What does a real estate attorney do?

A lawyer who specializes in real estate can ensure the legality of a property transaction, review and explain the documents involved, draw up contracts, resolve conflicts and, most importantly, keep you from making costly mistakes. And in some U.S. states, you can’t close a home sale without one. Here’s what to know about a real estate attorney’s role in your home transaction.

What does a real estate attorney do?

A real estate lawyer or attorney specializes in matters related to property, including the buying and selling of homes, ownership, disputes and title issues. In a transaction, they also ensure that the contract agreement for their client accurately reflects their understanding of the deal, says attorney Elizabeth Whitman of Whitman Legal Solutions in Potomac, Maryland.

To accomplish this, a real estate lawyer has several responsibilities, says Bruce Ailion, who is both an attorney and a Realtor with RE/MAX Town & Country in the Atlanta area. These services can include:

• Confirming that ownership is appropriately vested in the seller of the home.
• Identifying any unpaid loans, liens, litigation or other claims against the property and working to clear them.
• Arranging for title insurance.
• Negotiating as well as reviewing the real estate contract to determine how money will be allocated.
• Preparing the deed, disclosures, the mortgage or note to secure debt following the mortgage lender’s instructions and explaining the terms to their client.
• Searching for obligations like taxes, utility charges and homeowners association fees, and prorating them based on how they were allocated in the contract.
• Facilitating the closing and potentially hosting the seller and buyer to sign documents and collect official identification.
• Confirming that the parties have fulfilled their obligations under the contract and assisting with conflict resolution.

Real estate attorneys can also provide valuable advice to a buyer and seller engaged in a for sale by owner transaction. In this scenario, the lawyers can draft and review the purchase contract and help shepherd the transaction to closing, in the absence of a real estate agent.

Whom do they represent?

There are often a few different attorneys involved in a real estate transaction: one representing the buyer, one representing the seller, one representing the mortgage lender (if financing is involved) and potentially one representing the title company as well.

“One real estate attorney cannot represent both the buyer and the seller at the same time,” says Whitman. “In most home purchases, it’s common for at least the buyer to have a real estate attorney. In some states, an attorney must be involved in at least part of a real estate transaction, usually to address title or deed issues.”

How much do they cost?

The cost of a real estate lawyer will vary depending on the amount of work required, their level of expertise and their location. Most attorneys charge an hourly rate, but some might agree to a flat rate if they have only a limited role in the transaction, says Whitman. There are also some attorneys who strictly handle closings, typically for a fixed fee.

“For soup-to-nuts representation on a small home purchase, including transactions that don’t involve a real estate agent, look to spend about $2,500 to $3,000,” says Shavon Jones, an attorney based in Miami. A real estate lawyer hired to simply review and edit a contract might be had for around $500 or so, she says.

In the Atlanta market Ailion serves, an attorney’s fee typically ranges from $550 to $1,150 for a standard closing. If the transaction involves complicated title issues, that fee can increase.

No matter how much your attorney charges for services, you’ll be expected to pay the fees either before or at closing.

How to find one

Asking for referrals from family, friends or coworkers is a good place to start, or you might ask your real estate agent for a recommendation. You could also contact your state bar association or a local title company.

Screen at least a few candidates before choosing someone. Asking these questions may help:

• Are you experienced in this type of transaction?
• How many real estate deals have you closed in the past year?
• How much do you charge, and is this a flat fee or hourly rate?
• Are you a member of the real estate section of your local bar association?
• Which title insurance company are you authorized to represent?
• Are you on the approved attorney list for closing loans for any large banks?

States where a real estate attorney is mandatory

Many states actually require that you hire a real estate attorney, at least for some aspect of closing duties. These states include:

• Alabama
• Connecticut
• Delaware
• Georgia
• Kentucky
• Louisiana
• Maryland
• Massachusetts
• Mississippi
• New Hampshire
• New York
• North Carolina
• North Dakota
• Oklahoma
• Rhode Island
• South Carolina
• Vermont
• West Virginia
• Wyoming

SOURCE: Homelight

Whether mandated or not, however, a real estate lawyer can be an invaluable ally, particularly for the buyer, says Jones. “There are many risks involved with forgoing the services of a real estate attorney,” she says. “I’ve had people come to me when deals fall through, fighting over the deposit money or who’s going to pay for a leaky roof or crack in the foundation. I’ve had sellers receive better offers and look for ways to back out of the agreement they signed with the current buyer, too.”

If you do plan to work with an attorney, enlist him or her well before you sign a purchase agreement. “Many sellers and buyers wait until after they have signed the purchase contract to hire an attorney, but by then they may have committed to unfavorable contract terms that the attorney could have helped them with,” says Whitman.

When hiring an attorney, be clear about exactly what you want them to do (for example, help you draft an offer). Also, ensure you understand what their caseload is like with respect to handling yours in a timely manner, how they bill and what they bill for.

Should you hire a real estate attorney?

Buying or selling a home is a large financial transaction, with a lot of money at stake, and the relatively small amount spent on an attorney can be worth it to protect your interests. “If the transaction is complex, it’s never a good idea to engage in this deal on your own — the risk of loss is too great,” says Ailion.

That goes for investment properties as well as primary residences. Investment properties in particular “involve tax considerations that most buyers and sellers aren’t equipped to handle on their own,” says Whitman.

“People who don’t hire an attorney risk contract revisions that aren’t in their best interests, errors in their mortgage loan documents or title or survey problems that aren’t covered by title insurance,” she says.

“In one case, a couple was attempting to purchase their first home — a historic house that originally was built without a bathroom,” she says. “When they received their survey, they learned that part of the only bathroom in the house was built on the neighbor’s property. A real estate attorney was able to address the situation so that the buyers wouldn’t have to worry about their neighbor or the local zoning officials requiring them to move their bathroom.”

In another scenario, a buyer didn’t receive all the condo documents from the seller as required by state law. “The attorney identified the problem and requested the additional documents,” Whitman says. “After reviewing them, he saw that the condominium association was underfunded and that fees would need to be significantly increased soon. The buyer was able to use this information to negotiate a reduction in the purchase price.”