A real estate attorney, also known as a lawyer, specializes in real property law. They ensure that all real estate transactions are carried out with adherence to the law. Moreover, an attorney makes sure to cover all legalities on behalf of their client before the property is transferred.
What is a Real Estate Lawyer?
A real estate lawyer is a licensed legal expert, who specializes in the real estate field. Basically, all lawyers have to pass the local bar council exam to become licensed experts.
To become an expert attorney for real estate, one needs experience with various types of transactions. This includes home selling or home buying, foreclosures, short sales, etc.
Do I Need a Real Estate Attorney?
Firstly, some states have mandated that the closing of a real estate deal will only be conducted by an attorney. In such states, a lawyer for real estate conducts the transfer of title.
In total, 8 states fall under this category of attorney closing states:
| Connecticut | Delaware | Georgia | Massachusetts |
| North Carolina | Rhode Island | South Carolina | West Virginia |
Secondly, some states require an attorney to assist in all real estate transactions. Their services include analyzing closing documents, title verification & certification, drafting and reviewing purchase deeds, etc.
The following state laws require an attorney to assist in real estate transactions:
| Alabama | Louisiana | Mississippi | North Dakota |
| Oklahoma | South Dakota | Wyoming | – |
Lastly, some states do not have regulations about a settlement agent. Thus, hiring a real estate attorney is a custom. These states are:
| Illinois | New Jersey | New York | Ohio |
When to Hire a Real Estate Attorney?
It is quite possible that your real estate transaction takes place in a state where an attorney is not required. Still, there are some cases where a lawyer for home purchase or sale will guide you better.
Some of those conditions are:
When Selling Your Home For Sale By Owner
Nowadays, access to the MLS has been made easy for FSBO home sellers due to Flat Fee MLS listing services. However, FSBO sellers lack legal expertise.
Real estate transfer documentation is difficult to handle for new sellers. Hence, hiring a local real estate attorney is a wise choice when selling a house yourself.
» For Sale By Owner Websites: Explore America’s Best FSBO Websites
While Purchasing Commercial Property
A commercial real estate transaction differs vastly from a residential one.
For instance, a residential property consists of 4 or fewer units, while a commercial property has more than 4 units. Further, the tax rates differ between both of them.
Hence, it is equally important that you hire a commercial property attorney with the necessary expertise.
When There’s a Possibility of Defective Title or Legal Dispute
When an owner is aware of discrepancies in his title. For instance, if the property was transferred by a quitclaim deed or an existing lien, etc. there could be problems when selling the property.
In order to prevent major lawsuits and resolve these issues, a lawyer for property will assess the situation and come up with a solution.
What Does a Real Estate Lawyer Do?
Rectifying the purchase deed, acting as a mediator between the parties, and covering all the legalities involved in the transaction are some of the most crucial jobs of a housing attorney.
Property lawyers ensure that their clients do not face unnecessary legal setbacks or pitfalls during a transaction. To guarantee that, a property attorney needs to know the nitty-gritty of real estate laws and how to tackle legal issues.
- 📝 Note: A real estate lawyer’s services change depending on who the property attorneys represent. They may verify the documents, draft the deeds, but also act as settlement agents.
What Does a Real Estate Attorney do for a Seller?
A seller is concerned with various things, e.g. title, liens, defects, foreclosure, etc. while putting their property up for sale. A house attorney assists the seller by clearing these obstacles.
Drafts the Title Deed
A title deed is a written document that transfers the ownership, rights, title, and interest of a seller to the new buyer.
Likewise, it contains all the information related to the property and the parties to the contract.
Signing the title deed is the highlight of closing on the sale. Hence, it is also one of the most important documents that a property lawyer drafts.
Assists With Short Sales and Foreclosures
Homeowners who are financially distressed may turn to make a short sale of their property. A short sale is when a lender, e.g. a bank, agrees to the transfer of property as a mortgage payoff. However, the selling price is less than what the owner owes in mortgage dues.
In that case, a seller must prove that they are financially incapable of paying the mortgage debt. In that case, a short sale residential real estate attorney proves your financial condition, as well as negotiates on your behalf with the lender, real estate agent, and other parties involved.
Similarly, attorneys for real estate can also represent you in the foreclosure process and negotiate on your behalf for foreclosure resolution.
Mediates Sales Involving Multiple Owners or Tenants
In some home sales, it may happen that co-owners of the property are against the sale. In that case, a residential real estate lawyer may act as a mediator between the disputing parties to come to a resolution.
Further, a seller may not be aware of certain regulations when it comes to selling a leased property. There are various formalities needed to be fulfilled before evacuating a tenant from the property.
A property law attorney guides the seller through this process and helps them avoid unwelcome lawsuits in the future.
Negotiates With Creditors in Case of Liens on the Title
A title search of the property is conducted after an offer is accepted. There’s a possibility that liens in the form of unpaid taxes, unpaid balances, or third-party interest may be detected from this search.
In this case, property and estate lawyers help you assess bad liens and come up with ways to clear them.
- 📝 Note: Tax liens or statutory liens are considered as bad liens as they impact your credit score, which adversely affects your ability to obtain financing in the future.
Protects From Legal Issues
Several titling issues can occur when, for instance, the property is inherited, there is more than one owner or if there are easements on the property.
Almost 10% of contracts got delayed due to problems in titling/deed issues.
An attorney for property rectifies such issues during title inspection and comes up with viable solutions.
What does a Real Estate Attorney Do for a Buyer?
Buyers need an attorney to review the title, disclosure, and related documents. From making a purchase agreement to handling lawsuits for buyers, here are some of the attorney’s responsibilities.
Drafts The Purchase Agreement
A purchase agreement in real estate law outlines the terms & conditions of the residential property sale. This document acts as an offer made to the seller of the property, which can be negotiated upon.
The purchase agreement includes the selling price, property details, and the buyer’s and the seller’s information. Once both the parties arrive at an agreement, the contract becomes binding.
Checks The Title & Title Documents
In some states like Louisiana and Mississippi, a real estate attorney must examine and certify the title of an owner. The process is initiated during the closing, wherein public documents related to the property are examined by lawyers that deal with property.
During an inspection, discrepancies like pending taxes or owed debts are resolved by the real estate closing attorney. This prevents a buyer from getting into a deal where the seller’s title is defective.
Solves Contract Disputes and Legal Issues
The possibility of legal issues arising is common after title inspection. For instance, restrictive covenants can have an adverse impact on a seller’s title.
In that case, attorneys can give you real estate legal advice to either reconsider the contract, depending on the gravity of the legal issue.
Further, disputes can arise from failure to disclose material facts, appraisal or home inspection issues, title issues, etc. A real estate attorney will advise the buyer to take the necessary steps to avoid future problems.
Assists in Cancellation of Contract
If a buyer wishes to cancel the contract on failure to disclose material defects, breach of contract or any other reason, attorneys for property can take action on behalf of the buyer.
This involves the cancellation of the sale contract or filing a lawsuit against the seller if the buyer incurred damages from the breach.
What Does a Closing Attorney Do?
In the states where a real estate attorney closes on the deal, there are some additional responsibilities they carry out as a settlement agent.
Prepares a Settlement Statement
A settlement statement is involved where a buyer has taken out a loan for the property. The settlement statement contains the information related to the mortgage, e.g. interest, costs owed, credits, etc.
The Real Estate Settlement Procedure Act (RESPA) has prescribed 2 main types of settlement statements.
- HUD-1 Form
- Closing Disclosure Form
The HUD-1 form is mainly used in reverse mortgages. Prior to 2015, it was used in most mortgage transactions, but today it is replaced by the Closing Disclosure Form.
Reviews Closing Disclosure Form
A Closing Disclosure is a standard refinancing mortgage document. The lender provides this form to the borrower who takes a refinancing mortgage.
It contains the details related to the loan amount, monthly installments, mortgage deposits, and so on.
Moreover, it lists all the closing costs incurred in closing the real estate transaction. The form can be quite complicated to understand for a normal person, hence a closing lawyer’s job is to go through the paperwork with the borrower.
Conducts Title Search & Title Transfer
In attorney closing states, a real estate closing lawyer conducts a title search of the property. This involves going through public records to verify whether the seller is the owner.
An attorney for closing goes through public documents like land records, tax liens, court judgments, etc. Generally, the sale process goes ahead if the seller has a clean and marketable title.
Likewise, the execution of the title deed is also conducted by real estate closing attorneys. It is the last step in the real estate transaction that closes the deal.
Who Does the Closing Attorney Represent?
A settlement agent or a closing attorney works in favor of both parties. Hence, parties to the contract can choose a closing attorney together.
However, this changes across states. In New York, a buyer appoints a home closing attorney while in Kentucky and South Carolina, the lender chooses a real estate closing attorney.
Naturally, when a seller or a buyer hires real estate legal services, the attorney represents only that party.
In case where a loan is involved in the home purchase, an attorney for real estate closing will represent the lender.
Lastly, in states where real estate attorneys are not required, it is common practice for mortgage lenders to hire one.
- 📝 Note: Generally, a real estate attorney cannot represent both the parties as it will result in conflict of interest.
However, in Hawaii, a title or escrow company hires a residential lawyer during the closing. This is mainly due to Hawaii’s land division which has fixed designated land use and any changes in the title may require special permits.
How to Find a Real Estate Attorney?
| Ask your real estate agent | Generally, agents are acquainted with attorneys in real estate. Further, they can also recommend you based on your needs. |
| Take a word-of-mouth reference | If you know a friend, relative, or acquaintance who has past experience in working with real estate lawyers, approach them for a referral. It’s always best to find someone with good reviews to back you up. |
| Search online | Online directories like American Bar Association connects you with a local real estate attorney. |
| Ask your lender | Your mortgage lender is the one who requires the services of a home attorney the most. In any case, they can recommend you the best real estate lawyer fit for your requirements. |
How Much Does a Real Estate Attorney Cost?
On average, private real estate lawyers charge $150 to $350 per hour. However, this price differs vastly across states and cities. Likewise, some real estate attorneys charge a flat fee for their services.
Some states require a lawyer to only draft and certify the paperwork, while some require them to see through the whole process. Typically, residential real estate lawyers will charge way less if hired only for documentation or certification.
Typical Real Estate Attorney Fees for Closing
Typically, real estate attorneys prefer to be paid a flat fee for conducting closings. For instance, in New York, a real property attorney charges about $3000 for the closing!
Obviously, this rate differs among states. According to Zillow, on average, a closing attorney costs about $500 to $1500, excluding other closing costs.
» Closing Costs for Sellers: How much does it cost?
Who Pays Real Estate Attorney Fees?
Real estate lawyer fees are a part of closing costs where the attorney was the settlement agent. In such cases, payment of attorney fees is negotiated in the purchase agreement early on.
Some states have regularized who would pay the closing attorney fees. For instance, in Massachusetts and Georgia, buyers pay the closing costs, including closing attorney fees. In other states, buyers and sellers split the closing costs between themselves.
Final Word: What Does An Attorney Do & Whether You Need One?
A real estate attorney’s role is indisputable for real estate transactions in certain states. They protect you from title problems or bad liens and negotiate on your behalf to make a better deal.
While it may not be mandated in some states, having a real estate lawyer will definitely save you from unexpected obstacles and unnecessary lawsuits.
Even as a For Sale By Owner home seller, a real estate agent’s services can be opted out but that’s not true for an attorney.
To conclude, you need a real estate attorney to assist you, whether it be buying or selling a house.
Frequently Asked Questions (FAQs)
Is an attorney a lawyer?
Yes. Attorney and lawyer have the same meaning and both the terms can be used interchangeably.
Do you need a lawyer to buy a house?
Yes. A real estate attorney will help you with several important things when you are buying a home. For instance, a lawyer drafts the purchase agreement, works on your behalf to solve legal issues as well as checks the seller's title for you in some states.
How much does a real estate lawyer cost?
According to Thumbtack, private real estate lawyers charge $150 to $350 hourly rates on average. However, this price differs vastly from state to state and city to city.
What do real estate attorneys do?
Real estate attorneys carry out several tasks in a real estate transaction. It mainly depends on who the attorney represents - the seller, the buyer, or the lender. A real estate lawyer drafts the title deed and purchase agreement, acts as a mediator between the parties, conducts closings, and represents their client among other things.
Do I need a lawyer to sell my house?
Yes. A lawyer will assist you in drafting the title deed and negotiate with creditors or lenders on your behalf among other things.
How much does a closing attorney cost?
According to Zillow, on average, a closing attorney costs about $500 to $1500, excluding other closing costs.
What is a real estate attorney?
A real estate attorney, also known as a lawyer specializes in real property law. They ensure that all the all real estate transactions are carried out with adherence to the law. Basically, all lawyers have to pass the local bar council exam to become licensed experts. In order to become an expert attorney for real estate, one needs experience in assisting with transactions. This includes home selling or home buying, foreclosures, short sales, etc.
Which states require a lawyer at closing?
There are 8 states that require an attorney to be present at closing. These states are Connecticut, Delaware, Georgia, Massachusetts, North Carolina, Rhode Island, South Carolina, and West Virginia.
What is a closing attorney?
8 states require an attorney to be present at the closing. The attorney which assists with and conducts the closing in these or any other states is called a closing attorney.
How to find real estate attorney?
There are some basic ways to find a real estate attorney, e.g. asking your real estate agent, asking for word of mouth reference, asking your lender, or searching online on the American Bar Association's website.
Who hires the closing attorney?
When an attorney is to conduct a closing, both the parties elect an attorney, the terms of which may be covered in the purchase agreement. Usually, where mortgage financing is involved in the transaction, the lender appoints the closing attorney.
What to ask a real estate attorney?
Here are some questions you may want to ask your real estate attorney before hiring them:
1. How long is your experience in the legal field?
2. How do you charge? On an hourly basis or a flat fee?
3. How many years have you been handling real estate transactions?
4. What are the most common obstacles or challenges I may face?
5. What would be your role if I faced a legal issue related to title, lien, or covenants?
6. Have you resolved any cases similar to mine in the past?
7. If yes, what was the outcome?
8. Do you have any references from your past cases?
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