When do you need a real estate attorney?

What does a real estate attorney do?

Real estate attorneys are licensed to practice real estate law and have the authority to provide guidance to buyers, sellers, and lenders involved in a real estate transaction. In some states, real estate attorneys are in charge of the closing process. 

A real estate attorney may be involved in preparing or reviewing documents such as the purchase contract, mortgage agreement, and title documents. They may help with the title search and securing title insurance. They may check for zoning issues and examine the survey map for problems. Real estate attorneys can also provide important guidance on the tax consequences of the sale. When you hire a real estate attorney, they’ll represent your best interests throughout the process. 

When do you need a real estate attorney?

There are some situations where you must, by law, hire a real estate attorney and others where it’s seriously in your best interest. Here’s a rundown.

When your state requires an attorney at closing

Ask your real estate agent if you’re legally required in your state to hire an attorney to assist with any part of the transaction. About half of states require an attorney to either be present at closing or give a title opinion, but these laws can change, so it’s best to research your state’s laws before entering into a real estate transaction. 

Typically, the buyer pays for the real estate attorney when one is required, even though the attorney in those situations primarily represents the lender and/or title company. You may opt to retain your own legal counsel as well, especially in complicated situations. 

When you’re involved in a commercial real estate transaction

Zoning laws and environmental regulations can complicate commercial real estate transactions. It’s a good idea to get advice from a commercial real estate attorney throughout the process, from the initial contract to closing. An attorney can even help you with financing and review your commercial lease agreement. And they can help minimize your tax burden associated with the transaction. 

When there’s a dispute or you need representation

Real estate disputes can arise for many reasons. For example, the seller could fail to disclose facts about the condition of the property, the buyer and seller could disagree about who should retain the deposit after a sale falls through, or a legal issue such as a restrictive covenant could impede the sale. In many cases, these issues can be solved through negotiation, but if litigation is necessary, you’ll want a lawyer to represent you. Hiring an attorney at the beginning of the process may also prevent some of these issues. 

When the purchase or sale is complex

If you know about special circumstances that could complicate the sale or purchase, you may want to hire an attorney before making or accepting an offer. Or, if the home inspection reveals concerning issues, a real estate lawyer can help write an addendum to the contract. 

It’s a good idea to get legal advice if any of the following are true:

• You’re buying a short sale, foreclosure, or bank-owned property
• The property you’re buying is in another state
• You’re buying or selling a property that has known issues, like structural problems
• You’re buying a property that is in a flood zone or at-risk for natural disasters
• Multiple parties are purchasing the property or selling the property
• You’re buying an estate
• You’re selling a property in the midst of a divorce
• You’re selling a property you inherited
• There’s a lien on the property for sale
• You don’t have a real estate agent
• You’re making a 1031 exchange or buying a rental property
• You’re purchasing with all cash or owner financing
• The purchase or sale is otherwise complex

When can you buy a home without an attorney? 

When in doubt, it’s always best to have expert guidance. But with today’s high mortgage rates, you may be looking for ways to reduce your closing costs. A straightforward residential purchase may not require a real estate attorney. Additionally, certain government-backed mortgage types come with unalterable loan documents. If you’re using an FHA loan to buy a home without any issues, for example, an attorney may not be helpful. You can consult with your real estate agent to determine if legal guidance is appropriate in your situation. 

How much does a real estate attorney cost?

Real estate attorney fees vary based on the lawyer’s experience, the services provided, and the industry standard rate for your location. The attorney may use one of two fee structures to bill for their services:

• Hourly rate: Real estate attorneys charge between $100 and $400 on average, though experienced attorneys may charge higher rates, and you might also pay more if you’re buying or selling an expensive property. Some lawyers may charge a retainer fee, which you’d pay upfront based on the attorney’s hourly rate. That would cover the expected hours, but you might pay more if you need additional assistance.
• Flat fee: Many real estate attorneys charge a flat fee for the transaction instead. For uncomplicated purchases or sales, real estate attorneys charge between $1,500 and $4,000 on average. Attorneys charge more in some states than others. Additionally, if you’re hiring a lawyer to help with issues like a clouded title, that may increase the cost. 

If an attorney is required for your real estate transaction, the fees are typically included in the closing costs. During the mortgage underwriting process, you’ll receive a loan estimate that details closing costs. Since attorney fees are variable, the estimate may change depending on the attorney you hire.  

Remember that hiring an attorney to represent you may be an investment that results in a lower-cost transaction overall. For example, attorneys can negotiate closing costs and prevent improper negotiation surrounding property issues that could cost thousands down the road. 

How to find a real estate attorney

Start by asking your real estate agent or mortgage broker for recommendations, since they likely have experience working with attorneys in real estate transactions. You can also ask friends and family members who are homeowners for referrals. 

If you can’t get a recommendation from someone you trust, you can consult the American Bar Association for bar directories in your state. You may also use Google to find customer reviews of local real estate attorneys. There are also several reputable lawyer review websites, including Avvo, Justia, Nolo, and LegalMatch. 

Bottom line

If you’re considering selling or purchasing a property in a complex transaction, it’s a good idea to get guidance from a real estate attorney before signing a contract. Even if your state requires an attorney to be present at closing, you may require legal guidance earlier in the process, depending on the situation. You might also choose to hire a lawyer after the inspection if issues with the home give you pause. Uncomplicated residential transactions may not require a real estate lawyer, but having one can provide peace-of-mind. If you’re unsure, ask your real estate agent for advice.

Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.

This article was first published on SFGate.com and reviewed by Lauren Williamson, who serves as Financial and Home Services Editor for the Hearst E-Commerce team. Email her at [email protected].