By Erik J. Martin, CTW Features
They’re usually not required when purchasing or selling a home. And you may be able to get by without them when inheriting a home after a loved one’s death. But a lawyer sure comes in handy for these and other scenarios, especially when serious due diligence is required in a real estate-related event.
“Attorneys bring great value to a real estate transaction. There are a lot of issues that must be investigated and addressed – from getting a structural inspection for the home or building and obtaining and reviewing a title search and survey for the property to securing financing and ensuring you have proper permits and approvals for all structures on the property,” Ellen Savino, an attorney in Uniondale, New York, says. “A good real estate attorney will guide you through the process.”
Consider an attorney’s worth to a home buyer candidate, for example. This expert can investigate title reports, permits, liens, the financial health of the residence, pending litigations and relevant corporate documents.
“In the case of co-ops and condos, this includes reviewing the offering plan, board minutes, house rules, financials and bylaws,” notes Rachel King, a licensed associate real estate broker in Long Island, New York. “Additionally, they are responsible for reviewing and drafting contracts and act as liaisons among brokers, other attorneys and lenders to facilitate the transaction while also managing contract deposits and maintaining escrow accounts if necessary.”
In fact, in some states like New York, retaining an attorney for real estate transactions is mandatory; in many other states, using an attorney is optional.
“However, it’s always advisable to consult an attorney if you anticipate any potential risks in a real estate transaction,” suggests King.
Hypothetical #2: You are being sued or want to litigate for a real estate-related matter. Say, for example, your neighbor wants to take you to court for property damages they claim you are responsible for that you disagree with.
“In real estate matters, disputes can arise, whether it’s a contractual disagreement or a property-related conflict that needs to be resolved. Real estate attorneys can act as mediators and help settle these conflicts efficiently, representing you in court, if necessary,” says Ben Gold, founder of Recommended Home Buyers.
Another example where hiring an attorney is advisable is when you plan to sell to a buyer or lease property to a tenant; purchase contracts and lease agreements are complicated documents that need an experienced pro to carefully vet.
If you are preparing to inherit property or sell a home left to you by a deceased loved one, having a probate attorney in your corner can smooth out the process, too.
The risks of not having proper legal representation in any of these scenarios can be serious.
“If you don’t comply with the terms of a contract, you could be subject to penalties, like the forfeiture of your down payment, if you are a buyer. A lawyer will review and negotiate the contract to make sure your interests are protected”, says Savino.
Worse, “you could, for instance, purchase a property the seller doesn’t even own, buy a home in a floodplain, or find yourself owning a property subject to historic preservation restrictions for which you weren’t prepared,” cautions attorney Adam Hecht.
For a home purchase or sale, attorneys usually charge a flat fee, which can vary depending on factors like location and price. Other attorneys charge on an hourly basis, especially for more specialized services like litigation.
“Generally, an attorney charges a flat fee of $500 to $850 for residential transactions. Other matters may require billing by the hour, for which typical rates can range from $300 to $800 per hour, depending on the law firm and work involved,” says Hecht.
The best way to find a knowledgeable, experienced real estate attorney is through referral by friends or colleagues who have worked with such attorneys themselves, “because they will have first-hand experience with that attorney,” recommends Nina Ries, a Los Angeles-based attorney.
Your real estate agent should also be able to suggest a trusted knowledgeable lawyer they can vouch for.