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How Important is the Real Estate Seller’s Attorney?
The process for purchasing and selling real estate can be a very complicated process. It really depends upon the nature of the property and transaction. For example, a commercial real estate purchase generally has more considerations than a residential purchase. A purchase that involves existing mortgages adds an additional layer of complexity. Much of the transactional obligations fall on the real estate attorney for the parties.
In this article, we discuss the role of real estate attorneys.
What Attorneys are Involved in the Sale or Purchase of Real Estate?
The sale or purchase of real estate has the potential to involve three or more attorneys. In a basic transaction, the seller may hire or consult with an attorney. The buyer may hire an attorney. Finally, the bank lending funds for the purchase of the property is represented by the closing attorney. It is a common misconception that the closing attorney represents one or both of the parties to the sales transaction.
What is the role of the Closing Attorney?
The closing attorney is charged with executing all of the bank’s required mortgage documents. This includes paying off any existing liens or mortgages from the purchase funds and transferring the remainder of the purchase price to the seller. She will then take steps to record the new deed and mortgage at the appropriate county or city office. Additionally, she often serves as agent to hold the funds funds that are escrowed at the time of entering the sales contract. She also frequently serves as title insurance agent and sells the title insurance (which is required by the mortgage holder) to the purchaser of the property. In fact, most closing attorneys earn the majority of their money through these insurance policies, rather than the closing fees associated with serving as the mortgage holder’s agent.
What Role Does the Real Estate Seller’s Attorney Play?
Often, the seller of real estate will hire an attorney to assist with the process. First of all, the attorney will inform the seller of all of the steps involved in selling property. Next, the attorney will offer advise on negotiating the terms of sale.
Using an attorney for assistance in negotiating the terms of sale is far more common in commercial properties. These types of transactions often involve the acceptance, rejection, or renegotiation of existing contracts concerning the property. Further, the contractual provisions associated with the purchase of commercial real estate are far more intense. They generally include extensive representations and warranties concerning the condition of the property. Closing on commercial property often involves a due diligence phase in which all relevant paperwork, transactions, or other legal situations associated with the property are reviews.
Finally, the seller’s attorney may assist in the drafting of the purchase and sale agreement. This is rare in the sale of residential property. The parties generally use predefined forms that may be endorsed or required under state law.
Is it Worth It for a Seller to Hire a Real Estate Attorney?
This is a very loaded question. The answer is, “it depends”. If the seller is involve in the sale of commercial property, then “yes”. If the seller is involved in the sale of non-commercial property, likely “no”. Of course, the scenario changes based upon specific complications that may accompany the sale of the property. For example, if the property were subject to probate and being sold of the executor or an estate, then it may be advantageous to have an attorney review the transaction. This would be to protect the interests of the estate and the potential liability of the executor. Another scenarios might include when the property is being sold in a cash sale without the assistance of a real estate agent. This scenario can result in misunderstandings that an attorney could provide assistance in sorting out. Another scenario is when the sale involves seller financing. In such a situation, the attorney will primarily be charged with carrying out the transaction. She will need to draft contracts, assure compliance with state and federal law, and do the various tasks often associated with a closing attorney’s role.