Do I Really Need a Lawyer if I Have a Realtor?
This is one of those questions that are asked over and over again. If you ask your agent, he or she will probably say that most people don’t use a lawyer, especially in South Jersey. If you ask an attorney, they will most likely say “yes.” The truth is that you do not need an attorney. You also do not need a doctor or an accountant. You can certainly get all the medical advice you could ever need from a nurse or your friends and neighbors, and quite often their advice will be correct. It is certainly less expensive than seeing a doctor, but is it worth risking your health just to save a few dollars? Only your doctor has the education and experience to give you the kind of advice you need when you need it. Likewise, your real estate agent can guide you through the process, but cannot give you the kind of advice a trained attorney can, and cannot give you legal advice. Some areas of the law are fairly complicated and can best be explained by an experience real estate attorney. The “Exit Tax” is an excellent example.
Professional legal assistance is not cheap, but for many people, the purchase or sale of a home is important legal matter in which they will be involved. Purchasing a residence is usually the single most expensive investment a person will make. The documents involved in the transaction for both the Buyer and Seller carry far reaching legal effects. It is most prudent for the parties to each consult and retain a lawyer to review the documents to adequately protect the rights and interest of both Buyer and Seller.
The involvement of a lawyer who is experienced in real estate transactions will provide each party with a full understanding of their rights and responsibilities. An experienced real estate lawyer can also help to avoid future legal problems that may arise if either Buyer or Seller is not fully aware of the legal effects of the real estate transactions.
WHY DO I NEED A LAWYER TO REVIEW THE REAL ESTATE CONTRACT?
All contracts prepared by real estate agents, brokers or salespersons must contain an attorney review clause allowing the Buyer and Seller three business days to consult a lawyer for review of the contract. The contract is the legal document that fixes the rights and obligations of the parties and establishes the terms of the transaction that bind the parties. It is very important that a lawyer be consulted to review this document. The lawyer’s review of the broker-prepared contract encompasses the entire realm of real estate contract law. The lawyer must make certain that the terms of the proposed contract accurately reflect the terms of the transaction agreed to by the parties, and properly and adequately protect the client.
WHY DO I NEED A LAWYER TO REVIEW OR PRPARE THE DEED?
The deed is the written document that is signed, acknowledged and delivered by the Seller of real estate to the Buyer by which the Seller transfers the real estate. As this is the document evidencing and effecting the transfer, it is critical that the document be drafted with clarity. Ambiguous language in a deed can be the source of title difficulties in the future. In addition, the use of different types of deeds can affect the Seller’s liability in the future. The use of a lawyer knowledgeable in real estate can ensure that the proper transfer is made. I am often asked what is a “quit claim deed,” often mispronounced as a “quick claim deed.” Both are also known as a “dollar deed.” This is what is commonly used between family members, or transferring a property from a corporation to the owners, or from an LLC or Limited Liability Company to the owner. You would not use a quitclaim deed to convey title to buyer paying fair market value.
WHY TO I NEED A LAWYER TO REVIEW THE MORTGAGE PAPERS AT CLOSING?
Most Buyers require a mortgage loan to complete the transaction. In some cases, the Buyer’s lawyer prepares the mortgage documents, but in most cases the lawyer for the buyer can review the mortgage papers prepared by the lender to ensure that these documents are prepared correctly. A real estate agent or title company cannot explain the legal effects of these documents; such action would constitute the unauthorized practice of law. As the mortgage documents create a lien against the property and also personally obligate the borrower to repay the loan, it is prudent for the borrower to retain a lawyer to review these documents as to their correctness, and to explain their legal effect to the borrower.
WHY DO I NEED A LAWYER TO REVIEW THE TITLE REPORT?
To assure that the Seller of real estate is able to transfer all legal and equitable ownership interest in the property to the Buyer, a title search is required. The results of the search identifies the legal owner of the property and lists all recorded documents that affect the property. The title search also identifies those who have claims (e.g., taxes, mortgage, judgment) against any current or past owners of the property. These claims must be satisfied and cleared from the public record in order for the Buyer to obtain clear title to the property that can be readily transferred in the future. An experienced real estate lawyer reviews the title search, explains the results and pursues the satisfaction of claims in anticipation of closing.
WHAT CAN I EXPECT A REAL ESTATE LAWYER TO DO IN REPRESENTING ME?
The lawyer who represents the Buyer in a real estate transaction reviews the contract, proposes and negotiates contract changes with the Seller’s lawyer, provides notice to the Seller’s lawyer regarding the results of the home inspections and documents the agreement between the parties regarding necessary repairs, treatment or cash credits at closing; works with the mortgage company in preparing the documents for closing; orders and reviews title searches and survey; conducts and most often disburses funds at closing; arranges for the recording of the deed and mortgage, and review and forwards to the Buyer the recorded deed and title insurance policy.
The lawyer for the Seller reviews the contract and proposes and redrafts any changes to the contract required by the Seller’s individual circumstances; represents the Seller during the home inspection report review period; reviews current title; obtains information and documents needed to clear any title exceptions; prepares the Deed, Affidavit of Title and other documents necessary to transfer ownership at closing, and attends closing with the Seller .
In addition to the specific items noted above, the lawyers for both Buyer and Seller serve as the central communication point for the client, the real estate agent, the mortgage company and that title insurance agency. This often involves numerous written and telephone communications by and between the lawyer’s office and the various other individuals, all of whom are working toward a successful closing on the transaction.
While the vast majority of real estate transfers take place without problems, the presence of an experienced real estate lawyer in a transaction the develops legal problems can provide a smooth transition from transaction to litigation. An experienced lawyer can evaluate and counsel his clients regarding their legal rights in the event and aspect of the transaction becomes problematic. If this occurs, however, the fees that are normally quoted for the straightforward transfer of property do not apply to time spent by the lawyer in attending to any contested matters.
HOW DO I LOCATE AND SELECT AN EXPERIENCED LAWYER?
The best way to locate a lawyer who is experienced in real estate transactions is by referral from one who has utilized the services of the lawyer in a real estate sale or purchase. Besides friends and family members, another reliable source of referral is a real estate agent who was worked with many lawyers and can recommend those who are knowledgeable. The Lawyer Referral Service within your county’s Bar Association is also a valuable resource.
As in selection of any professional, you should inquire as to the fee for services prior to retaining a lawyer for your real estate transaction. Attorneys have various ways of billing clients for residential real estate closings: For example, some attorneys charge an hourly rate and some attorneys charge a flat fee. Therefore, when selecting an attorney, you should inquire as to the attorney’s billing method and what other legal fees or charges will be included in your settlement costs.
