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Buying a home means scaling a small mountain of paperwork - over and over again, you have to sign your name on the bottom line. It's essential to understand each and every piece of paper you sign. Your real estate agent and mortgage broker or loan officer can explain many of the contracts and forms involved in your transaction - but neither of these people is a lawyer. It's a good idea to have a qualified real estate attorney on your side to scrutinize the fine print, answer questions, and explain difficult concepts.
Every state has its own real estate laws. In some, such as New York, a real estate attorney is a normal and expected part of the home-buying transaction: Only an attorney can prepare the home purchase documents, perform a title search, and close the deal. In other states, such as California, your agent will help you fill in the blanks on standard forms that have already been approved by the state bar association. An escrow officer handles the closing, so you may not need an attorney. But even if your state doesn't require an attorney, consider bringing one on board early in the process. If things go wrong, it's better to have an attorney who's familiar with your situation than to rush around looking for one who might be able to salvage a deal.
What an attorney can do for you
If you're a first-time buyer, a real estate attorney can give you peace of mind as you go through an unfamiliar and complex process. Here are some of the services a real estate attorney provides:
- Reviews the purchase agreement before you sign it and, if necessary, revises it. Or, if you already signed a purchase agreement and worry there's a problem, an attorney can void a purchase contract if it violates your state's laws.
- Reviews (or in some cases performs) a title search for the property, which confirms that the seller is its legal owner.
- Reviews all other legal documents related to the purchase, including the deed. If there are mistakes in the deed, such as misspelled names, the attorney can correct them.
- Prorates costs you split with the seller. For example, the seller may have prepaid a year's worth of property taxes, and you have to reimburse her for that money from the date you take ownership.
- Coordinates among agents, your mortgage broker or loan officer, the lender's attorney, and the seller's attorney to make sure all documents are ready for the closing.
Even experienced homebuyers should consult an attorney in certain situations:
- For complex transactions. If legal issues arise and your real estate agent doesn't know how to address them, you definitely need a real estate attorney. For example, say the current owner converted his garage into a studio apartment that doesn't have a certificate of occupancy; you want to know whether you can legally rent out the apartment. Or you want to buy a home with a partner who's not a relative, or through a trust. If your situation doesn't fit the language of standardized real estate forms, an attorney can get the wording right.
- When you don't have a real estate agent. If you buying a FSBO home directly from a seller, you definitely need an attorney to help you with the paperwork and make sure everything is legal.
- When your state requires it. As mentioned earlier, some states require an attorney to prepare certain documents related to the purchase of a home. Ask your real estate agent if that's the case in your area.
Choose a real estate attorney
It's important to pick an attorney with expertise in real estate law. A lawyer might be a whiz at tax or probate law or corporate mergers, but unless she has significant experience with residential real estate transactions, you don't want to hire her for this job. So before you hire an attorney, ask these questions:
- How much experience do you have in residential real estate transactions? Look for an attorney who has five or more years of experience. An attorney who specializes primarily in commercial or rental real estate may not be the best person to represent you in a home purchase.
- How many homebuyers have you represented in the past year? At least 10 shows that representing home buyers is a significant part of the attorney's practice.
- How do you charge for your services? Some attorneys charge a flat fee for real estate transactions, others charge by the hour. Ask how much in attorney's fees a typical home purchase costs. Fees may vary widely; for example, hourly fees may range from $150 to $350 for each hour of the attorney's time.
- Have you ever been sued for malpractice or disciplined by a bar association? It's in your interest to hire a competent attorney with a clean ethical slate.
- Will you provide me with a list of recent clients? Get at least three names.
References don't mean much unless you check them. So talk to some of the attorney's previous clients to get their opinions and their answers to these questions:
- How did you choose this attorney? Did someone recommend her or had you worked with her before?
- What services did she provide?
- Did she meet deadlines and return your phone calls and emails promptly?
- Did she explain concepts and answer your questions clearly?
- Were you satisfied with her work?
- Would you work with her again?
