of an attorney, you may also have to pay the retainer upfront.
The total real estate attorney cost is usually around $1.5K. The cost of a real estate attorney may be higher or lower depending on where you live. For cities like New York, for example, real estate lawyer cost can range from $2k to $4K.
Buyers usually have to pay higher fees compared to sellers since lawyers have to perform more services for them.
Since these legal professionals get paid regardless of the outcome, you may be curious about another thing – how much does a real estate lawyer make?
The average real estate lawyer salary ranges from $118K to $160K per year depending on your expertise, experience, and state.
Hiring a Pro Bono real estate attorney
If you can’t afford a real estate attorney, you may also consider pro bono services. Some law firms and organizations provide free real estate attorney services and legal assistance. A pro bono real estate lawyer can help you throughout the process without charging you anything. Some law firms and organizations provide this service.
Here are some places where you can search for a pro bono real estate attorney.
Some lawyers may also offer free consultation and advice. However, you may have to pay their retainer fee if you engage their services in drafting contracts and other legal documents.
How to find a real estate lawyer near me
The best real estate attorney usually comes from a referral from a trusted source. You want to be working with a local real estate attorney whom a friend or family member has personally worked with.
If none of your close friends had dealings with a local real estate lawyer, you can just look up “real estate attorney near me” or some random key phrase. But if you go that route, choose the lawyer who is known to be an expert in the field.
While mulling over how to find a real estate lawyer, don’t just consider one candidate, it’s better to shop around.
What should you ask a potential real estate attorney?
Here are some real estate lawyer questions to ask potential candidates for your legal representative.
1. How many years have you practiced real estate law? In which state?
If you are looking for a real estate attorney, you want someone who has enough experience to guide you through the process. A lawyer’s experience becomes even more important if the transaction is not a simple real estate purchase.
You want to know if your potential candidate has been in the field for a year or two or is someone who has been dealing with real estate transactions for decades.
Aside from that, it would also be useful to know if your candidate practiced real estate law. Although the real estate law is generally the same across the country there are state-specific laws and legal considerations. Hence, the ideal candidate is someone who practiced in your state.
While at it, it’s also useful to hire someone who:
◙ Graduated from an accredited law school
◙ Has verifiable credentials
◙ Has not been disbarred
It would also be useful to check on the process of how to become a real estate lawyer. Someone in this field needs to earn an undergraduate degree and graduate from law school.
There is no real estate lawyer degree or a designated real estate lawyer school. So, those who enter the field usually take electives to further their knowledge in real estate law while in school. Some lawyers also do internships to have practical experience.
The journey doesn’t end after obtaining a juris doctorate degree from an American Bar Associated accredited school and passing the bar exam to get an attorney’s license. Most states require continuing education annually or every three years to practice in real estate law.
Pro Tip: Check your real estate lawyer’s credentials through the American Bar Association portal.
Real estate lawyers also seek higher education and train under seniors in the real estate field to gain experience in contract negotiations and real estate transactions. Learning the process of how to become a real estate attorney in your state may also help you assess the qualifications of potential real estate lawyers.
2. Have you handled cases similar to mine?
Each real estate transaction is unique. So, you need to find a real estate attorney who has dealt with similar cases. These lawyers would know possible issues that may arise and be on the lookout for the most important details.
For instance, when you are the middle man in a double closing, you have to buy the property from the owner and sell it to the final buyer. The simultaneous purchase and sale of the property make this transaction unique, and it may be better to have a lawyer to guide you. Cases like this require a lawyer who knows the real estate law in the state.
During the interview, it would be useful to ask how this question – how do you plan to handle my case?
A candidate who provides a brief plan addressing the main issues would most likely be better in handling the case compared to someone who assures you of success without sharing his or her plan.
What kind of procedures should you expect, what kind of outcome does the lawyer foresee, and how long will the process take. From the candidate’s answers, you can assess if you are comfortable with working with him or her.
3. How much do you charge? Can you provide a cost estimate?
When you’re looking to hire someone, you want to know how much the service will cost. Ask potential candidates for a cost estimate based on the real estate transaction you’ll need assistance for.
If someone asks for a flat rate, don’t forget to ask what is included in the package. Find out if there additional fees that you may incur during the engagement?
What if you find a lawyer you are comfortable with, but the price is over your budget?
In this case, try to negotiate for a more affordable rate. While price will always be a big factor don’t settle for a bottom-of-the-barrel lawyer who may not provide all the services you need. Paying a little more to avoid headaches later could cost you less in the long run.
4. Can you provide references?
Aside from talking to your potential lawyer to gauge their professionalism and negotiation skills, it may be useful to get in touch with other clients they’ve worked with. A real estate lawyer who can provide references such as former clients or other professionals in real estate would be preferable.
5. Will you be personally handling my case?
If your lawyer is part of a larger firm, it would also be useful to know if the person you are talking to will personally handle your case. Sometimes, junior attorneys and paralegals will do the job. This will also let you know who has access to the information involving your transaction.
You should also ask about the best way to get in touch with your attorney. If he or she is not around, who should you call or ask if you have concerns?
Communication is crucial in hiring any professional, more so when you engage the service of a real estate lawyer.
What kind of real estate lawyer do you need?
If you are a first-time home buyer looking for an attorney, you would need a residential real estate lawyer. Attorneys in small firms or those who own their practice usually focus on this field. Some of these lawyers may also be a for sale by owner real estate attorney who could help you negotiate the purchase or sale of a property.
For people interested in business, it may be better to consult a commercial real estate lawyer. These legal representatives are not just familiar with real estate laws but also of business laws and other relevant laws involving commercial properties. A commercial real estate attorney has experience beyond the expertise of a residential real estate attorney.
A real estate attorney for investors can provide more guidance issues related to investing in real estate property such as taxes, prohibitions, and drafting contracts in your favor. An investor-friendly real estate attorney will know what things to look out for, to avoid losses and legal issues.
A Reliable Real Estate Attorney May Save You a Fortune
From the moment you sign the offer to the day you receive your house keys, you should stay vigilant. During this period having a lawyer can help you with any question you may have about the home closing process. They will take care of all the legal documents you need and ensure that you meet all the conditions to receive the mortgage funds you’ll need for closing.
Your real estate lawyer will also look into issues about the on and off title. Since your real estate attorney will make sure you own the property legally and all mortgages and liens have been discharged, you’ll need a professional you can trust and communicate with.
Referrals are usually the best way to find a real estate lawyer. But you can also do your own search and interview candidates to find someone you are comfortable working with.