You’re selling your home, not going to court. What’s all this buzz about hiring a real estate attorney on top of your amazing agent, who seems to have it all figured out? Sounds like an expensive cut to your bottom line!
The reality is having an attorney in your corner, especially at closing, protects you from documentation issues, titling errors and costly lawsuits.
Most states don’t require that sellers obtain legal representation—but even so, in certain cases, it would be reckless not to lawyer up.
If you’re on the fence about getting a real estate attorney, take the advice of top real estate agents and attorneys in the business who together know how to tie up a deal’s every loose end. From there, you can make a sound judgment call based on your situation.
What Does a Real Estate Attorney Do?
Real estate attorneys go over the mounds of daunting paperwork involved in your home sale with a fine-tooth comb to catch mistakes and protect your interests every step of the way.
In the early stages of your sale, you can ask them to look over the listing agreement with your real estate agent to make sure that the terms are in your favor. Real estate attorneys are also equipped to review offers as they come in and identify red flags or tax benefits and considerations.
Once you’re past the offer phase, real estate attorneys draft contracts; review title, mortgage and transfer documents; write the deed; and check the final breakdown of settlement funds at closing.
On top of that, if an unexpected complication were to throw a wrench into the transaction—like a lien or judgment on the title, or question about a disclosure—your real estate attorney will represent you and handle it so that the deal can move forward.
But wait, won’t my awesome real estate agent help me with that?
Yes, a top real estate agent will guide you through the transaction, but they don’t have the specially trained eye of an attorney.
Real estate transactions typically involve standard forms that your agent will be intimately familiar with, so you can count on them to lead negotiations and communicate with buyers on your behalf competently. A real estate attorney adds an extra level of scrutiny to make sure the deal closes without a hitch, and that no legal issues come to light after the fact.
“It’s basically like hiring a bodyguard for your assets,” says Brett Wasserman, an associate attorney at the legal offices of Marc Bronstein in Southern California.
“We go in there, we represent you, we make sure you’re not taken advantage of in any way, and we make sure that you’re happy at the end of the day.”
Does Your State Require a Real Estate Attorney?
Some states require real estate attorneys to be involved in the real estate transaction from preparing documentation to being present during closing to everything in between.
Check out the map to see if you may be required to hire an attorney when you sell your home (an attorney is required in the orange states, and not required in the blue). The laws change year by year, so double check your local regulations to be sure. Your real estate agent will also be able to tell you if you need to hire legal representation for your home sale in addition to their own services.
A Tale of Two States: Real Estate Attorneys in Massachusetts vs. Maryland
Take Massachusetts and Maryland as examples of two states with drastically different rules about real estate attorneys.
Massachusetts requires that buyers use a bank attorney at closing instead of a title company.
Because of this, 99.99% of sellers also hire a real estate attorney to balance the scales. “The bank attorney is going to make changes to the contract to benefit the buyer,” says Nancy Rogers, the #4 real estate agent for homes sold in Lowell, Massachusetts. “I’m not a lawyer, so I always recommend a lawyer to look at it to make sure [the seller] is OK with those changes.”
In Maryland, on the other hand, buyers and sellers aren’t required to hire an attorney. Eric Pakulla, the #3 seller’s agent in Columbia, Maryland, rarely sees sellers hire an attorney.
“I’ve been doing this 22 years,” said Pakulla. “We’re selling hundreds of homes per year and people do not use real estate attorneys at all.”
Should you ever hire a real estate attorney in a state where it’s optional?
Many sellers and buyers do—simply because they prefer to have that representation for peace of mind in the event of complications. It’s never a bad idea to hire an attorney, especially if you’re anticipating negotiation deadlocks or the need to parse tricky paperwork.
These Situations Call For an Attorney (Even When It’s Not Required)
Some real estate transactions are more complex than others. The following special circumstances could trigger an outpouring of issues that put your home sale at risk. In these 5 cases, the professional expertise of a real estate attorney is paramount to keeping the deal on track.
1. You’re in financial distress.
Are you facing foreclosure?
“If you get a foreclosure notice, the first thing that you should do is contact an attorney,” said Wasserman. “There are ways to save the foreclosure and get an injunction but it takes times and the more time that you have, the better.”
According to information from the Mortgage Bankers Association in 2017, 1 out of every 200 homes will be foreclosed upon.
If you fear your home may be foreclosed upon or if you have already received a foreclosure notice, contact a real estate attorney. You may be able to sell your home as a short sale or negotiate the terms of your mortgage with the help of a legal professional.
Are you considering a short sale?
A short sale is when you sell your house for less than the amount you owe on the mortgage. A short sale must be approved by the lender after you show that you’re financially incapable of paying the mortgage due to hardship, and an attorney can help with that.
“If they’re not current on the mortgage, if they’re underwater, or if they owe more on their house than what it’s worth, then I actually get them pre-approved with an attorney that specializes in short sales,” said Pakulla. “Once they get pre-approved, the attorney can help them avoid foreclosure.”
If you think you may qualify for a short sale, find a real estate agent and an attorney that specialize in short sales to help you through the process.
Are there liens and judgments on your title?
A lien is a notice attached to your property’s title that claims you owe money to a creditor. Voluntary liens (such as mortgages) are common and easy to settle in escrow because you signed a contract to put it in place.
Involuntary liens, on the other hand, are the bad kind! Creditors can get permission to place involuntary liens against your property for any debt you owe to them. The county can also place a lien for outstanding debts like property taxes. Other types of involuntary liens include those for unpaid construction jobs, judgments (lawsuits), or child support.
Since these liens are attached to the property title, the sale will not be able to close until you pay them off.
An attorney will help you clear the title of liens and judgments and negotiate with creditors.
2. You’re selling on behalf of the deceased owner.
If you are left responsible for a property after the death of the owner, and the owner didn’t set up a living trust, you will need to go through probate to sell the home. Probate is a legal process that appoints a representative to administer the estate and distribute assets to intended beneficiaries.
An experienced probate attorney is a necessary player in this process. Once you have inherited the rights to the property, your attorney can help you manage any debt, taxes, or complications with the property.
“In terms of a trustee selling something out of a trust, there could be specific language in the trust requiring certain terms,” said Wasserman.
“You’re going to want an attorney to review that to make sure that you’re complying with all the terms of the trust, and that you’re not breaching your fiduciary duty by selling the property.”
A real estate attorney will help navigate the selling process to make sure you are within your legal rights.
They will also defend and protect you if you are one of multiple trustees, so you receive the amount you are entitled to. And if you aren’t familiar with the house and its condition, a real estate attorney can work with your real estate agent to negotiate any major issues that come up, like structural problems or water damage.
3. You’re going through a divorce or separation.
If you co-own a house with someone and you want out, you’ll need an attorney—especially if the other name on the house doesn’t want to sell. A real estate attorney will represent you and your rights when you’re up against an uncooperative co-owner in tough negotiations.
There a lot of different factors to consider when you sell a house in a divorce, and real estate attorney will help work out the details. Some things that can legally affect your right to the house are:
- Your state’s laws on dividing property
- If you were married when you purchased the home
- Any prenuptial agreements
- The name on the deed and mortgage
- Your finances
- The terms of your divorce agreement
If you both have equal rights to the property, you and your partner will have to decide how you want to divide the house. Here are some options when it comes to handling your house during a split:
- Buy out your partner for full ownership, or vice versa.
- Decide who will stay in the house until you are ready to sell.
- Work together to rent out the house and be co-landlords.
- Sell the house and split the proceeds.
It’s hard to come to a fair decision, but an attorney will make sure you get everything you deserve, whether you decide to sell and split the proceeds, or one person is able to keep the house.
4. You have tenants renting the property.
If there’s a tenant in the property that you are selling, it can get tricky to manage. They have legal rights that you need to abide by before selling the property.
A real estate attorney can help you determine the best course of action depending on a few important things:
- The lease agreement you have with the tenant. Your real estate attorney will review the duration of the lease and any termination clause to determine if and when you can ask the tenant to move out.
- State laws on required notice to vacate. Most states require either 30 or 60 days notice but ask your real estate attorney to confirm the law based on your state.
When you decide to sell your house with a tenant living in it, you have a couple of options:
- Wait for the tenant’s lease to expire or ask them to vacate.
- Sell with the tenant in the home and transition their rental agreement to the new owners.
The easiest option is to wait until the tenant is out of the property to sell it, otherwise, you’ll have to rely on their cooperation throughout the selling process.
Your real estate attorney will help you settle outstanding balances with them to make sure you receive accurate payments and avoid possible legal action from their end (in the event you violate the lease agreement). If all parties agree that the tenant will stay on the property with the new homeowners, your real estate attorney will help you transition the agreement.
5. You have reason to believe your home sale could get complicated.
If you have a gut feeling that there may be unexpected issues with your home sale, such as damage or defects that have gone unnoticed or possible issues with the ownership and title, consult with a real estate attorney.
It’s better to have a real estate attorney make sure you’re protected throughout the whole process than to hire one later for damage control.
“In terms of closings for a general person selling, it’s always good to have someone there to make sure all of the T’s are crossed and the I’s are dotted,” said Wasserman.
How To Find a Qualified Real Estate Attorney You Can Trust
Most real estate agents have a network of professionals that they’ve teamed up with for years. So, start your search for a top real estate attorney by asking your real estate agent for referrals.
“The attorney that I recommend has helped a lot of people so he just has a very strong track record,” said Pakulla. “What makes him good is the experience and the work that we’ve done with him.”
Rogers has multiple real estate attorneys in her Rolodex and will pair them with clients based on good personality matches. “But all the attorneys I do recommend are very experienced and excellent and they know their stuff,” she added.
The attorney you hire should be experienced and well-versed in situations like yours. The most important thing, according to Rogers, is that the attorney you hire knows real estate inside and out and practices in your area.
“You might as well not have any representation than to have someone who doesn’t know what they’re doing,” Rogers said. “That’s like having a dentist perform your open heart surgery.”
If you want to conduct an online search for a real estate attorney, here are some of the best places to start.
- Your state bar association. Each state has a bar association website that offers a lawyer referral service. It allows you to search for licensed attorneys by ZIP code, specialty, language, and more. Find certified, active lawyers who are experienced in the area you need.
- Avvo provides information and reviews for 97% of practicing lawyers in the United States. Their extensive research and resources will help you through every possible legal situation and provide vetted lawyer recommendations for your needs.
- FindLaw is a search engine to find lawyers based on your location. It provides free resources about the law to help you navigate and understand your specific legal situation. Get all your legal questions answered in one place.
After you’ve identified several candidates, vet each professional you’re considering by asking them some simple questions:
- How long have you been practicing?
- How many real estate clients have you helped?
- What is your plan of action to protect me through my home sale?
- Are you also a title agent or do you have one on your team?
- What are the local real estate laws that I should know about?
- Will anyone else be working on my transaction?
- What are your fees?
The Cost of a Real Estate Attorney
You should be prepared to spend up to $5,000 on a real estate attorney. Each attorney has different hourly fees, ranging anywhere from $150 to $300 an hour, so it depends on the situation. Considering what’s at stake (hundreds of thousands of dollars), it’s a small price to pay for peace of mind and a sense of security.
Wasserman pointed out, “Other than the introduction if you don’t use us up until closing, it doesn’t cost you anything.”
You’ll simply have the ability to say that you are represented by an attorney, and can call on them when (and if) you need them. “Now some may require a retainer fee, but in small transactions, that’s probably not going to be necessary,” he added.
Should You Hire a Real Estate Attorney?
Unless your area requires that real estate attorneys be involved in real estate transactions, whether you hire an attorney to oversee your home sale is ultimately up to you.
If you’re anticipating a simple, straightforward deal, a top real estate agent may be all you need. Alternatively, a transaction fraught with obstacles may require the expertise of a legal professional to put out fires and keep the sale from crumbling.
Every seller’s situation is different, so talk to your real estate agent about your individual needs to make sure you’re covered from all angles.
This article is purely informational and is not meant to be legal advice. If you have any questions, please consult a licensed real estate agent or real estate lawyer.