What Does a Real Estate Attorney Do, and Do You Need One?

When it comes to your new home purchase you may be asking what does a real estate attorney do for the buyer or seller? Here’s a look at whether you need one.

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What does a real estate attorney do

Depending on the location and complexity of the deal, the closing table for a residential real estate transaction can get pretty crowded. Besides the buyer and seller, there is usually a real estate broker there to guide the deal through, and often one for each side of the transaction. In most deals there is also a lender involved to provide financing. Finally, the lawyers: buyer, seller, and lender may all be represented by attorneys at the closing. Although it may crowd the closing table, attorneys often fill a valuable role in the process.

In some states, an attorney is legally required to be involved in every real estate closing. Although this list is subject to change with new legislation, it currently includes Alabama, Connecticut, Delaware, D.C., Florida, Georgia, Maine, Massachusetts, Mississippi, New Hampshire, New Jersey, New York, Rhode Island, South Carolina, Vermont, and West Virginia. However, even in these states, a homebuyer is not necessarily required to hire their own lawyer to purchase property. In deciding whether to hire an attorney to represent you in a real estate purchase, consider the following guide.

What does a real estate law attorney do

What does a real estate attorney do?

Attorneys for the buyer and seller in a real estate transaction are usually retained before the purchase and sale agreement (P&S) has been signed. Each party’s attorney will take part in drafting, reviewing, and negotiating the P&S to make sure the interests of their respective clients are safeguarded. Because of the complexity and intricacy of property laws in the U.S., this service can be extremely valuable, especially in larger deals with a lot of moving pieces. For many, buying a home means divesting a huge chunk of savings, so it is essential to be protected from risks.

However, there are “standard” P&S forms available for every state. For simple deals, particularly in states where attorneys are not required, little deviation from the standard form is necessary, and minor adjustments can be handled by the brokers. For your particular purchase, your real estate agent or mortgage broker should be able to provide guidance on whether an attorney is needed for the P&S.

Real estate attorneys are also involved in the due diligence process of the transaction, the majority of which usually takes place after the P&S is signed. The biggest piece of due diligence is usually the review of the title report- the history of all transactions relating to the subject property, including sales, mortgages, foreclosures, liens, etc. A full review of a property’s title is essential to ensure that the property being purchased is free and clear of any encumbrances. When the buyer is taking a loan out for the purchase, the title review will always be conducted by the lender, either through an attorney or a title agent.

Other than the title review, due diligence may also include assessing the health of the condominium and HOA in the case of a condo unit purchase, or other miscellaneous issues that will vary from one region to another.

Finally, a real estate lawyer is responsible for drafting and reviewing the deed and other closing documents, and serving as the settlement agent for the transaction. Once again, each party’s attorney is there to make sure their client’s best interests are reflected in the documents that will go to record once the closing is complete. The settlement agent is usually an attorney for the lender (or escrow agent if there is no attorney) and is in charge of holding and disbursing all funds and handling all adjustments (for taxes, utilities, etc. paid or unpaid by the seller at the time of closing).

Buyers Real Estate Attorney

Do I need to hire a buyer’s attorney?

Although a buyer’s attorney can provide valuable advice and assurances, hiring one is an additional expense, and may not always be worth the cost. As a buyer, determining whether you should bring your own real estate attorney vs. realtor to the deal is largely based on the complexity and value of the transaction, and on the state where the property is located (as noted above).

When there is a lender for the purchase and the lender is represented by a lawyer, they are often referred to as the “closing attorney.” The closing attorney is responsible for ordering and reviewing the title, preparing closing documents, and acting as settlement agent. Because the bank and the buyer both want the property to be transferred free and clear, without any defects, their interests are largely aligned. Thus, buyers often go without a lawyer, relying on the closing attorney to make sure the deal goes through without a hitch.

That being said, it is important to understand that the lender’s attorney does NOT represent the buyer, and in some respects the buyer and lender have opposing interests. Therefore, particularly in large purchases or deals involving hard money loans, it is wise to retain independent counsel.

NOTE: The buyer/borrower generally pays the legal fee for the closing attorney as part of the cost of the loan. Real estate attorney fees vary based on location and breadth of work. You can expect to pay anywhere from $100 to $300 an hourly basis or $500 to upwards of $1500 total in real estate attorney costs.

When there is no lender in the picture, it is more likely the buyer needs their own attorney, as there is no closing attorney overseeing the deal. In a simple purchase, a buyer can often get by with a form P&S filled out by a broker. Similarly, preparing a deed is usually straightforward and can be accomplished by a non-lawyer (if allowed in the relevant state). However, the guidance of an attorney may be indispensable when it comes to the due diligence phase, where any defect or problem overlooked could come back to haunt the buyer after the deal goes through. In Western states, where each property typically has a shorter history, the title search may be handled entirely by a title agent or title company, without attorney involvement, but if any uncertainties arise, it is prudent (and usually well worth the fee) to hire a buyer’s attorney.

Required real estate attorney states: Alabama (AL), Connecticut (CT), Delaware (DE), Washington D.C. (DC), Florida (FL), Georgia (GA), Maine (ME), Massachusetts (MA), Mississippi (MI), New Hampshire (NH), New Jersey (NJ), New York( NY), Rhode Island (RI), South Carolina (SC), Vermont (VT), and West Virginia (WV).