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What is a Real Estate Attorney?
A real estate attorney is a lawyer who specializes in property matters, including purchase transactions, disputes, and estate planning. Their expertise ranges from buying and selling real estate, leasing, property development, zoning laws, and land use.
What Do Real Estate Attorneys Do?
One of the most well-known roles that real estate attorneys have is that of the closing attorney. However, their responsibilities extend to a broad spectrum of property-related duties.
Here are some of the regular tasks real estate attorneys perform:
- Drafting and reviewing documents related to real estate transactions, such as purchase agreements, title documents, and transfer documents.
- Providing legal advice to clients on real estate transactions and related matters, ensuring compliance with all relevant laws and regulations.
- Negotiating deals to achieve favorable terms in real estate transactions.
- Overseeing real estate closings and ensuring all necessary documents are properly executed and filed.
- Litigation such as boundary disputes or issues with real estate contracts.
- Probate proceedings and assisting clients with real estate transfers upon death.
Real estate attorneys are crucial in ensuring that real estate transactions are legally sound and in protecting the interests of their clients, whether they are buyers, sellers, landlords, tenants, or developers.
What Does a Real Estate Attorney Do For a Buyer?
Real estate attorneys can be especially crucial for homebuyers and assist them in various ways, even outside of closing day.
“The work that a real estate attorney does for buyers starts much earlier than the closing,” says Michelle Chase, attorney at law with Naperville, Illinois-based Law Office of Michelle Therese Chase.
Negotiate on your behalf
Before closing, a real estate attorney can help you negotiate after the home appraisal or inspection. If the inspector finds serious problems with the home you want to buy, you can work with your attorney to negotiate with the seller to cover repairs.
Alternatively, your attorney might negotiate a reduction in the home’s sales price or argue for a credit you’ll receive upon closing to pay for the repairs yourself. An attorney can also advise you in the case of a bidding war, which is a strong possibility given the competitive market.
Ensure you abide by local rules and regulations
Real estate sales abide by different rules and regulations depending on the state and jurisdiction. For instance, in the Chicago area where Michelle Chase works, real estate contracts have built-in financing deadlines. Chase has to monitor these deadlines to make sure her clients stay on track.
There’s also the possibility that the property comes with easements or other possible restrictions whose implications may not be readily apparent. There may also be signs of environmental problems or other liabilities that could come back to haunt you down the road. If you’re buying a home in a development, the homeowner’s association may have rules with unforeseen consequences.
Explain mortgage term details
At closing, a real estate attorney’s job is to ensure that the loan documents you sign are prepared accurately and properly reflect the fees you and the seller agreed to pay.
Chase said the mortgage closing packages she reviews are often 100 pages or more. That’s a lot of documents, and there is room for plenty of mistakes. Chase’s job is to make sure that her clients understand what’s in those documents.
Your attorney will answer any questions you have during the closing and negotiate on your behalf if last-minute financing problems pop up or if the sellers attempt to make changes you disagree with. Chase also helps her clients when they have questions about the mortgage process, which is common as lenders study the bank accounts and tax returns of homebuyers.
“Financing has become so invasive today,” Chase said. “Clients often need to speak to someone who can tell them that what their lenders are asking for is legit. They might be concerned that their lenders are asking them for bank statements from two years ago. I can tell my clients that, yes, the lenders do need that information, and they need to provide it.”
Perform a title search
Real estate attorneys will perform a title search to verify that other individuals or governmental bodies don’t have ownership stakes in the home you want to buy. If the sellers of your home failed to pay all their property taxes, your local government might have a lien against the property. Your attorney will search title documents to ensure no unpleasant surprises are waiting for you after closing.
What Does a Real Estate Attorney Do For a Seller?
Many of the tasks that real estate attorneys perform for buyers are services they can offer to their clients interested in selling property. Particularly when drafting or reviewing the purchase agreement, negotiating terms on the seller’s behalf, ensuring there are no title issues, and advising on the tax implications of a property sale.
When to Hire a Real Estate Attorney
The issues that real estate attorneys assist with are typically not cheap. Take closing on a home mortgage, for example. A home is the most expensive purchase most people will ever make. You can expect to pay from 2% to 5% of your home’s purchase price in closing costs. It’s understandable, then, that most buyers want to reduce these costs as much as they can. Hiring an attorney to represent them will cost dollars that buyers don’t necessarily want to pay.
But for that exact reason, mistakes or problems encountered in that purchase can also be very expensive. A real estate attorney can help you spot trouble areas and avoid them before you get locked into an agreement.
Do you need a lawyer at closing?
Some states require that an attorney be present at a real estate closing.
But it’s important to note that closing lawyers in attorney states represent your mortgage lender at the closing, not you. If you want an attorney to represent you, you’ll have to pay extra for those services.
Real Estate Attorney Fees
Real estate attorney fees vary depending on several factors, including the complexity of the transaction, the attorney’s experience and reputation, the location, and the specific services required. Here are some common pricing structures real estate attorneys use:
- Hourly Rates: Many real estate attorneys charge by the hour. Hourly rates can range from $150 to $350 or more, depending on the attorney’s experience and the location. In larger cities or for highly experienced attorneys, rates could be higher.
- Flat Fees: Some attorneys may charge a flat fee for more straightforward transactions. This is common for routine matters like house closings. Flat fees can range from a few hundred dollars for simple transactions to several thousand for complex deals.
- Retainer Fee: In some cases, an attorney may require a retainer fee, an upfront cost the client pays before the attorney begins working.
- Contingency Fees: While less common in real estate than in other areas of law, some attorneys may work on a contingency basis, where they receive a percentage of the transaction value or the amount saved in negotiations. This is more typical in litigation related to real estate.
How Much Is a Real Estate Attorney for Closing?
Attorneys typically charge an hourly rate or flat fee for closing. How much will this cost? That depends. To close on a typical single-family home, a real estate attorney may charge $600 to $1,800.
For a more accurate cost estimate, it’s best to consult directly with a few real estate attorneys in your area. When discussing cost, ask what services are included, whether the fee is flat or hourly, and if any additional fees are expected.
How to Choose a Real Estate Attorney
Finding an attorney who is experienced and well reputable is vital. Depending on the complexity of your needs, you could spend hundreds or thousands of dollars. It’s important to do your due diligence when searching for an attorney to ensure your investment is worthwhile.
Here are 6 tips to help you choose a real estate attorney that best supports your needs:
1. Find an attorney with experience
Look for an attorney who specializes in real estate law. Real estate has various sub-specialties, such as residential, commercial, land use, and development. Confirm that the attorney has experience in the specific area relevant to your transaction.
2. Look at reviews
Research the attorney’s reputation in the community. Look for online reviews and client testimonials, or ask for references. An attorney with a strong reputation will likely provide reliable, high-quality service.
3. Make sure they have local knowledge
Choose an attorney who is familiar with the local laws and regulations. Real estate law can vary significantly from one location to another, so someone who regularly works in the area you are buying is essential.
4. Understand their fee structure
Understand how the attorney charges for their services. Some charge a flat fee, while others may charge by the hour. Make sure you are clear about fees to avoid surprises later on.
5. Ask for recommendations
Get recommendations from friends, family, or professionals such as real estate agents, mortgage brokers, or other attorneys. Personal recommendations can be invaluable.
6. Check their credentials
Verify the attorney’s credentials. Ensure they are licensed to practice in your state and check if they have any history of disciplinary action. Most states have a lawyer directory that allows you to search by name or location details. This will tell you whether a lawyer is approved for practice and is in good standing with the state bar association.