Whether you’re buying or selling a home, your team of expert advisors should include a real estate lawyer as well as a REALTOR®. Your REALTOR® can help you find the right house or the right buyer and negotiate a price and closing date that are right for you. Your lawyer can review any offer you make or receive and make sure that your rights are protected and your duties clearly defined.
If you’re ready to make or accept an offer on a property, and haven’t retained a lawyer yet, make the offer contingent on a lawyer’s review and approval before you sign a binder.
There are non-legal services that claim they can do all the legal work you need. If you’re tempted to save a few bucks this way, remember that lawyers belong to a regulated profession with standards they must meet and insurance to cover damages if they make an error or omission. You don’t necessarily have the same standards or recourse dealing with other advisors. And this isn’t the time to do-it-yourself. Although many legal forms used in real estate are similar, binder or purchase and sale agreement forms vary from state to state.
Further, some title insurance companies and mortgage lenders require you to use a lawyer to ensure that, among other things, the title is good, there are no liens against the property, and that the deal will close as anticipated.
A lawyer’s role can be as broad as you want. And while it is not typical in a real estate transaction, you can ask that your lawyer describe his or her work and fees in writing before you proceed.
If you’re buying a home, your lawyer should:
- Help you understand the purchase contract, including how you will take title on the property.
- Check that there are no covenants, easements, liens, etc. registered against the property that will impede your use of it.
- Prepare and register all the legal documents.
- Clarify the terms of the mortgage and work with your bank, if necessary, to modify them.
- Scrutinize the adjustments, including taxes owing and utilities costs paid, prior to the transaction closing.
- Attend the closing and review all the papers you will be required to sign.
- Arrange title insurance protection to protect you from losses due to title defects.
- Ensure you receive a valid registered ownership subject only to the liabilities you have accepted.
If you’re selling a home, your lawyer should:
- Review the binder and review or prepare the purchase and sale agreement, including negotiating its terms.
- Prepare the deed and power of attorney if necessary.
- Deal with title issues as they arise and help correct them.
- Attend the closing and review all the papers you will be required to sign.
- Arrange for transfer of security deposits.
- Arrange for insurance certificates if needed.
How much does this all cost? Typically, legal fees are higher when you buy than sell because the role of the buyer’s lawyer is more extensive. Most fees range from $500 to $1,500 for an average home whether you’re the buyer or the seller.
Some lawyers charge a flat fee for specific services and others bill by the hour. If you are paying by the hour, make sure you understand what the final cost is likely to be and insist on a regular accounting for charges. Usually, a lawyer can easily estimate costs related to a real estate transaction and his or her fees will only go higher if something goes wrong. Remember, even if your deal does not close, you’ll still owe your lawyer for his or her time.