Do I Need a Lawyer to Buy a House?

Depending on where you live, you may have to hire a lawyer for a part of the homebuying process. Buying a home is a significant legal and financial matter, especially if you are a first-time homebuyer. Hiring an attorney to help you throughout the process can save you time and money.

What Does a Real Estate Attorney Do?

Real estate attorneys are legal professionals specializing in real property law. Although they can work on commercial or residential real estate transactions, this article focuses on residential real estate lawyers. Before you finalize your choice of real estate lawyer, check with your state's bar association to ensure they have a law license.

These lawyers are experts in real estate law and can advise you on a wide range of real estate-related legal issues, including but not limited to the following:

• Reviewing your purchase agreement
• Reviewing all legal documents that are part of the real estate transaction
• Resolving title issues such as liens
• Advising on a short-sale or estate-sale property
• Reviewing lease agreements for homeowners who want to rent their property

Hiring a Real Estate Attorney

Hiring a lawyer is daunting for many homebuyers, and cost is often a factor in the hiring decision. Some attorneys work on an hourly rate and others work based on a flat fee.

The hourly rate is exactly as it sounds. The attorney sets an hourly fee, and you pay the attorney based on the hours they work on your case. Attorneys keep records of how they spend their time. They will outline their activities on your bill. Some attorneys work based on a flat fee. They set one fee based on the legal services they provide.

How Can an Attorney Help in a Real Estate Transaction?

There are many steps in a typical home purchase. Sellers often contract with a local real estate agent to sell their house. A seller's agent helps the seller price, stage, and sell the house. A buyer's agent helps buyers find a new home. Once the buyer picks a house, the buyer and seller will enter into the purchase agreement, one type of real estate contract.

Once the parties set a closing date — the time when the title passes from seller to buyer — they have a set time to complete the purchase. Lawyers are beneficial during the closing process.

Closing is often the most critical part of the process. It is the final part of the homebuying process, the day when the title and money pass to the proper parties.

Real estate lawyers can help at every stage of the home sales process. This may include:

• Assisting the buyer in finding or vetting a mortgage lender
• Helping the buyer understand the home inspection process
• Reviewing the purchase contract
• Reviewing the title report

The Purchase Agreement

The purchase agreement is an important legal document in the transaction. Although standard printed forms are valid, a lawyer can help to explain the form and make changes and additions to reflect the buyer's and the seller's desires. There are many issues to address in the purchase agreement. Some common examples:

• Who holds title to the property?
• Does the property contain hazardous waste?
• What are the legal consequences if the closing does not occur?

Most buyers finance a substantial portion of the purchase price for a home with a mortgage loan from a lending institution. The purchase agreement should include a contingency conditioning the sale on the buyer obtaining financing.

Again, keep in mind that printed contract forms often prove inadequate. They may need significant changes to get everything the buyer and seller want in writing. Mortgage loan commitments and mortgage loan documents are complex. Lawyers can review and explain the importance of these various documents.

The Title Search

After signing the purchase agreement, the next step is to establish the state of the seller's title to the property to the buyer's — and the financial institution's — satisfaction. A title insurance company can provide a title report. An attorney can review the title report and provide legal advice.

A title search covers the public legal history of the property. It will often include:

• Legal description of the property
• Possible encumbrances, including liens and easements
• Ownership history
• Covenants or zoning restrictions
• Any prior foreclosure

A real estate attorney can explain these items' significance for your potential new home.

The title search does not tell the buyer or seller about existing or prospective zoning. A lawyer can explain whether zoning prohibits a two-family home or whether planned improvements violate zoning ordinances.

The Closing Process

At the end of the closing process, the buyer will have a new home, and the seller will get paid. During the closing, an escrow agent will prepare a closing statement to help guide both parties through the process.

The closing statement includes most fees and expenses each party must pay before the title can transfer. These are the closing costs. Some examples of these fees and expenses:

• Mortgage insurance
• Real estate agent or Realtor commissions
• Cost for home inspector/home inspection
• Deposit for property taxes
• Appraisal fees
• Title search fees
• Attorney's fees
• Loan origination fee

An attorney can review the closing statement to ensure the charges are correct. They can also review closing documents, such as the deed or mortgage instrument, and explain what you are signing.

Hiring a real estate attorney to help you through the homebuying process is an excellent decision to help you on your path to home ownership.

Real Estate Attorneys Required

Only a licensed attorney can handle a real estate closing in some states:

• Alabama
• Connecticut
• Delaware
• Georgia
• Kentucky
• Louisiana
• Massachusetts
• North Dakota
• New Jersey (northern part of state only)
• New York
• South Carolina
• Vermont
• West Virginia

In other states, the parties have greater flexibility in who handles the closing. That may include:

• Attorneys
• Escrow companies and agents
• Lenders
• Title companies

Check with your state's bar association to confirm whether you must hire a real estate attorney.

Get Help

Whether this is your first home or fifth, a real estate attorney can help ensure you have peace of mind when buying a home. Real estate lawyers are experts in this specialty and understand state law concerning real property. Speak to an experienced real estate attorney near you today.