When you are buying or selling a home, do you need a real estate attorney to help with the transaction? Your state may not require one and you may not want to spend the money. But if something goes awry, you’ll likely wish you had. Here’s why hiring an attorney is money well spent.
All that paperwork!
A real estate deal is a complex business transaction. Besides complying with the terms of the sale, the buyer and seller must follow state laws regulating many aspects of the forms, financial transactions and ownership transfer. The sales contract alone is often several pages with many sections, paragraphs and clauses, not to mention addendum pages.
Most consumers deal with real estate transactions, which involve hundreds of thousands of dollars, an average of once every 10 years. That’s not enough exposure to build familiarity. Hiring a real estate attorney to look over the completed sales contract before you sign and to review subsequent addendums and the closing documents protects your interests.
Transaction steps and why an attorney is important
As a buyer, you and your agent will complete the contract to submit to the seller and his agent. As the seller, your agent will help you negotiate with the buyer to seal the deal. But real estate agents are not attorneys and cannot offer legal advice. A real estate attorney can guide you to the successful completion of the following steps.
- Your attorney helps ensure the contract terms are in your best interests. Your agent has this responsibility too, but a real estate attorney’s oversight is a good additional step.
- If one party to the sale is a corporation or trust, a real estate attorney can make sure the contract is consistent with your state’s laws governing such a sale.
- A real estate attorney can run a title search more easily than you can on your own. This involves searching for any “encumbrances” on the seller’s title: that is, situations where someone else has some type of claim against the property. For example, a contractor may have filed a lien against the property for money the seller owes him. A survey may show that someone else’s fence or other structure crosses a property line, or the seller may owe back taxes on the property. All of these issues can tie up the sale if not resolved, but a real estate attorney can make sure the seller can transfer a clear title with no encumbrances.
- In many states, the seller must complete a property condition disclosure form. An attorney can help make sure the seller properly discloses what she should and can counsel both buyer and seller regarding any red flags on that form.
- An attorney makes sure the money gets where it needs to in related financial transactions, such as the buyer’s escrow payment and the funding at closing.
Because problems with any of these aspects of a real estate transaction can have substantial financial and practical consequences, an attorney’s counsel is vital.