Do I need an attorney?

If you've decided to buy or sell your home by yourself, an attorney is essential. You're about to enter a complicated legal transaction involving a very valuable asset. Most FSBO experts agree that you need an attorney to insure that your interests are protected and the transaction goes smoothly.

Even if you're using an agent, it still makes sense to involve an attorney. In finding the right one, make sure you use a lawyer with a signficant amount of experience in residential real estate transactions. Agents are notorious for their disdain of attorneys, and unfortunately for good reason. Attorneys who are not familiar with these types of transactions often adopt an overly aggresive posture in negotiations, which often times kills the deal. An attorney experienced in this area will know better.

Buying or selling a home involves the law of real property, and regardless of the training, experience, or sophistication of your agent, he or she is almost certainly not a lawyer. The typical home purchase appears at first glance to be a simple transaction.  However, without a lawyer, the consequences may be more disastrous than purchasing a car that turns out to be a lemon, or a stock investment that was unwise.

A lawyer can help you avoid some common problems with a home purchase or sale. For example, the seller should have the advice of an attorney with respect to a listing or brokerage agreement. This may be a valuable contract (for a $500,000 house, the typical commission would be $30,000), and it most certainly was drafted by an attorney who represents the broker. The seller should have the opportunity to insure that it is fair to the seller by having it reviewed and possibly revised by the seller's attorney. 

The purchase agreement is the single most important document in the transaction. Although standard printed forms are useful, a lawyer is helpful in explaining the form and making changes and additions to reflect the buyer's and seller's desires. The buyer will probably want several contingencies in the contract. An attorney will insure that these are included and that the buyer's interests are fully protected. The seller may need guidance as to his or her rights in the event that the transaction does not close as scheduled.

It is important to remember that printed contract forms are generally inadequate to incorporate the real understanding of the buyer and seller without significant changes. In addition, there are many kinds of mortgages that may be available. Mortgage loan commitments and mortgage loan documents are complex. Lawyers can review and explain the importance of these various documents.

After the purchase agreement is signed, it is necessary to establish the state of the seller's title to the property to the buyer's - and the lender's - satisfaction. Generally, a title search is ordered from an abstract or title insurance company. In some states, and in outlying areas of others, title insurance is not typical. In such cases an attorney is essential to review the status of title and render an opinion of title in lieu of a title policy.

Assuming you are in an area where title insurance is customary, an attorney can help review the title search and explain the title exceptions as to what is not insured, and determine whether the legal description is correct and whether there are problems with adjoining owners or prior owners. He or she can also explain the effect of easements and agreements or restrictions imposed by a prior owner, and whether there are any legal restrictions which will impair your ability to sell the property.

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

The closing is the most important event in the purchase and sale transaction. The deed and other closing papers must be prepared. Title passes from seller to buyer, who pays the balance of the purchase price. Frequently, this balance is paid in part from the proceeds of a mortgage loan. A closing statement should be prepared prior to the closing indicating the debits and credits to the buyer and seller. An attorney is helpful in explaining the nature, amount, and fairness of closing costs. The deed and mortgage instruments are signed, and an attorney can assure that these documents are appropriately executed and explained to the various parties.

The closing process can be confusing and complex to the buyer and seller. Those present at the closing often include the buyer and seller, their respective attorneys, the title closer (representative of the title company), an attorney for any lending institution, and the real estate broker. There may also be last minute disputes about delivering possession and personal property or the adjustment of various costs, such as fuel and taxes. If you are the only person there without a lawyer, your rights may be at risk.

Perhaps the most important reason to be represented by an attorney is conflicting interests of the parties. Throughout the process, the buyer's and seller's interests can be at odds with each other, and even with those of professionals involved in the sale. The broker generally serves the seller, and the lender is obtained by the buyer. Both want to see the deal go through, since that is how they will get paid. Neither can provide legal counsel. The respective lawyers for the buyer and seller will serve only their own clients' best interests. Seeking the advice of a lawyer is a very good idea from the time you decide to sell or to buy a home until the actual closing.

• Finding the Right Attorney