Historically, the real estate attorney played a central role in all real estate transactions. And while real estate attorneys are still a prominent figure in commercial real estate transactions, their use in residential markets has declined across the U.S. over the past several decades. The primary reason for this decline has been the drastic growth in the number and frequency of residential real estate transactions and the availability of standard-form contracts to streamline the process.
However, the value of having an attorney in the modern residential real estate transaction has not diminished. For most people, owning their own home is the most expensive investment they will ever make. Unfortunately, the process of buying and selling a house is rife with pitfalls. This is largely due to the host of competing interests held by the various parties to the transaction.
And that is what makes having an attorney so essential. Your real estate lawyer has a legal and ethical duty to represent your interests and your interests alone. Real estate transactions are essentially an elaborate choreography of contracts and negotiation. The buyer wants to buy a house and the seller wants to sell one, but the mutual interests between these parties begin and end here. Beyond that, the interests of the buyer and seller are in direct opposition: the buyer wants a low price and the seller wants a high price; the buyer wants the option of rescinding his agreement to purchase, whereas the seller wants to lock the buyer in; the buyer wants to hold the seller accountable for any undisclosed problems with the property, whereas the seller wants to wash his hands of any responsibility. And these are just a few examples.
Conflicts of interest also exist between the main parties and secondary players, such as real estate agents, title companies, and lenders. For instance, often both the buyer and seller will hire an agent or broker to do some of the searching for them. The buyer’s real estate agent plays matchmaker, while the seller’s listing agent or broker does the heavy lifting in marketing his client’s home. But unlike attorneys, real estate agents have conflicting self-interests. Generally, they don’t get paid unless you close on a deal, and the amount they earn directly relates to the final purchasing price. It is in their interest, therefore, that you make a decision quickly and that the price agreed upon is high.
Moreover, your relationship with your broker is essentially another contract with negotiable terms. Despite what anyone may try to tell you, the commission percentage due to the agent at closing is always negotiable; this is one area in which hiring a Will County lawyer can help you save money.
For buyers, competing interests are also at stake in your relationship with the title insurance company and financial lenders. When buying a house, you may need to take out a mortgage. This necessitates yet another contract: the mortgage agreement. What will your payment terms be? What about your interest rate? A real estate attorney can help ensure that the price and terms of your financing agreement are accurate and reasonable.
Additionally, most financial lenders nowadays demand the buyer obtain title insurance in order to get a mortgage. Title insurance protects the buyer’s (and the bank’s) ownership interest against defects in title. (The list of possible title defects is long and cannot adequately be addressed here. We’ll save this topic for another article.) The buyer generally pays the premium and other costs involved in issuing title insurance to the lender. Even if you are not taking out a mortgage to purchase your new home, obtaining title insurance is highly recommended. In either case, your agreement with the title insurance company involves a complicated document with negotiable provisions. The insurance agent is employed to get the best possible deal for the insurer, so you cannot count on him/her to assist you in the negotiation process. Like all insurance companies, the title company wants to write exceptions into your coverage; your lawyer can assist you in addressing and eliminating these exceptions to get you the best possible protection against title defects.
By now it should be clear to you that the other professionals involved in the real estate transaction are not there to help you. They are there to ensure that their employer’s role in the transaction goes smoothly and in their favor. Your only true advocate in the process is your real estate attorney. Unlike real estate agents, your lawyer does not get paid on a contingency basis; therefore, s/he does not have any stake in rushing you into a deal or compromising your interests during negotiations. Although a real estate agent plays an important role in your venture, s/he does not have authority to provide legal advice let alone have the requisite knowledge to do so. Real estate law is essentially an amalgamation of contract law, property law, environmental law, regulatory law, and some tax law. Real estate agents receive only cursory instruction in these areas.
Other Specific Services a Will County Real Estate Lawyer Can Provide
If you are the buyer:
- Ensure the property described in the purchase agreement is actually the property you intend to purchase. Sounds silly, but many plots of land have been around for hundreds of years and deeds may be inaccurate.
- Help you determine the type of title you will be receiving. (There are different kinds.)
- Ensure you are adequately protected against liens and encumbrances on the property.
- Help negotiate and write in any contingencies you would like to include in the purchase agreement.
- Assess any risk of environmental liability in connection with the property.
- Determine who should pay the taxes and assessments on the property and when.
- Help you determine how long you should leave your offer to purchase open for the seller’s consideration.
- Determine whether the property is zoned for the activity(ies) you intend to use it for.
If you are the seller:
- Negotiate your agreement with your listing agent.
- Help you determine your rights and options if the buyer’s mortgage or other financing is denied.
- Ensure your preferences regarding who to sell to are not in violation of the Fair Housing Act (FHA). You may not discriminate against buyers based on things like race, gender, familial status, etc., but you may consider a buyer’s creditworthiness or ability to make payments (which is especially important if you are selling by contract or deed), as well as the buyer’s apparent intended use of the property. Even if your intentions do not run afoul of the FHA, a lawyer can make sure nothing in your contract or deed is written in such a way that may be construed in violation of the FHA.
Of course, it is up to you to define the scope of your attorney’s involvement in the real estate transaction. The above tasks are just recommendations and common requests. Other matters in which a real estate attorney might be useful include condominium/housing-association documents, water, flood, & zoning certificates, land surveys, title checks and deed recording.
Certain Situations Where Hiring a Real Estate Attorney is Especially Important
As the buyer:
- If you are moving somewhere from out of town
- If the property you are buying is short-sale or bank-owned
- If you are buying property that is part of an estate sale
- If you are buying a property that could potentially have some structural issues
- If the property you are buying is located in a flood zone or other disaster-prone area (tornados, radon gas, toxicity levels, etc.)
As the seller:
- If the property you are selling is in some state of distress
- If you are the heir or executor of a property whose owner is now deceased
- If the property you are selling is owned in conjunction with someone else
- If you have any judgments or liens in your background
A final note on the importance of hiring the right lawyer. As mentioned above, real estate law is a very specialized field of law. Just because your uncle or your daughter is a lawyer and would give you a discount on legal services does not mean that he or she is qualified to accomplish your goals as a home buyer or seller. Furthermore, if the home you are buying or selling is in Joliet or Will County, it is vital that you hire a real estate attorney with experience working in this geographic area. What is considered reasonable and customary in a real estate transaction varies from county to county in Illinois.
To set up a consultation with an experienced real estate attorney, please contact Hamilton & Antonsen, LTD at 815.729.9220.