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- A real estate attorney advises buyers, sellers, and lenders in real estate transactions.
- Although some states require buyers and sellers to retain legal counsel, most do not.
- You might consider hiring a real estate attorney if your purchase or sale is complex or you want peace of mind.
Buying and selling a home are two of the largest financial transactions you will ever make. Like most people, you may not be familiar with mortgage terms or your obligations when engaging in a real estate transaction. Your real estate agent should help, but their expertise may be limited.
Here’s what exactly a real estate attorney does and how to decide if you need one when buying or selling a home.
What is a real estate attorney?
Like any lawyer, a real estate attorney has a law degree and has passed the state bar exam for the state in which they practice. As a real estate specialist, they have the knowledge and experience to advise buyers, sellers, and lenders in all types of real estate transactions. They prepare and review documents and contracts related to the sale or purchase of property.
Real estate attorneys often take elective courses and even serve as interns in real estate law practices. Some choose to be certified in real estate law, but it’s not a requirement.
There may be multiple legal professionals involved in a real estate transaction. Here are their distinctions:
- Lawyers who represent the interests of buyers or sellers are called real estate attorneys. The job of a real estate attorney is to advise their client in order to ensure the client’s interests are represented in the best possible way.
- Real estate attorneys retained by lenders are called mortgage lawyers or lending attorneys.
- Those who only perform closing duties on a real estate transaction are known as closing attorneys and do not represent buyers or sellers, even if one of them pays for the service provided. In many cases, the closing attorney is also the lender’s mortgage lawyer.
What do real estate attorneys do?
Depending on representation, real estate attorneys perform a variety of tasks for their clients as part of the property transfer. Some of the most important tasks that may be performed on behalf of the client are highlighted below.
The seller’s real estate attorney:
- Drafts or reviews the real estate contract
- Negotiates contract terms on behalf of the seller
- Gives general advice to the seller regarding the contract and sale
- Resolves title issues on behalf of the seller
- Drafts or reviews the deed
- Resolves transaction disputes
“If the transaction involves seller financing, an attorney should be used to draft the mortgage documents, typically on behalf of the seller,” says Dan Mantzaris, partner at DSK Law Group.
The buyer’s real estate attorney:
- Conducts a title search to ensure the seller’s title is clear
- Prepares a purchase contract on behalf of the buyer
- Reviews the mortgage contract and advises the buyer
- Resolves problems or disputes regarding the deed
- Obtains title insurance
- Writes amendments to a standard contract utilized by realtors
The lender’s mortgage lawyer/closing attorney:
- Often serves as closing attorney but does not represent the buyer or the seller
- Draws up a mortgage contract and sets the terms of the mortgage
- Represents the lender in the event the buyer defaults or ends up in foreclosure
- If serving as closing attorney, prepares and presents closing documents for signing including:
- Truth-in-lending statement
- Bill of sale
- Loan application
“If the lender’s attorney also serves as a mortgage broker or commissioned agent for a bank or mortgage company, he or she may be required to have a special license from the state,” notes Mantzaris.
How much does a real estate attorney cost?
How much you pay your real estate attorney (or attorneys) will depend on the services they provide, your location, and whether they bill by the hour or charge a flat fee. If you hire a lawyer early in the homebuying or home selling process, you will pay more than someone who engages legal counsel for the closing only.
If you are the buyer and your lender requires an attorney to be present at closing, you will likely pay for that attorney as well as your own attorney if you decide to hire one. In general, real estate attorneys charge between $150 and $350 per billable hour or a flat fee of $500 to $1,500 for their services at closing, according to Rocket Mortgage.
How to decide if you need a real estate attorney
Each state has its own laws and requirements when it comes to real estate transactions and when or if a lawyer must be involved. In many areas, real estate agents use standardized form contracts for home sales that agents can legally fill out on their own.
If your state considers certain aspects of a real estate transaction to be practicing law, it may require the presence, participation, or oversight of a lawyer.
For example, eight states require both the buyer and seller to be represented by legal counsel at closing, according to October Research:
- North Carolina
- Rhode Island
- South Carolina
- West Virginia
Seven states require the participation of a lawyer to oversee the title process:
- North Dakota
- South Dakota
Although it is not a legal requirement, four states observe the practice of having legal counsel involved in the closing process:
- New Jersey
- New York
In addition to state law, some lenders require an attorney to be present for the closing. In these cases, the buyer usually pays for that service even though the attorney does not represent the interest of the buyer in the transaction.
If you are not required to retain counsel, it’s up to you whether you want to hire an attorney.
Some real estate transactions come with, or later develop, complications that only competent legal counsel can handle, including:
- Property lot line issues
- New construction
- Zoning disputes
- Title defects
- Short sale or foreclosure purchase
- Commercial real estate purchase
- Sale of investment property
- Selling property as an heir
In these situations, hiring a real estate attorney can mean the difference between success and failure. “Even if the transaction is straightforward, you may want to consider legal counsel, especially if you don’t understand the documents or terminology,” says Anne Ross Taylor, attorney and co-owner of M&M Title Company.
Above all, hiring a real estate attorney can give you peace of mind, serving as insurance for problems you cannot see or predict.
The bottom line
While only a few states require you to have legal counsel at closing or as part of the title transfer process, many experts say you should carefully consider hiring an attorney when buying or selling a home. If your sale or purchase involves unusual circumstances, such as a short sale, you almost certainly need a lawyer.
Real estate agents cannot provide legal advice or services, unless they are an attorney themselves. In addition to guidance and advice, hiring a real estate attorney provides a form of insurance against making a major financial mistake. It’s up to you to decide whether that insurance is worth the upfront cost.