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Some states require every homebuyer to hire a lawyer during the homebuying process. But even where it's not compulsory, a knowledgeable real estate attorney can help ensure your home purchase goes smoothly. Here's what you need to know about hiring a real estate attorney.
Why You Should Get a Real Estate Attorney
Many states require the parties in a real estate sale to have an attorney present at closing, when all binding sale documents are signed. Those states are listed below.
| States That Require Real Estate Attorneys | ||
|---|---|---|
| Alabama | Maine | Pennsylvania |
| Connecticut | Maryland | Rhode Island |
| Delaware | Massachusetts | South Carolina |
| District of Columbia | Mississippi | Vermont |
| Florida | New Hampshire | Virginia |
| Georgia | New Jersey | West Virginia |
| Kansas | New York | |
| Kentucky | North Dakota |
In some cases, the buyer and seller can share the costs of this attorney; in others, each party is expected to hire their own counsel. Even in states where it's not mandatory, hiring a real estate attorney is often advisable for homebuyers.
The paperwork is straightforward enough in many traditional real estate transactions to be prepared by real estate agents using standard boilerplate appropriate to the state and county where the sale will take place. Having a lawyer review those documents may not be necessary, although you can probably arrange it for a reasonable fee, and the peace of mind might be well worth it.
It's much more important that you, as a homebuyer, have a lawyer advocating for you under any of the following circumstances:
- You are buying the home in a short sale from a buyer seeking to avoid foreclosure.
- You are buying the home in a foreclosure auction or from a lender as a real estate-owned property.
- The home is a rental property, and you plan on removing tenants so you can move in yourself, to renovate the property, or for any other reason.
- The home features unusual structures or features (in-law apartments, outbuildings) that could run up against zoning laws.
- You are buying a home in another state.
A seasoned real estate attorney can help you avoid contractual surprises and guide you through any issues that arise as a home sale progresses from offer letter to closing.
What Does a Real Estate Attorney Do?
As your advocate in the homebuying process, a real estate attorney typically handles the following tasks:
- Title search and review: The lawyer will research the status of the seller's title to the property up for sale to ensure that the seller is legally entitled to sell the home, and to identify any liens, judgments or other financial obligations that must be met before the property can be transferred to you. In cases other than short sales or foreclosures, the seller typically pays any outstanding obligations at the closing.
- Sales contract prep or review: In straightforward sales, this typically involves double-checking standardized documents prepared by a real estate agent. In more complicated sales, your attorney will play an active role in drafting or revising the sales contract to protect your interests. For instance, if a sale is contingent on the seller completing repairs on the property, your attorney can negotiate a timeline for the work to be done, specify that the seller put funds aside to cover their costs and spell out remedies you can pursue if the seller fails to get the work done as promised.
- Consult at closing: Ideally, any concerns you had with the seller will have been addressed by the time you close the deal and finalize your home purchase. The mountain of paperwork to be signed at closing can be daunting, however, so it's good to have your attorney available to explain documents and answer questions. In states where homebuyers are required to hire attorneys, this is the role they're typically required to play.
How Much Does a Real Estate Attorney Cost?
Real estate attorneys can charge anywhere from $100 to $500 per hour, with rates often varying by location and relative demand for services. It pays to shop around for legal services, but while you may not have to pay top dollar, legal advice isn't a service you want to pinch pennies on, either.
It's not unusual for an attorney to set a flat fee for review of sale documents, as opposed to billing by the hour, if your home purchase is straightforward—such as if it's a sale in the state where you live, there aren't occupants that need to be evicted from the property and you're not buying at a foreclosure auction or short sale. Even then, however, it's important to recognize that issues uncovered during a standard legal review (outstanding liens against the property, for example) could lead to charges above an agreed-upon fee.
How to Find a Real Estate Attorney
State bar associations typically list attorneys by specialty and location and can be a helpful resource for finding a real estate attorney near you.
Meet with several potential attorneys—a courtesy that should not involve any fees. Ask the following general questions, and if you're uncomfortable with the answers you get or the way those answers are delivered, keep looking until you find a lawyer you feel good about:
- How much do you charge, how are fees calculated, and how do you handle billing?
- What's the best way to communicate with you (phone call, text message or email)?
- How quickly can we expect a response if we call or message you with questions?
- How long have you been practicing real estate law?
- What's the best piece of general advice you'd offer a homebuyer who's your client?
Hiring a real estate attorney when you're buying a house is an added expense, but it can be well worth it if it uncovers issues that could mean even greater expenses and hassles in the future.
On the topic of preventing future issues, it's important to know what's going on with your credit if you plan on buying a home in the near future. You can check your credit reports from all three credit bureaus for free through AnnualCreditReport.com. Not only that, Experian allows you to view your Experian credit report as well as the FICO® Score☉ based on it for free.