Some questions and answers by Steven R. Neuner Esq.
Why do I need an attorney?
Most likely, you are making one of the biggest purchases or transactions of your life. Hiring an attorney may seem like a needless expense, but in truth an early consultation with an attorney in many cases can be money well spent. Attorneys are (or should be) problem solvers and independent advisers. An ethical and experienced real estate attorney will work with your broker to help you anticipate and solve problems that could cause unexpected and expensive problems down the road. He or she will be your independent adviser so that you go into this transaction with full knowledge of the risks and issues, and that you make fully informed choices
Many people buy or sell real estate without attorneys, relying on the real estate brokers, the title companies, or their own knowledge. While many brokers are experienced professionals and advisers, and having an attorney is not always required, getting early advice from one is almost always money well spent.
The best time to see an attorney is when you have a contract of sale to sign. The standard forms may work for you, but they do not always work for everyone. The problems if they exist are not always obvious. You can consult with an attorney at a relatively low cost to review the contract and see if it really works for you. Early consultation with an attorney is especially important if:
- You have been sued or have judgments or a bankruptcy now or in your past.
- You are selling and there are problems with your home that are troublesome or not obvious.
- You do not understand everything in the contract or what alternative language may meet special needs you have.
- You are buying or selling a commercial, investment, or rental property.
- Disputes arise with the other side that are not quickly resolved in a clear fashion satisfactory to you.
- You need to buy or sell this property because you are buying or selling another one.
When should I see an attorney? Do I have to have an attorney at settlement?
The most important part of most deals is the contract of sale and the revisions to it. This is when it is best to see an attorney. The attorney should review your particular facts and needs and be able to tell you whether any changes are needed to the contract. If changes are needed, an attorney should tell you what is needed and what cost may be involved. You can then decide how to proceed.
Real Estate brokers can and do prepare contracts and contract changes (called “addenda” or “amendments”) using standard forms and addenda that have been prepared to cover the most common situations. However, you are not required to adhere to that standard language. An attorney can explain what the standard language says and does not say, or how it might affect you down the road. If the situation is unusual, or is one that you do not think you understand, or your broker suggests you see an attorney about, you should see one right away.
However, an attorney can make the closing and everything leading up to it smoother, easier, and less nerve-wracking. At settlement, or in preparation for it, an attorney:
- Should review the title report and any survey, and make sure there are no problems that cannot be resolved.
- Review the deed to make sure it does not contain mistakes.
- Review and explain the settlement sheet so that you are confident you are not being overcharged.
- Negotiate for you to resolve any problems that may have come up. Negotiation is a large part of what attorneys do every day. They are not personally involved. They can and should tell you the risks and stakes involved. When a settlement is reached, they can and should put it in writing in a way that is clear and understandable to you while couched in clear and unambiguous language.
- At settlement, make sure that your rights, both under the contract and applicable law, are protected.
- At settlement, explain to you the many papers you are signing, in a way that is clear and understandable.
How can I limit the cost of having an attorney?
Any attorney should meet you initially for a “consultation” at a reasonable flat fee. During this meeting, you should be able to get a lot of advice and guidance. This includes whether or not you will need an attorney going forward. Hiring an attorney is not an “all or nothing” proposition. You may decide you only need to see the attorney at the start to answer questions or help solve a particular problem. This is your right. Whether you need an attorney at settlement is up to you.
To get the most out of your first meeting with the attorney:
- Bring any contracts or other papers concerning the property in question, or (if you are selling) any mortgage payoffs, judgment papers, or (if applicable) papers from any previous bankruptcies).
- Explain your goals and needs, and anything of particular concern.
- Ask for an explanation of what the attorney can do to help you and the costs of those services. You should ask and be told what you can or should do yourself (if that is what you want).
- Your initial meeting or consultation should be for a fixed price agreed to in advance. Your attorney is obligated to discuss fees and costs with you. From there, you can decide and control what he or she does for you.
Once you hire the attorney, stay in touch. You are the client, and you run the show. It’s your money and your deal. The attorney is there to advise and help you but you, not he, decide what is important and what is not. You make clear what you want the attorney to do.
Finally, make sure there is a clearly defined division of responsibility between the broker and your attorney. For example, most brokers have processing departments that perform routine tasks like ordering a title report, survey, or payoffs. Not all of this needs to be done by the attorney (at your expense). Tasks like coordinating pre-settlement inspections or following up with mortgage lenders should be the broker’s responsibility unless you and your attorney decide differently. Either way, the attorney should make sure the broker, and anyone else involved know what the attorney will be doing for you.
SUMMARY: A good real estate attorney is one who 1. Works well with you and your broker. 2. Is an independent, practical and dedicated problem solver, who helps you determine and achieve your goals; and 3. Provides you the advice you need to make well-informed decisions.
You can reach the author, an experienced real estate attorney and an ABBC Board Certified Business Bankruptcy Specialist, at (856) 596-2828.