When we called in the new year, many men and women had been working from home for nearly nine months, while at the same time running a virtual school away from home for their schoolchildren. Even the largest houses have started to look small and cramped, and many people are considering moving to a new home to deal with the uncertainty of COVID-19’s extended restrictions.
As people begin to explore buying or selling their residential real estate properties, one of the most common questions I get asked is, “Why do I need a lawyer if I’m working with a realtor?” At first glance, the need to combine a lawyer with a real estate agent may seem like an unnecessary expense, but spending some money upfront to have a lawyer assist with your transaction can save you a lot of money in the long run. Here are some important ways in which lawyers can assist you in your residential real estate transaction:
1. Analyze, prepare and explain legally binding documents
Before you even start searching for your dream home, you will be asked to sign legally binding documents that may adversely affect you. From the moment you execute a listing agreement, you agree to certain legally binding terms and conditions that may have ramifications for you, whether you close a real estate transaction or not (that is, you owe your real estate agent a commission if sign a sales contract and the transaction doesn’t close?). In addition, whether you are the buyer or seller of a property, you will be asked to execute some form of sales contract, which will govern your transaction and any schedules, inspection periods or mortgage contingencies negotiated as part of your transaction. Lawyers can help here by writing or reviewing the transaction documents to ensure that you are protected and that any specific terms or conditions that concern you are met. Lawyers are also familiar with good and bad real estate transactions and can add additional specific language to their contracts to resolve potential problems before they occur. Unfortunately, real estate lawyers have seen litigation regarding residential real estate transactions and, as a result, have been careful and thought of ways to prevent these disputes from occurring. In addition, and most importantly, consulting an attorney before signing any listing agreement or transaction-related agreement will allow any of your questions regarding the documents to be answered and any concerns you may have raised before signing legally binding documents.
2. Analyze title commitments, exception documents and policies
Almost all real estate transactions require the seller to pass on a valid and negotiable title to the buyer. If the clear title, subject to certain permitted charges, cannot be transmitted, you will not be able to proceed with your transaction. Real estate lawyers review and review the bond reports contained in the property pledge and any accompanying documents, evidencing encumbrances or restrictions on ownership, to ensure that the clear title can be conveyed. Real estate attorneys are also experienced in working with securities companies and parties opposed to transactions to offset encumbrances on registrations to ensure that the property being transferred is legally permitted and the buyer will have no surprises after closing. Often, lawyers are contacted after closing, when a buyer realizes that he is unable to improve his new property because there is an easement or other restriction on the use and development of the property that was not addressed before closing. When a lawyer has been involved in the transaction from the start, he or she can work with you to ensure that you know what charges and restrictions exist on the property and how it affects your property and any future use of it. After consulting you, a lawyer can work with the title company and other parties to the transaction to remove the burden or restriction, or if it cannot be removed and will have a material and adverse effect on your intended use and performance, provide with the information you need to determine if you still want to proceed with the property transaction. Finally, an experienced real estate attorney can ensure that you obtain an appropriate title policy from the insurer to protect you from any future claims against you or your property.
3. Closing assistance
Closing assistance is one of the most important tasks that an experienced real estate attorney can help with. Whether you are the buyer or seller of a residential property, the deed and other closing documents have a material effect on the closing and your post-closing obligations. For example, if you are selling a property, a real estate attorney can review the closing documents and make certain changes to ensure that any of your post-closing obligations are limited to your ownership of the property. On the other hand, if you are the buyer, it is important to ensure that all representations and guarantees you make to the securities company and your lender are accurate, which may require minor changes to the loan statements and documentation. Failure to do so can lead to your loan default. Almost all documents signed in connection with the closing will affect both the buyer and the seller – whether related to the transaction, the bank or an IRS form. Lawyers can review these documents with you to make sure they are accurate and are configured to limit any potential liability you may have. For more complex transactions, real estate lawyers can consult with their tax colleagues to ensure you are getting the most favorable tax treatment in relation to closing.
4. Protect your sanity
Finally (and most importantly), hiring an attorney to assist you in the transaction of your residential property will provide economic guarantees that the transaction is being conducted by a legal professional who will ensure the protection of your interests throughout the transaction. Having the peace of mind of having an experienced lawyer handling the transaction and working in conjunction with your real estate agent will allow you to focus on the most enjoyable aspects of buying or selling a home, while trusting the legal aspects of the transaction will be completed without any problems.
There are many justifications that a buyer or seller can do to avoid hiring an attorney to assist him in his residential real estate transactions. However, it is much cheaper to hire a lawyer to help you buy or sell your home than to hire a lawyer to assist in litigation about your home or the use of your property after the real estate transaction closes.