Disclaimer: As a friendly reminder, information in this blog post is meant to be used for educational purposes only, not as legal advice. If you need assistance navigating a real estate transaction, HomeLight always encourages you to consult your own independent advisor.
A Georgia home seller had fallen on hard times and missed a few mortgage payments. Although she caught up, there was a breakdown in communication that looked like the bank owned her house once she was ready to sell.
“That’s something the attorney caught and has worked diligently with an attorney in Atlanta to get resolved,” says Teresa Cowart, a top real estate agent serving the Richmond Hill and Savannah areas of Georgia. “If we didn’t have them involved, I don’t know that we’d ever get to closing.”
Although many states require a real estate attorney’s involvement at closing, regardless of the complexity of the transaction, using an attorney is more than a formality.
Real estate attorneys help sellers, buyers, and their agents resolve various issues surrounding the title, clarify whether someone can back out of a deal, and even act as go-betweens when buyers and sellers become acrimonious. “I call the attorneys we use regularly whenever a buyer and a seller are in dispute about something,” Cowart says.
Let’s break down some situations where a real estate attorney becomes a valuable member of your home selling team.
What does a real estate attorney do for the seller?
A real estate attorney shields your home sale from legal trouble by tackling difficulties that arise along the way.
Statistics from the National Association of Realtors show that 30% of closings in October 2020 were delayed because of complications, including issues related to financing, appraisals, home inspections, titling, distressed property, or contract contingencies. What’s more, 5% of buyers and sellers who entered into contracts into October terminated those contracts, according to NAR.
“Our main objective is to make sure you are ready to close on the closing date and prepare the documents required to close,” says Steven B. Herzberg, a real estate attorney at Vazquez & Associates in Miami, Florida. “That means communicating with the buyer’s attorney or title agent, reviewing the title and lien search for any issues, making sure any issues are resolved, and preparing the documents the seller signs for closing.”
Depending on where you live and how involved the attorney is with your home sale, a real estate attorney also can draft and negotiate the contract for the sale, as well as prepare the deed, says Jeffrey L. Nogee, a New York City-based partner at the nationwide firm Tully Rinckey PLLC.
Here are some specific areas where sellers and agents rely on a lawyer’s expertise.
1. Solve documentation disputes.
Titling or deed issues amounted for 10% of delayed contracts in October and can be some of the knottiest problems to resolve, involving documents that weren’t drafted or recorded correctly years ago.
Herzberg handled the sale of a Miami Beach condo that the seller inherited from a relative. It had been transferred through a quitclaim deed, but because the death certificate hadn’t been filed with the deed 20 years ago, he had to obtain another death certificate and record it with the sale to provide a clear title.
Open permits are a problem that Nogee often encounters. He recently worked with the seller of a house built in the 1700s that had an open permit for an addition from 1942. He arranged for the proper electrical and plumbing certificates for the building inspector and obtained a certificate of completion so the sale could close.
A permitting issue doesn’t always crop up during a standard records search, he adds. Sometimes the buyer does a survey inspection and compares the physical property to the survey. If the property has a rear deck that’s not on the survey, that raises the question of whether any work was permitted properly, he says. The seller — or their attorney — has to get a definitive answer.
New York City has some other real estate quirks. Failing to pay your water bill winds up being listed on your real estate tax bill, so most of the time buyers will insist on an official meter reading to ensure there are no outstanding charges, Nogee says.
Some properties also have shared driveways, but the layout might entail crossing your neighbor’s portion to enter your home. A home sale might involve obtaining an easement for the buyer to access this part of the driveway legally.
2. Navigate short sale or foreclosure hurdles and complexities.
If you’re financially underwater and contemplating a short sale or foreclosure, a real estate attorney (along with your agent) is one of the experts authorized to negotiate with your lender on your behalf.
They’ll provide records and documentation to prove your financial instability and also make sure this information is up-to-date so that you can reach closing. An attorney also will know your state law’s specifications regarding short sales and foreclosures, adds Nogee, who handles a lot of estate and probate work. He helped to resolve one case where the executor of a woman’s estate in New York City didn’t pay the bills, sending the property into foreclosure.
3. Sort paperwork related to an inherited property.
Dealing with an estate or inherited property can be an intricate transaction. Nogee once represented a person interested in buying a co-op in Queens. When he asked to see the documents regarding the underlying ownership, he learned the property was in the name of the seller’s mother — and she’d died about a decade ago. No one had done any probate work on her estate, so even though her son said he was the only heir, the deal couldn’t move forward.
He’s currently involved in the sale of a two-family building in Brooklyn that an elderly woman deeded to a trust and made her granddaughter the trustee. Meanwhile, the granddaughter’s uncle moved into the basement and refused to pay rent or leave; he changed the locks and even harassed his mother and sister, forcing them to leave the building. Ultimately, the trustee found a buyer who was willing to take the property at a reduced price with the uncle still there, although Nogee expects the buyer will move to have the uncle evicted.
4. Discuss liability regarding repairs.
Even after a home inspection, issues with repairs or last-minute issues can arise. For example, sometimes the refrigerator breaks the day before closing.
“You work that out with money usually,” Nogee says. But even though the seller would replace the refrigerator, the money wouldn’t be for a brand-new appliance — only the cost of one that’s the same age as the one that broke.
Roof leaks are another hurdle to be ironed out to all parties’ satisfaction. “The buyer doesn’t want somebody else’s workmen coming in; the seller doesn’t want the buyer’s workmen gouging them for the cost,” he says.
Cowart, in her capacity as a real estate agent in Georgia, has referred buyers to the real estate attorneys that helped with closing if the seller didn’t disclose something properly, such as a garage that floods, ruining the buyer’s plans to convert the space to a workout room. “I said, ‘You need to call the attorney; they’ll tell you what kind of recourse you have,’” she says.
5. Handle sales with out-of-town owners.
Herzberg’s office often represents people in other countries who sell real estate in Florida. Because of COVID-19 travel restrictions, he’s had to find ways to get the necessary paperwork signed remotely, such as coordinating with notaries in the sellers’ home countries and working with the buyers’ underwriters to obtain their approval about these means.
Cowart has worked with real estate attorneys to facilitate home sales for people serving in the military, which also involves remotely transmitting and signing documents. She’s also found an attorney’s staff helpful when dealing with out-of-state sellers who are “technology-challenged.” She once sold a home for a woman now in Ohio who didn’t have the ability at home to print out or e-sign the required paperwork.
So Cowart found a retail printing outlet, the paralegal highlighted where the seller needed to sign, and the two spoke to a worker there about printing out the pages for the seller, then returning them. They also paid for the necessary fees.
6. Mediate sales with multiple owners or sour feelings.
Whether you’re selling property that you own with a spouse or one that you’ve shared with siblings, a sale with multiple owners can dissolve into chaos if there’s no agreement in place (such as a joint tenancy or living trust). While a real estate agent is a neutral party in this situation, an attorney can ensure there are no conflicts of interest — or be prepared to go to court in a partition action if necessary.
Sometimes even a sale with one owner can turn adversarial, though. While many buyers and sellers will close in the same room, trading light chit chat, every so often things turn frosty, Cowart says. “Occasionally, we have things where they don’t like each other and they don’t want to be in the same room.” A real estate attorney winds up ferrying the paperwork between both parties so that the sale can close.
7. Protect your interests.
Attorneys also are prepared for those situations where a buyer has a change of heart — or raises an issue at the last minute. “I have a buyer who now doesn’t want to close because they don’t think the house is clean enough,” Cowart says.
An attorney can weigh in on what concerns are worth renegotiating and whether either side can walk away. “That’s extremely helpful to me because it’s not me, the agent who’s going to get paid, saying what’s going to happen if you don’t close,” Cowart says.
As much as you rely on your real estate agent for their expertise, agents like having a trusted resource to consult, too, especially when a deal becomes complicated. A home is for many people the biggest investment they have, and therein lies a real estate attorney’s value: offering peace of mind.
Header Image Source: (Tingey Injury Law Firm / Unsplash)