Do I Need a Lawyer When Buying or Selling a Home?
When it comes to buying, selling, and transferring properties, most people think of Realtors, rather than attorneys. However, failing to hire an attorney for your real estate dealings can be a huge mistake. There are good reasons to hire an attorney for real estate transactions.
What do Real Estate Attorneys DO?
1. Contracts and Negotiations
When a potential buyer makes an offer to purchase a property, what usually happens next is a contract. Many realtors have standard purchase contracts, and many sellers and buyers choose to use those boilerplate contracts, figuring they will save a couple of hundred dollars. Savvy buyers and sellers, however, have their own lawyers draw up the purchase agreement. Many times, an offer is made with several contingencies. As either the buyer or the seller, you need to ensure these contingencies are appropriate. You also need to negotiate the purchase price for the home. An attorney is a skilled negotiator with his client's best interests driving the deal. Conversely, a realtor just wants his/her commission with the least amount of work. Generally, as a buyer, you will recoup your attorney fees in price negotiations. As a seller, an attorney will help ensure you do not lose money by having potential buyers back out of a sale. Your attorney will negotiate the type of contingencies the offer is dependent on as well. If you are involved in any type of "bidding war," your attorney can help you determine when it is time to back away.
Even if you DO choose to use the Realtor's standard contract, an attorney can help you review and understand the contract BEFORE you sign it. Often, a lawyer will help you modify this standard contract to better benefit you.
2. Title Searches
Before a sale can commence, a buyer needs to be sure the seller actually has the right to sell the property. Buyers also need to ensure the property is free from liens, judgments, and other encumbrances. Title searches are performed by attorneys. Again, many realtors offer to handle the title search, but it won't necessarily cost any less. And should the title search find any liabilities, an attorney can negotiate to clear these. He can provide documentation to the loan companies (which require clear titles) that the title has been cleared. And he can negotiate the costs of obtaining clear title into the overall purchase price.
3. Property Research
Often times, a buyer has potential uses in mind for a purchased property. Your attorney can research the property to see if it is appropriate for your intended use. Can you subdivide a unit into a 2 family home? Can you establish a home office? Are there any zoning or licensing requirements? What type of renovations does the current building code allow? Were there any unpermitted renovations that may come back to haunt you in the future? A real estate attorney can research all of these issues for you BEFORE you enter into property negotiations.
Again, many people rely on their realtor for these types of questions. However, realtors are not always honest or accurate in their answers. A realtor is not bound by the same ethical code as an attorney, and there are few consequences for a realtor giving inaccurate zoning information to a prospective buyer. It is far better to ask your Real Estate Lawyer to research these types of things while he is reviewing the other documents.
4. Document Preparation and Property Transfers
A Real Estate Attorney can draft and/or review all documents associated with a sale or purchase. S/he can prepare "rent-to-own" agreements. Your lawyer can prepare all paperwork necessary to complete the sale, including deed transfers, purchase contracts, financial agreements, etc. An attorney can review all loan documents. These days, much investment property is owned by an LLC. Your attorney can help you form the LLC, as well as transfer properties to its ownership. An attorney can also prepare and review leases, security deposit restrictions, property management contracts, etc. for your investment properties. And, of course, s/he can help you with all of the paperwork associated with investment properties, including tax and licensing paperwork.
5. Filings and Document Recording
Almost all paperwork associated with real estate needs to be filed with the local courts. And of course, your attorney will ensure all paperwork is filed and recorded in a timely manner. An attorney is crucial in helping navigate the "who, what, where, and when" of property paperwork.
6. Litigation
Buyers and sellers always hope their property transactions go smoothly, but alas, this is not always the case. Often, issues crop us well after the closing date. Should this occur with your transaction, you will be glad you worked with an attorney throughout the process.
Often, issues crop up around "defects' discovered well after the sale. Sellers are legally bound to disclose "known defects," and Home Inspections are often performed to uncover defects not disclosed by the sellers. Despite these precautions, sellers can find themselves in court, with buyers claiming unknown defects were actually known. Many times, having had the same attorney handle the transaction from start to finish can prevent such issues from turning into litigation. And of course, the costs will be lower as your attorney is already familiar with the intricacies of the case.
What Can Happen if I Don't Hire an Attorney?
There is no law that says you HAVE to hire your own attorney. Many people decide to just work with a realtor, and in many states, a realtor cannot act as both the buyer's and the seller's agent. This is purportedly to eliminate a conflict of interest and to ensure the transaction is in the best interest of both parties. But the bottom line is most realtors are only interested in their bottom line. If you don't hire an attorney, you may experience one or more of the following issues.
- You may not get the best price for your property. That applies whether you are the buyer or the seller.
- You may not understand all of the contingencies that may make the deal fall through.
- As a seller, you may fail to make disclosures; this could result in post-sale issues and even litigation.
- As a buyer, you may not receive all the disclosures to which you are entitled.
- The property may not be transferred correctly.
- The sale may not be recorded correctly.
- You may not be able to get licenses or permits to renovate and/or use the property the way you desire.
- You may end up with unexpected financial obligations, including tax liabilities, repair costs, etc.
- Your contracts and negotiations may not be in your best interests and may actually favor the other party.
Should I hire an Attorney for my Real Estate Deal?
Here at the
Law Offices of Heath D Harte, we feel strongly that BOTH parties should retain counsel for all real estate transactions. Most times, your lawyer pays for itself in terms of saving time and money. It minimizes the stress associated with buying and selling property, and it ensures your interests are protected throughout the process and for years to come.
We encourage our own clients to engage us with every step in the process. We want to help you with making or accepting an offer, all the way through closing and recording the documents. For most of our clients, real estate is one of the largest purchases of their lives, and we want to help make it one of the most positive ones too. We want to help you with every step of the process to ensure no detail is overlooked.
Our advice is to never be "penny wise but pound foolish." and failing to work with an attorney can result in just that. In our opinion, the document and filing maze is justification for attorney involvement in and of itself. We have seen many buyers and sellers get taken advantage of, and we are expanding our real estate practice in part, to help stop that.
Having legal counsel through an arduous process like this just makes sense. We suggest you retain counsel to protect your interests and to ensure everything is handled according to state and local regulations.
So yes. The bottom line is you really SHOULD hire an attorney to help with any and all real estate transactions.
