What Does a Real Estate Lawyer Do?
Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.
Buying a home for the first (or fifth) time is a significant milestone — and a complex endeavor. There is money and property at stake, and a lot of paperwork stands between you and the keys to your new home. In addition to your broker and lender, it can be helpful to have a real estate attorney on board to look out for your legal and financial interests.
What is a real estate attorney?
Real estate attorneys are what David Reiss, professor of law at Brooklyn Law School and academic program director of the Center for Urban Business Entrepreneurship, calls the “quarterbacks” of the whole homebuying process. Although you can DIY a purchase or sale, it may be helpful to have a lawyer review all documents and coordinate with brokers, lenders, inspectors and contractors to make sure you understand your rights and obligations throughout the transaction.
Lawyers may represent both buyers and sellers — if one party has an attorney working on their behalf, it’s a good idea for the other do so as well to ensure they are properly represented. Here’s what you can expect from a real estate attorney.
If you are the buyer, your lawyer most likely will:
- Help you understand your contract
- Ensure you take title in the correct form — tenancy in common versus joint tenancy, for example
- Order a title report and check for any liens, easements or covenants against the property
- Prepare and register legal documents
- Help arrange a home inspection
- Work with your lender to ensure your mortgage complies with the terms of your contract
- Make sure you receive any credits due, such as real estate taxes
- Attend the closing and finalize all paperwork
- Obtain title insurance protection against title defects
- Ensure you receive a valid, registered ownership
If you are the seller, your lawyer will:
- Prepare or review the purchase agreement and negotiate its terms
- Prepare the deed and power of attorney if required
- Address and correct title issues
- Attend the closing and finalize all paperwork
- Arrange for insurance certificates and the transfer of security deposits
Marc J. Blumenthal, a real estate attorney practicing in Illinois, said that some transactions may require additional scrutiny, such as those properties purchased from a probate estate, a mortgage company after foreclosure or a condominium association. Condos and co-ops, for example, often come with additional rules and regulations that restrict pet ownership, leasing, property upgrades and business activities, so it’s important that buyers understand the fine print before they sign.
Real estate lawyers can also provide perspective on issues a buyer or seller wouldn’t think to consider, such as what happens to the property in the event of divorce or death.
“Critical errors can be made even if it just looks like a simple transaction,” Blumenthal said. “They can be caught in the initial process by having an attorney involved who would at least ask the question.”
A lawyer’s role is to make sure the homebuying process is fair and runs smoothly.
“I feel I’ve done a good job when the actual closing is as boring as possible,” said Joel L. Chupack, a partner at the Chicago firm Heinrich & Kramer. “It means … there’s no 11th hour surprises.”
Why you should consider getting a real estate lawyer
Whether you are the buyer or the seller, residential real estate transactions can feel overwhelming. Between contracts, loan documents, titles, inspections and the closing process, it would be easy to miss important details that will cost you money, time, and even legal trouble down the line. An attorney can help make your purchase or sale more manageable.
Not all residential real estate deals will require a lawyer, but there are some scenarios in which an attorney’s knowledge and services are invaluable. Here’s when to consider hiring a lawyer for your transaction.
Lawyers are expected to participate in most local deals
Real estate lawyers are more active in some states and local jurisdictions than in others. In Reiss’ area of practice in New York and Blumenthal’s and Chupack’s locations in Illinois, attorneys are commonly called upon to represent both buyers and sellers. In other states, the process is considered simple enough — with the use of standard or form contracts, for example — that lawyers aren’t generally involved.
If you’re unsure, ask your broker what’s customary in your area, and find out if the other party has an attorney representing their interests. If the norm is to have a lawyer and you don’t retain one, you may find yourself in a weaker bargaining position, Reiss said.
Even if it’s not common in your state or city to bring lawyers into real estate transactions, you can still consult one if you need help.
Your transaction is costly or complex
Condominium purchases are complicated thanks to the number of documents required and the regulations laid out in the condo declaration. Transactions that involve zoning, permitting, or rent regulation, as well as high-value sales, may be well-served by an attorney. If you know you are going to require a contractor or architect agreement, consult a lawyer familiar with these issues.
“You tend to want to use a lawyer when the stakes are higher and it’s more complex,” Reiss said. “In a market where things are more simple and plain vanilla and there are fewer variables, the need for a lawyer is not as apparent.”
The cost of legal fees
There is no hard-and-fast rule for legal fees associated with real estate deals. Some attorneys will charge a flat rate for your entire transaction based on how many hours they expect to spend working for you. Others will charge by the hour but at a discount from their regular rate. If your lawyer does bill hourly, make sure you discuss how long they expect the work to take and what you should budget for if they need additional time.
Single-family home purchases will likely require about six hours of an attorney’s time, for which you can expect to pay a flat rate starting around $400. Fees will vary depending on where you live and how complex your purchase is. Condominium closings require additional documentation and more hours of work, for example. In some areas, low-end fees could start closer to $1,000.
Before you retain a lawyer’s services, talk to brokers in your area as well as friends and buyers you trust to find out how much you can expect to spend. If you are quoted fees that are much higher, make sure you understand why.
Key questions to ask a real estate lawyer before you hire them
Experts say that buyers and sellers should contact a real estate lawyer at the earliest opportunity — before any listing agreements or contracts are signed — because he or she can help navigate both parties’ relationships with brokers and lenders from the start. At the very least, consult your attorney when a contract is in place.
Once you know whether real estate lawyers participate in transactions in your area, get a word-of-mouth recommendation or contact your state or local bar association. You can also find attorneys on Yelp or Avvo, though a personal recommendation is likely the most effective. While you should ask your agent or broker whether it’s common to hire an attorney or appropriate in your particular situation, don’t rely on them for a recommendation, even if they may have an attorney they work with on a regular basis. Chupack said it’s best to get independent referrals from family, friends or your bar association, and to look for someone who doesn’t rely on realtors for clients.
Here are a few questions to ask before you hire a lawyer.
What can I expect from this process?
Buyers should ask about key milestones to expect throughout the transaction and how long the process will take. Blumenthal recommends questions like:
- Should I do a home inspection?
- How do I find a lender to process my loan?
- Are the timelines set out in my contract reasonable?
- Are there any legal issues we may run into?
How much do you charge?
While cost shouldn’t be the only — or even the primary — factor in choosing a real estate attorney, it is an important thing to consider. Get quotes from several lawyers, and always ask whether they charge by the hour, the transaction or some combination of the two. You’ll want to know what costs to expect relative to your total expenses. If your purchase costs $250,000, attorney fees will make up a higher percentage of your overall expenses than a million- or multimillion-dollar transaction, for example.
“Typically, the more expensive the transaction, the less expensive the lawyer feels,” Reiss said.
How can I contact you?
Buyers and sellers should always find out how accessible their lawyer will be and how best to contact him or her with questions. Real estate attorneys generally have many transactions in the works at once, which means you aren’t their only client.
Reiss recommends asking how your attorney manages emails and phone calls; whether you can have their cellphone number; if there is a paralegal, secretary or other point of contact when your lawyer isn’t available; and how to get help when urgent matters arise.
“That can be a real issue in the fast moving parts of residential real estate transaction where you just need an answer from your lawyer so that you can move forward,” he said.
The bottom line
A real estate lawyer’s job is to look out for your interests when you buy or sell a home. He or she can help you navigate paperwork and manage details you might not otherwise consider to save you significant financial or legal trouble down the line.
“For most buyers, this is the most complex and the largest financial transaction of their life,” Reiss said. “Buyers may buy and sell one, two, three, maybe four times, but that’s probably relatively rare. On that first time, they’re just like deer in the headlights in general.”