Real Estate Attorneys - What Is Their Role?

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by Tony Seruga, Yolanda Seruga and Yolanda Bishop

Many real estate buyers and sellers consider real estate attorneys to be the most expendable part of your real estate transaction team. This opinion has been proven painfully wrong to those who choose to eliminate their expense. Skipping the attorney in a transaction can lead to problems: contract liabilities, zoning issues, EPA problems, and even unpleasant surprises like liens that even the seller didn't know about. For these issues, you must have a specialist.

Not just any real estate attorney will do in any transaction: each situation calls for a specialist. Subcategories include residential, commercial, industrial, agricultural, landlord-tenant, construction, and environmental, and in some large transactions you may need more than one specialty. They can be critical both before and after the transaction - setting up a paper trail prior to the deed assignation, or tracking down fault when problems are found with the property. Destruction of a property or forced sale (due to divorce, foreclosure, death, etc.) should immediately trigger hiring a real estate attorney.

The specialty attorney you need to hire will vary not just from type of transaction, but from property to property. For instance, suppose you need to close on an industrial property that has a lien on it, and that may have some environmental issues. Your real estate attorney must be able to handle all three issues, and identify any further issues that may be coming up around the bend. Or what if you are working with the property disposal of a divorcing couple that rented out a home to long-term tenants? In this case, you'll need a real estate attorney experienced with both divorce issues and landlord-tenant issues, ideally ending in a sale to someone who would prefer to keep good long-term tenants in the home.

You also need to consider the role you're taking in the transaction: buyer or seller. Real estate attorneys for buyers:

* Interpret contracts, explaining to you how your title will work and giving you options as well as looking for liens, covenants, easements, and other things that complicate your title.
* Create and file legal documents related to your purchase, and review your closing papers along with you.
* Help with mortgage terms and negotiate alongside you for the best possible deal; also, he looks for things like unpaid taxes and utilities prior to closing.
* Set up title insurance protection and ensure you receive true registered ownership with minimal liabilities.

Seller's real estate attorneys:

* Prepare contracts and other papers, as well as reviewing purchase and sales agreements and other paperwork. They also help negotiate terms.
* Identify and correct title issues
* Act as an escrow party, helping transfer security deposits and arranging insurance
*Attend your closing and review all papers prior to signing, helping to negotiate changes if necessary.

In essence, a good real estate attorney functions as a member of your transaction team, and as a valuable safety net, catching any errors that may have been made before they become critical problems. They are also critical in special real estate transactions, such as a 1031 trade.

What Do Real Estate Attorneys Cost?

The cost of your real estate attorney will vary depending on the size of your transaction and the complexity of the deal. Typically, attorneys charge by the hour. An average home, depending on the amount of work they must do, will result in a fee ranging from about $500 to $1,500, on either the buyer or seller end. Your first consultation visit should be free; at that point, if your attorney charges by the hour make sure you talk to them about what your final costs will be. Also ask for a regular accounting for charges, particularly if charges start to amount above where they should be at a given point in the sale.

Remember, also, that whether the sale goes through or not, you'll need to pay your real estate attorney. For this reason, you should not retain one unless you are reasonably certain you want to move forward with the transaction.

Tony Seruga, Yolanda Seruga and Yolanda Bishop of http://www.maverickrei.com specialize in commercial and investment real estate. As of May, 2006, they and their partners are managing over $600 million dollars worth of new projects.

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