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THE REAL ESTATE ATTORNEY
What does a real estate attorney do? Do I need one for the purchase of a home? What will one do for me? These are questions that many people ask when they first hear of a real estate attorney. Everyone knows what a real estate agent does, but many have not even heard of a real estate attorney. Regardless, they are an important part of real estate transactions.
WHAT DOES THE REAL ESTATE ATTORNEY DO?
Real estate law involves the sale and purchase of land, any structures on it, and anything attached such as appliances and fixtures inside the buildings. The attorney will be aware of all federal, state, and local laws regarding the transfer of real property.
He will be on your side at closing, reviewing all the paperwork involved and giving you advice on anything he finds that needs attention. His expertise covers a number of things, including zoning, titles, and property taxes.
He will look over any purchase agreements, and mortgage, transfer, and title documents. He will also be responsible for any federal forms required and documents from the buyer’s lender. If any dispute comes up, such as lot line problems, title or contract problems he will resolve them. In case a problem ends up in court, he’ll represent you there.
A real estate attorney is often present at closing or at least required to certify title in many states, including Alabama, Connecticut, Delaware, District of Columbia, Florida, Georgia, Kansas, Kentucky, Maine, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New York, North Dakota, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, and West Virginia. Remember that this attorney is usually representing the lender’s interests, not yours.
Another important factor is making sure that whatever your real estate agent told you is according to the current pertinent laws. Some real estate agents are very knowledgeable in the area of real estate law but some states require a practicing attorney for certain tasks.
Fees for the lawyer may be charged at a flat rate for specific services or an hourly rate. Sometimes the flat rate depends on the selling price of the property. Hourly rates vary but usually run between $150-$300 per hour.
THE ESCROW OFFICER
A Real Estate Attorney sometimes serves as an escrow officer or agent, or it could be an officer from a title company. This officer is a neutral third party who will make sure that the mortgage transaction goes smoothly and oversees matters relating to the title. Usually, the escrow officer is chosen by the loan officer, but sometimes there are two.
The seller’s listing agent chooses the second officer in that case. The buyer can also choose his own title and escrow services, which may save money. The officer, even if he is an attorney, is able to answer general questions you may have about your mortgage loan, but is not allowed to give you legal advice.
The escrow officer also makes sure all the documents involved in the sale are accurate. Any earnest money provided by the buyer is held in an escrow account and is managed by the officer until disbursement. There are often small amounts from the seller held in escrow to take care of any small repairs needed that were unknown to either buyer or seller beforehand but are discovered after the sale.
They also can cover known needed repairs. In case of known repairs, the escrow holdback, as it is called, will be more than what the repairs call for. Knowing that this money will be withheld will encourage the seller to go ahead and fix the problems before the sale, but the amount can also cover any minor problems or damage that happens between offer acceptance and closing.
For example, there may be minor storm damage that occurs a few days before closing and doesn’t rise to the level of filing an insurance claim. If the seller does not have the time or funding to make the repairs, an escrow holdback takes care of this. Whatever amount in the account that is not needed on repairs is later returned to the seller.
A popular type of escrow account sets aside part of your mortgage payment every month. This amount will cover property taxes and homeowners insurance premiums, and mortgage insurance if there are any. The amount set aside each month is calculated by adding the taxes and premium due for the year and dividing by 12.
This monthly amount is added to the mortgage payment. The lender pays these out of the escrow account when they are due. Many people find this method preferable to having to come up with funds to pay these in a lump sum each year.
The escrow officer will look over all the closing documentation and explain each document you will be required to sign at closing. They will also distribute the funds at this time.
Fees for the officer are usually calculated at one to two percent of the final purchase price. The cost may be borne by either buyer or seller or split; this will be stipulated in the documents.
DO I REALLY NEED A REAL ESTATE ATTORNEY TO BUY OR SELL PROPERTY?
Unless your state requires an attorney at closing, this choice is really up to you. However, many people have found out that it is money well spent. For instance, when buying a home out of state or if you inherited property in another state you won’t be familiar with the local and state laws at the other location.
The real estate lawyer is also someone you’ll be glad you have in your corner if some unforeseen problem rears its ugly head or if there are some possible unusual complications to the transaction. If your offer on a home states that it is dependent on what the home inspection finds, the seller may want to dispute the inspector’s findings.
A real estates lawyer’s help is invaluable here when the home inspector says the basement walls have a leak problem and the seller says they don’t leak and doesn’t want to let you back out of the offer.
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Finding a good attorney can be as easy as asking a friend or relative who recently was involved in a real estate transaction who they used. This person can also explain what the attorney did and what the process was like. The state bar association can help you find a lawyer in your area.
The American Bar Association has an online directory with the various state bar websites listed. Another good way is to utilize an online legal review site. These will not only list the lawyers in your area but usually include their specialties and fees. Former client reviews on the site can be a real help.
Buying or selling a home are often the largest monetary transactions most people will make. It’s important to get all the help available to make sure everything goes smoothly. It will certainly lessen the likelihood of “buyer’s remorse” or unforeseen problems. It’s usually a good investment.
Disclaimer: This article is meant for educational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice.