When a law firm represents a party in a real estate transaction, the law firm performs many separate functions. These functions can be characterized as either administrative or legal in nature. Some examples of administrative tasks are:
- Making arrangements for the closing
- Preparing financial summaries of the transactions
- Gathering information on taxes
- Ordering releases and similar tasks
A law firm’s staff of trained paralegals and secretaries typically handles these often-overlooked duties. Their experience in real estate transactions can often save you substantial time and help you to avoid unnecessary headaches – often at little or no additional cost. Lawyers and their staffs perform a number of important legal functions in a real estate transaction.
There also are a number of functions which require an attorney’s professional expertise. While other professionals can provide services to you, such as a Realtor® providing assistance in locating an appropriate property, or a mortgage lender assisting you in selecting an appropriate type of loan, only an attorney is there to represent you in your transaction. The attorney plays a vital role in advising you in the following areas:
- The Brokerage Contract or Listing Agreement: If you are selling your home or property, the attorney can provide advice on terms and items included in these contracts. It is also important for buyers to be aware of the description and contents of the structure being purchased.
- The Preliminary Negotiations: While price is often paramount in the minds of the parties, there are a number of other issues such as terms of payment, mortgage contingency clauses, the status of fixtures or personal property, the risk of loss by casualty pending the closing, etc., which issues an attorney is best suited to handle.
- The Purchase Contract: Once the parties enter into a written contract, their rights and obligations become fixed. It is the arguably the most important document in the entire transaction and should be carefully reviewed by an attorney before it is signed.
- The Mortgage and Financing Commitment: Interest rate and term (or length of mortgage), while important, are not the only issues involved in mortgage financing. Points, commitment fees, service charges, prepayment penalties and a host of other items are worthy of consideration. An attorney is best suited to give advice on these matters.
- Determining the status of title to the property: This is generally the most crucial legal work in the transaction. Even if a title insurance policy is to be issued, it is critical that any limitations in the title be determined and explained. An attorney is best suited to handle these important title matters.
- Eliminating Title Problems: In some instances, if a problem exists in the title, some type of action may be required to cure the problem. It is the attorney’s role to initiate and oversee corrections to title problems BEFORE your closing so that you do not encounter the problems later.
- Survey: If a survey of the property is required, the attorney can advise you on the legal implications of the surveyor’s findings and the scope and extent of the surveyor’s certification.
- Inspections: In some instances, one or more inspections (e.g. structural, mechanical, etc.) may be required or desirable. The attorney can be useful in determining the scope of such inspections and the methods of dealing with any problems that might be discovered during the inspection.
- Drafting of Instruments: It is the responsibility of an attorney to draft the necessary instruments of conveyance. In some cases, the lender will retain its own counsel to prepare the mortgage and note. In these instances, an attorney can review and advise you on these documents.
- The Closing: This is the stage at which the parties sign and exchange documents, make required payments and conclude the formal transactions. An attorney can attend to virtually all of the details surrounding this aspect of the transaction, including alerting you in advance of the items you will need to provide at the closing.
If you’re still thinking of not using an attorney ask any other real estate people you may be dealing with the following questions.
- “Who will represent us and give us advice if a dispute develops before or during the closing?”
- “Can we expand, add a deck or build a pool under present zoning regulations?”
- “What is your opinion as to the best way for us to hold title to this property?”
- “What happens if you give us the wrong advice?”
Maybe you didn’t realize the value that only attorneys can deliver to you. VATC strongly recommends that you discuss your options with an attorney before you make any final decisions. After all, a home is a big investment!
For information on the legal functions performed by Sellers counsel, click here.
For information on the legal functions performed by Buyers counsel, click here.