Realtors – Why Your Client Needs A Real Estate Attorney
In an effort to save money your clients may choose to forgo legal representation in their sale or purchase of real property. However, the lack of competent legal representation in the sale or purchase of real estate could not only cost your client more money in the long run, it could also jeopardize the entire transaction. An experienced real estate attorney helps facilitate the closing, working with all the parties involved- mortgage brokers, realtors, buyers and sellers- to ensure the smooth closing of the transaction. In my experience, there are four main reasons why your clients should hire a real estate attorney to assist with their transactions:
1. To Review the Contract Before Execution
Simply put, your client should not sign the contract until his/her lawyer has reviewed it. If the parties are in a time crunch- simply put the words “Contract subject to review by [party]’s attorney” and include a reasonable time frame. The other party will see that your client is serious about the sale/purchase and it will allow extra time for the attorney to review the contract. You may find that your clients are comfortable signing the contract if it is printed on a standard form.
However, I have seen standard form contracts where the costs of title insurance were incorrectly allocated, financing contingencies unknowingly waived, and inspection periods extending beyond the date of closing. Mistakes happen. At a minimum, the attorney serves as a second pair of eyes, trained to catch errors and potential issues that may arise from the contract terms.
2. To Review and Clear Title
Having an attorney on board early in the deal will also assist with any title issues that may later arise. Even a small issue, such as an unreleased prior mortgage, appearing at the last minute can delay the closing for the transaction. Your client’s attorney will be on the look-out for any possible title issues, and plan ahead, obtaining satisfactions, releases, corrective deeds, probate approval, powers of attorney, etc. in a timely fashion.
Also, a real estate attorney is trained to review and understand the title commitment, which is prepared by the Buyer’s attorney or title company. In transactions where I have represented sellers I have seen (and corrected) inaccurate title requirements that were unnecessary and would have caused the seller an undue burden and increased expenses. In such an instance it is essential to have a real estate attorney to communicate with the title company, the title insurance underwriter, and/or the buyer’s attorney to clarify and amend the commitment. When your client is the buyer, having an experienced real estate attorney prepare your title commitment is both cost and time efficient- a correct title commitment needs to be prepared only once.
3. To Monitor Contract Dates and Requirements
The experienced real estate attorney will monitor the contract critical dates for the buyer’s deposits, as well as all contract contingencies such as the inspections and financing. Missing a deadline can result in financial losses for the parties, including a potential loss of deposit or loss of the whole transaction. Simple matters such as calculating calendar days versus business days may make all the difference in some transactions. A party may try to use a missed deadline in order to avoid the contract or to make unreasonable demands on the other party.
Further, if the other party defaults, the attorney will address it properly, both representing your client’s interest and working to salvage the deal. An experienced real estate attorney will keep your client’s interest paramount, and will focus on meeting critical dates and requirements per the terms of the contract.
4. To Verify Property is Deeded Correctly
When most people purchase property they are not thinking about when they will be selling it. However, the experienced real estate attorney looks at the buyer’s specific objectives when purchasing the property, making sure that the property is deeded correctly so when the property is sold in the future there will be no surprises.
In addition, the different ways to title the property, affecting your client’s real estate taxes and estate planning must be considered. Whether the parties want to be tenants in common or joint tenants with rights of survivorship, consequences of deeding the property individually, versus in the name of a company or trust, are all matters that should be determined well in advance of the closing. Incorrectly deeding the property at closing will cost your client more money later when the deed is corrected, including additional attorney fees, documentary stamps and county recording fees.
Fearing the cost of a hiring an attorney, many clients may try to handle their real estate transactions without one. However, your client may not realize that many real estate attorneys work on a flat fee, and are able to provide them both a fee and cost estimate before beginning any work. Advise your clients to hire an experienced real estate attorney, and let them know that they can request the fees and costs up front.