Monday, November 25, 2013

Why Use an Attorney to Close on Your Home Sale or Purchase





In Real Estate closings or settlement in many states, a buyer or seller can choose to use an attorney or a title company authorized by the state to conduct real estate closings.  If you live in New York or California, you know or your Realtor will quickly inform you that there is only one part allowed to settle real estate transactions.  Thus, this post specifically address Virginia real estate transactions.

As a Realtor, I am frequently asked by a buyer or seller whether they should use a title/escrow company or an attorney.   This is a question to be resolved early in the purchasing process to ensure the house transfers to the new owner on the day noted in the contract.

Frankly, my first response is always to clarify that not every attorney is a real estate attorney.   Attorneys typically concentrate on a limited number of fields of law such as personal injury, wrongful death and such or perhaps real estate, wills and trusts.  In large offices, there can be attorneys specializing in wills and trusts and another specializing in real estate.  The key, as I tell my clients, the lawyer sought to close a real estate transaction should, as a typical part of his/her day, handle real estate transactions with paralegals supporting that practice.

Upon clarifying the importance an attorney focused on real estate,
we can focus on the key differences and similarities of title/escrow and real estate attorneys:

                             Similar Work

    Title Escrow                 or                        Attorney

                             Can Order Survey
                             Can Work with Bank for Payoffs
                             Can Conduct Title Search
                             Can Order Bank Payoff
                             Can Prepare HUD(final statement of costs)
                             Can Provide Lender and Owner's Title 
                             Can keep Buyer, Seller and both Realtors
                                aware of process proceeding to Settlement
                             Receive Termite and Moisture Reports
                             Receive Copies of Repairs Bills and note
                                 on Settlement Statement if needed

                               Differences in Work

      Title Escrow                                          Attorney

Can Conduct Closing by                 Can conduct closing by
 Showing docs for buyer                  reviewing each document
 or seller to sign                               to ensure his/her client
                                                         should sign the document
                                                         and that all documents are
                                                         consistent with terms of 
                                                         the contract

                                                          Can Prepare the Deed

                                                          Can Create Power of                                                                      Attorney

                                                           Can review the Survey                                                                   noting Property line                                                                      discrepancies

                                                          Can interpret contract                                                                       language in case where                                                                 seller or buyer
                                                              takes an errant position                                                               on a term of contract,                                                                    helping the client                                                                         complete the                                                                                transaction with a 
                                                               favorable outcome

                                                          Can represent the buyer's 
                                                               or seller's interest  
                                                               throughout the closing                                                                   process.

Though there are a myriad of details that a Title/Escrow or Attorney can do as well.  There are also other details that could or could not occur in a real estate transaction that only an Attorney could handle as they require interpretation of the law.

It is a serious offense if a Title/Escrow company or a Realtor such as me start to interpret the law as that is in the scope of a trained lawyer.
Thus, use of a Title/Escrow company is very possible and is a lower cost option than an Attorney.  Yet, the buyer or seller must evaluate will the savings be worth the lack of representation.

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