When buying and selling a home, many believe that they can represent themselves, or that the others involved in the house sales transaction will adequately protect their interests. But is this a penny-wise and pound foolish approach? Just what does an attorney do when representing a buyer or seller?
The attorney’s obligation is to represent their client’s interest exclusively. They do not represent the lender, nor the realtors, nor the title company. Each of those parties are receiving payment based generally on the size of the transaction and their fees are contingent upon the sale going through.
First, an attorney helps their client understand and negotiate the terms of the Contract of Sale. While frequently a standard real estate broker form contract is used to commence the purchase/sales process, a party’s interest may need to be protected with additional provisions. For a buyer, perhaps the contract needs to be conditioned upon the sale of their existing home. For a seller, perhaps there are conditions at the property or an easement or restriction which need to be mentioned, or items affixed to the house which the seller wants to remove. Or, for either party, perhaps it is essential that the closing occur no later than a certain date. In all these situations, terms can be added to insure this.
Second, inspection issues often spur additional negotiations. Do buyers or sellers want repairs, or should credits be provided. An attorney can provide assistance in these negotiations.
Third, issues which effect title may arise. For a seller, there may be old mortgages from a prior loan or owner which have been paid off, but not removed from the record and perhaps the lender no longer exists – or has merged with another bank. These will need to be addressed prior to sale. For a buyer, there may be limitations on the use of the property which make the property unacceptable to a buyer. Perhaps it has wider setbacks than what the local zoning ordinances require, or perhaps there are limitations as to how the property may be used. Or, perhaps there is a sewer easement or a pipeline easement running through the property so that an intended pool the buyer sought to install would not be possible. These are all issues that an attorney, after consultation with their client and being informed of the client’s expectations, can be in a position to protect.
Fourth, for Sellers, the attorney will prepare all the necessary transfer documents. For buyers, the attorney will assist with the loan documentation and execution of the mortgage documents.
Finally, issues can arise at the actual closing. It may be an explanation of the loan documents to the buyer, a walk-through issue which needs to be negotiated or a last minute title issue raised by the final run-down of title. A buyer’s or seller’s attorney present at closing can explain the consequences and offer options available to remedy the situation.