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The purchasing of a new home can be a daunting task that requires the assistance of numerous professionals to get you to the finish line. From mortgage and real estate brokers to appraisers and title companies, the idea of adding a real estate attorney to the mix may seem excessive. This article will discuss whether or not you need to hire a real estate attorney; what are the advantages of hiring a real estate attorney and how much does a real estate attorney cost?
- Do I Need to Hire a Real Estate Attorney?
- What Are the Advantages of Hiring a Real Estate Attorney?
- How Much Does a Real Estate Attorney Cost?
Do I Need to Hire a Real Estate Attorney?
Regardless of where you live, the hiring of a real estate attorney is not a requirement for you to purchase a home. Like any other field wherein the use of an attorney is customary, an individual can choose to represent themselves. However, in some states an attorney must be physically present at a real estate closing. Others also restrict the activities a non-attorney can handle as part of a closing, such as drafting documents and providing legal advice.
If you decide not to hire an attorney for your home purchase, the mortgage lender, title company or seller may provide one to manage the necessary legal requirements of the closing. However, the mere presence of an attorney at the closing does not mean s/he is there to represent your interests. In fact, an attorney hired by another party in the deal cannot give you legal advice.
What Are the Advantages of Hiring a Real Estate Attorney?
A real estate attorney can be a valuable partner throughout the process of purchasing a home. Beginning at the early stages of the home buying process, your attorney can assist in selecting potential properties and reviewing any contracts or other documentation you are asked to sign by your real estate broker or mortgage broker. Once a property is selected, a real estate attorney will negotiate and draft your contract of sale, which should ensure your interests are protected and that you fully understand any inherent risks in the transaction.
After you are "in contract", your real estate attorney can be an important advisor to help you to navigate from the contract stage to the closing. They can help to clear any title issues, work through any problems with your financing and confirm the seller has met all their contractual obligations. Finally, at the closing your attorney can help you to understand the loan package from your lender, negotiate and draft agreements to account for any issues with the property that were noted during your final walkthrough of the property, and confirm that you’re being presented with clear title. Below, we discuss a few specific examples of how a real estate attorney can be an important resource during the process of purchasing a home.
Let’s say you are purchasing a condominium in New York City. Prior to or during the contract negotiation stage, an experienced real estate attorney will review the condo’s operating documents (the declaration, bylaws and house rules), financials and board minutes. This important process helps give you a picture of what it might be like to live in this building. The attorney will highlight if there are any known issues such as leaks or noise complaints, and if there are any ongoing or planned capital improvements. They’ll also assess the financial stability of the condominium development as a whole, and judge whether or not an assessment or increase in common charges might be imminent. Without this important information, your dream of owning a home might be derailed by unexpected repair costs and increased monthly expenses.
Another example of the useful role an attorney might play comes if you are purchasing property that has some physical damage. Let’s say you hire an inspector to examine the home for defects and her report notes electrical issues, possible problems with the foundation and an underground oil tank that may not have been properly decommissioned. At this point, a good real estate attorney can save the day by negotiating repairs or credits for these issues, and then draft an agreement between you and the seller that resolves them to your mutual satisfaction.
How Much Does a Real Estate Attorney Cost?
The expense of engaging an attorney can vary greatly depending on where the home you are buying is located as well as its value and property type. Some attorneys charge by the hour, with rates that typically range between $150 to $350 per hour.
Other attorneys may charge a flat fee. Typically, such fees range between $500 to $1,500, although the cost may run far higher. That’s especially the case in a major metropolitan area, where the fee can easily reach $5,000 or more. The property values in such areas play a part in these elevated costs: pricier properties pose greater potential liability to attorneys, leading them to charge more for their services. Finally, more complex transactions may require more time from an attorney, and thus result in a higher fee. Examples of more demanding transactions include those that involve multi-family homes and purchases from an estate or bank.
Purchasing a home is a costly endeavor, and closing costs can range into the tens of thousands of dollars. Paying another several thousand dollars to engage a real estate attorney may seem like overkill. However, the sound advice and deft legal drafting skills of an experienced real estate attorney may pay for themselves several times over by solving problems before they ever arise.