The answer to the question in the title of this article might surprise you! You don’t necessarily need a lawyer to buy real estate, especially if it’s not your first property purchase. However, it can be helpful to hire an attorney to assist you with the purchase, particularly if you’re buying property as an investment or if there are other complicating factors involved in the sale, such as private companies and absentee owners. An experienced real estate attorney can help you understand your options and avoid costly mistakes that could ruin your investment or worse—put you in danger!
What Does A Real Estate Lawyer Do?
Using a lawyer when buying a house will help you avoid some common legal problems, such as sellers that sign a Broker Agreement that neglects to cover legal concerns. What this says is that this happens quite often, with realtors typically using standard forms expecting that they will cover all or at least unusual circumstances.
But, in the absence of a contrary agreement, the seller may have to pay the broker even if a sale does not occur, or to pay multiple broker commissions. For example, you can avoid this by using a broker who is granted the right to negotiate on his or her own behalf.
Lawyers specialize in those types of contracts, especially ones where the owner withdraws the property from the market or isn’t able to deliver good marketable title.
A real estate broker may give advice on a contract to the homeowner when purchasing a house, even if the contract is standardized. This should be thoroughly explained to the homeowner and revised if necessary. A lawyer should also assess whether the agreement was actually signed by both parties.
Despite the fact that a lawyer might not be needed throughout the negotiation process, both the buyer and the seller may still have to speak with one in order to answer important questions, such as the tax implications of the transaction. From the perspective of the seller, tax implications are often of crucial importance.
For example, if a person who is selling their property makes a lot of money off of it, they should make sure they do their research on the best way to structure the sale and how to profit off of it the most, to get the most back on their taxes. They can consult an attorney to determine if they can take advantage of any tax loopholes and what specific approach to take.
On behalf of the buyer, they will also want to find out more about how they can make their home more valuable while still being able to sell it later on.
For example, if an owner wants to add value to their property, they may need a building permit and/or insurance. Not getting these permits may come back and haunt them later on when they try to sell. In order for them not to have any surprises in terms of taxes or expenses down the road, having an attorney check over all paperwork beforehand is a must.
Should I Get A Real Estate Lawyer For Buying My First Home?
In a typical home purchase, the seller enters into a written brokerage contract with a real estate agent, usually. When the broker finds a potential buyer, negotiations are conducted through the broker, who usually functions as an intermediary. Once a purchase is agreed upon, the buyer and seller sign a formal purchase agreement.
After this, the buyer arranges for financing. A Title search is made to appease the Lender and the Buyer. Finally, the property is transferred from the Seller to the Buyer, and the Seller receives the negotiated purchase price of the property in the contract. It’s true, this may not seem as important as purchasing a car that ends up being a lemon or an investment that doesn’t do well, but without a lawyer, the consequences could be much worse.
The buying and selling of a house are more complicated than a simple matter of handing over your credit card and bringing your purchase home. Homebuying (and selling) are a complicated legal matter that must abide by state and local regulations.
An experienced real estate lawyer can walk you through the step-by-step process of purchasing your home. Doing all the complicated paperwork yourself is incredibly time-consuming and will open you up to fines or costly time penalties if you don’t do certain paperwork properly.
Tips For Choosing A Real Estate Attorney
When it comes time to buy a home, most people opt for an attorney. Choosing one is a bit easier if you’re a homeowner — chances are, you know someone who has done it in your area. But what about when you’re purchasing investment property?
While many investors choose lawyers (either generalists or real estate specialists), doing so isn’t always necessary — or wise.
A poorly chosen attorney can end up costing more than they save, and there’s often free and low-cost help available from a wide variety of sources.
Here are some tips for finding and choosing a lawyer when buying real estate:
- Do your research on lawyers specializing in real estate law and get their rates before making an appointment.
- Visit local legal aid offices for resources as well. There may be programs that provide consultations with attorneys at no cost.
- Ask other professionals whom they would recommend; make sure they have dealt with the attorney on a personal level though — not just heard that person’s name mentioned by others.
- Look for local bar associations or professional organizations which offer referrals to members who specialize in real estate law – these are usually cheaper than individual referrals but offer similar levels of experience and expertise.
What Lawyers Can Help With
There are a number of ways real estate lawyers can help with the purchase process.
Lawyers Can Help With Real Estate Contracts
It is possible for most people to negotiate with a counterparty in person. However, in order for the terms of the agreement to be legally binding, it should be put in writing in a contract. A lawyer can negotiate the contract on your behalf and make sure it doesn’t violate any state laws. Furthermore, they can identify any specific issues that could affect the future use of the property.
In many states, the buyer and the seller have three days to review a real estate contract before it becomes legally binding. Many don’t know this. Your lawyer will show you where your contract is legally inadequate, amend it where necessary, and take out provisions you don’t need.
Lawyers Can Help With Title Searches
Attorneys perform another service called a title search. Its purpose is to see if the property is free of any issues, such as liens or judgments. It’s necessary to run a title search before buying a property. Anyone can do a title search, but an attorney can do it faster and better. So long as they are not doing it themselves, they will often have a connection with companies specializing in these types of title searches.
If a search uncovers a red flag, your attorney can advise you on what to do next. For example, a title search reveals that the sellers owe a lien or outstanding court judgment before they can sell their home. In this case, your lawyer may negotiate a price reduction on the property to compensate you for the delay, and might provide the seller with helpful sources for financing in order to prevent issues.
Assistance With Property Transfers & Filings
Since one or more parties may be a corporation, trust, or partnership, contracts are more complicated, which means you should consult with an attorney for a few reasons. The lawyer will make sure that the contract adheres to the law and whatever else the partnership, trust, or corporation has laid out in their charters.
Deeds for real estate will often need to be filed at the county and state levels. Legal counsel will be able to do this quickly and effortlessly. In some cases, the transaction might involve property in an area where construction is not allowed. If that’s the case, an attorney will be able to advise you on what state laws you should follow to complete the transaction.
When a real estate transaction is commercial, securing an attorney becomes imperative, who can handle bureaucratic red tape to establish your corporation or sole proprietorship as a valid business entity for state tax purposes. The attorney will secure your state-required license with the city or town where you’ll operate.
Final Remarks: Do You Need a Lawyer to Buy Real Estate?
What you need to do depends on your situation. You may be a first-time home buyer or a seasoned investor, buying a home for personal use or as an investment property. Whatever your situation is, real estate transactions can be complex and fraught with pitfalls for both buyers and sellers. If you find yourself in any of these situations or any other real estate challenge, it may be time to hire a lawyer. A lawyer can help protect your interests and help make sure that you get what you’re entitled to – whether that’s exactly what you were looking for in a new home or not.