Do I need a real estate lawyer?
What the law demands
You usually won't need a real estate agent or a real estate lawyer to complete a real-estate transaction. But in some states, only an attorney can prepare a home-buying contract.
Similarly, in these states, only a lawyer is allowed to prepare sale documents, perform a title search, and close a real estate deal. For example, in New York and Alabama, licensed attorneys generally must conduct closings. In general, the laws of your state determine whether you'll need to hire a real estate lawyer.
When to hire a real estate agent
When asking, "Do I need a real estate attorney?" you also need to consider whether you'd benefit from hiring a real estate agent. Buying a house requires you to sign and complete necessary forms. Having someone familiar with the process can help.
Some of the things a real estate agent can do include:
- Recommending properties
- Fielding buyer offers
- Hiring inspectors
- Negotiating contracts
- Finding mortgage loan brokers
When to hire a real estate broker
Real estate brokers have slightly higher education requirements than real estate agents. Brokers must also have prior experience as an agent before they can become a broker.
The specific requirements vary by state, but brokers typically need to take classes, pass an exam, and have worked as a real estate agent fors everal years. For example, in New York, licensure as a broker based on experience requires being an agent for at least two years.
Why hire a real estate attorney?
While real estate agents and brokers have their places, they can't perform all the functions of a real estate attorney. Your real estate agent can help you through the negotiation process, but that negotiation ends with the contract. A real estate attorney can offer you the knowledge to review that contract.
An attorney can also help you understand what documents you're signing. Finally, a real state attorney will have experience in researching your home's title to decide whether anyone has a claim against it.
Here's a summary of the services a real estate attorney can offer:
- Explain the legal terms of the purchase or sale contract to you, including how you will surrender or take title to the property
- Outline any defects of title and recommend actions to cure them
- Evaluate any covenants, liens, easements, and other obligations on record for the property
- Prepare all necessary documents
- Explain the terms of the mortgage and negotiate with the lender to change them as necessary
- Calculate the tax liabilities associated with the purchase or sale of real estate
- Join you at the closing and review the paperwork you'll need to sign
- Help you secure title insurance as a buyer
- Ensure that you receive a deed to the property that's subject only to the encumbrances, such as liens or easements, that you've agreed to
Do I need a real estate attorney as a seller?
As a seller, you might think that you have less to worry about than a buyer. But the truth is that you also have a lot at stake. The following list outlines what a real estate lawyer can do for you if you're selling your home:
- Prepare or review the sale agreement, including negotiating its terms
- Prepare the deed and power of attorney, if needed
- Address any title issues that arise
- Attend the closing and review all the documents you need to sign
- Arrange the exchange of security deposits
- Make sure the mortgage is paid
Questions to ask a real estate attorney
Many real estate agents are not licensed to practice law. However, that doesn't mean that any lawyer who has a license is qualified to handle your case. When deciding on a real estate lawyer, make sure you ask the following questions to ensure a good match:
How long have you been in practice?
For basic real-estate transactions, such as buying a home, hiring a new real estate lawyer isn't much of a risk. However, if you're dealing with a complex sale or real estate development, you'll want someone with at least a decade or more of experience.
Have you handled cases like mine? If so, how many? What were the outcomes?
Real estate matters can vary widely in complexity. Ask potential lawyers if they've dealt with cases like yours and the results of those cases. You might also ask if the attorney has clients who would be willing to talk to you.
What's your strategy on my case?
A seasoned attorney will be able to give you a rough outline of what your case will look like. From the start, you should know how long your case will take, what documents the attorney will need to file, and all the possible outcomes.
What will it cost?
The average hourly fees of real estate attorneys range from $150 to $200. Asking your lawyer this question in advance will help you avoid unpleasant surprises later. Keep in mind that if you're asking for a simple service, such as the review of a sale agreement, you might be in a good place to ask for a flat fee. You can also ask whether your lawyer will accept payment plans or demands full payment upon billing.
Who will work on my case?
You have the right to know whether your attorney will be working on your case exclusively or if paralegals, secretaries, junior attorneys and others will be involved. You should also find out who the primary contact for your case will be.
Real estate agents and brokers both occupy important roles in real estate law. But more complex transactions sometimes require a lawyer, one who can help you whether you're in the market to sell or buy property.
