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Do you need a real estate attorney? -- Page 2

Often you just want someone who can translate the legalese. In that case, the closing agent, who is often an attorney, can be a good resource, says Shemin. "Most of the time they have dual agency, they represent both the buyer and the seller," he says. And they should answer "any questions you have, if it takes 20 minutes or an hour," he says.

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"If they say, 'We do not represent you, only the seller,' that's a big red flag," says Shemin. And it's a sign you might need your own lawyer with you.

Feel like everyone at the closing table is more interested in completing the transaction than watching out for your interests? There are two fairly simple ways to get someone on your team at closing, says Shemin.

First, buy your own title insurance. "In most states, the owner pays for title insurance," he says. But "if you get an owner's policy you are protected as a buyer. And, No. 2, then I have some representation from that title company." Expect to pay in the range of $50 to $200, he says. "It can be very reasonable. Every time I've done that, I haven't had a problem." And second, if you have a title or escrow company you use and trust, have that agent draw up the papers.

But any time you get into an atypical situation -- anything out of the ordinary -- you want your own real estate lawyer to make sure your interests are protected. Some examples:

  • At closing, the seller delivers the deed in a different form than you agreed. What if you are presented with the inferior quitclaim deed instead of the more acceptable warranty deed? "The problem at most closings is that the brokers and escrow agents don't get paid unless it closes," says Jacobus. "So they are naturally inclined to encourage you to close instead of create a stink."
  • The seller starts dragging his feet. He is doing everything he can to kill the deal, and you suspect he's gotten a higher offer. "An attorney would threaten to file suit and file a lis pendens, which clouds the title because you have an equitable claim to buy the property," says Jacobus.
  • At closing, you find out there is a title defect. "An IRS lien pops up," says Jacobus. "Somebody's got to be able to tell you what your rights are. The seller always says, 'It's a mistake. Let's go ahead and close.'"
  • The seller is pledging an ongoing responsibility to the property. Is he still making repairs or promising to remedy a particular problem if it reoccurs? Get it in your contract and have an attorney look over the wording, says Jack Guttentag, author of "The Mortgage Encyclopedia" and professor emeritus of finance at the Wharton School at the University of Pennsylvania.

If you're a first-time buyer or you're buying an investment property, a couple of hours of an attorney's time are just inexpensive insurance.

A few days before one closing, Shemin's attorney discovered that the owner had recently sold the property to someone else. But the seller hadn't yet filed the paperwork at the courthouse. His attorney immediately filed a copy of the contract, beating the other claimant and clouding the title for any other prospective buyers.

To prevent a similar situation, many states allow an attorney to file either the contract or an affidavit saying you have an interest in the property and are preparing to close within a specific time period, says Shemin. But it's a maneuver that requires some legal expertise.

"That protects people," he says. "It's protected me many times."

-- Posted: May 16, 2005
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'05 Real Estate Guide
30 yr fixed mtg 3.94%
15 yr fixed mtg 3.02%
5/1 jumbo ARM 3.66%
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