Do You Really Need a Real Estate Lawyer?

Gearing up to buy? Besides having an agent represent you in the purchase, consider including a real estate attorney on your team. An attorney will act as an extra pair of eyes to spot any potential legal red flags. Image: Liz Foreman for HouseLogic

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I didn’t go far when I bought my first house, a 1970s townhome two doors down from my mom’s place in Columbia, Md. Even though I’d been in every house on the block growing up and knew their features and quirks, I didn’t know anything about buying property. So naturally I hired a real estate pro to help me find and negotiate the best deal. And, I supplemented my real estate team with an attorney.

My husband, Al, and I went on to purchase dozens of properties, and we always included an attorney on our real estate team (in addition to an agent). Sometimes, it was because we bought where it’s customary to use attorneys to close real estate transactions — like in Al’s hometown near Buffalo, N.Y. That’s just the way things are done there.

But we also hire an attorney because we like having an additional set of eyes. When things go smoothly —  and they usually do — the amount of time the attorney works for us is minimal. When things go wrong, we have a lawyer familiar with the deal teed up to handle any legal particulars.

Here are five instances where an attorney makes sense in addition to a real estate pro:

But before that, learn more about the role of a real estate lawyer:

1.  Your First, and Subsequent, Home Purchases

No doubt you have a buyer’s agent representing you to help you negotiate the best price, find the right home, and move the sale along expertly and efficiently. But if you want legal advice, only an attorney can do that. Plus, an attorney can spot legal red flags before they become big issues.

A friend of mine bought a property where the fence was built well over the property line. Her attorney noticed the issue at closing and convinced the sellers to pay to have the fence moved where it belonged.

Another friend was alerted by an attorney that the home she was buying had a deck that wasn’t approved by the community association and was built over the neighbor’s property. The attorney worked with the HOA to get deck approved. And the sellers paid to rebuild it so it was no longer on the neighbor’s property.

Even if you don’t experience these kinds of issues in your purchase or sale (and I hope you don’t), an attorney:

  • Gives you an additional review of the contract and contingencies involved in what is likely the biggest purchase you’ll ever make.
  • Stops you from signing optional closing documents that aren’t in your best interest. If your title company slips you a release absolving it of negligence even if it does something wrong during your closing, you might not notice it among the plethora of papers you’re signing. But, your attorney’s going to catch it.

2.  Investment Rentals

My husband and I are huge fans of investing in vacation or rental properties, which we sometimes renovate and resell. We once bought a single-family investment home in Baltimore that came with a set of rather difficult tenants.

Local law gives tenants the right of first refusal on whether to purchase the unit. They said they wanted to buy but couldn’t qualify. As the issue dragged out, the attorney advised us through the unfortunate eviction process.

When you invest in a home you plan to rent out, an attorney can guide you through an eviction as well as zoning, building, health code, and local or state rental laws that affect your property.

You may also want to talk to your lawyer about the different ways to hold title to your investment property. Our attorney in Pennsylvania told us to hold title there as a limited liability company to shield us if we were ever sued. When tenants there set our house on fire (twice!) then sued us for disposing of their water-saturated, moldy possessions weeks after the fire department declared the house uninhabitable, the LLC did, indeed, protect us.

By the way, the vast majority of our investments have been rewarding experiences. But having legal counsel in the wings sure comes in handy when the unexpected occurs.

3.  Foreclosed Homes

You’ve probably heard about the great deals you can get when you buy a foreclosed home at a foreclosure sale. But you rarely hear about the risks. An attorney can help you deal with those risks, if necessary.

Risks vary from place to place because each local jurisdiction that holds a foreclosure sale sets its own rules. A county might allow homeowners whose properties are sold at a foreclosure auction to buy back their homes within a set time period, such as a year. Another may offer foreclosed homes with liens, or claims against the property, attached. And at some foreclosure sales, property liens transfer along with the property — meaning you’ll have to pay off the liens if you buy the property.

4.  Land

We’ve never bought land, but if you’re purchasing land to build a custom home or buying an undeveloped lot and seeking approval to build, it would make sense to hire an attorney. You could run into issues with zoning, titles, undisclosed environmental hazards, or a new highway scheduled to cut through your backyard — just to name a few potential problems.

An attorney can make sure you get clear title with no access issues; figure out what can be built on any nearby lots; and advocate for you if an inspection turns up a serious environmental concern like toxic waste.

5.  Short Sales

Thankfully, we’ve never had to do a short sale, where you sell your home for less than you owe on the mortgage. If we ever do, besides working with a REALTOR® who’s skilled in these transactions, I would definitely have an attorney review the paperwork to make sure the lender had no right to come after us to recoup its loss after the sale was finalized.

Your real estate agent is the key player in your property transaction. But when it comes to the biggest purchase you’ll likely ever make, it’s smart to have an attorney on hand, ready to field any legal issues that might crop up.