Buying a home will be one of the most important decisions of your life. It will involve not only a large sum of money but also the intricacies of real property law. Unfortunately, making a home purchase stressful, and without professional guidance, things can quickly go wrong. Hiring a buyer’s agent will overcome many of these hurdles, but a real estate attorney is just as vital and, in New York State, mandatory.
We’ve discussed the importance of a real estate attorney in conducting due diligence. It is essential to take a step back to discuss how to approach hiring an attorney. You can rely on your real estate agent for a recommendation, but it is up to you to conduct your interview and make the final decision on whether or not to bring them aboard. We provide a roadmap to help you with this critical decision.
Hiring a Real Estate Attorney in NYCHiring a Real Estate Attorney in NYC
Each state has its own set of real estate rules. For most of them, attornies are not required. However, New York State is one of several laws requiring their physical presence in a real estate transaction. A broker can help you with many tasks that border on legal areas, but only an attorney is allowed to prepare the home purchase contract and rider, perform due diligence, a property title search, and close the deal.
The due diligence process in New York City takes on added meaning. Your attorney needs to examine the building’s financials, board minutes and offering a plan for your co-op or condo purchase. O top of the standard contractual work.
Even if it weren’t a requirement, you’d still want to have one. Real estate transactions can be complicated and involve a significant amount of paperwork and interested parties. If something goes wrong and legal issues arise, buyers will need an attorney to sort things out.
Therefore, you must ask how much experience they have with co-ops or condos in New York City and what their process entails.
How to Find a Real Estate Attorney in NYC?How to Find a Real Estate Attorney in NYC?
Choosing a real estate attorney is an important decision you need to make when buying New York City real estate. Besides a buyer’s agent representing your best interests in a real estate transaction, an attorney represents your legal and contractual rights. They can help you navigate the complicated and often contentious process.
Your buyer’s agent is an excellent source for a recommendation. Combined with their colleagues, they have done many transactions over the years and can confidently recommend an attorney. By the way, an attorney cannot accept a referral fee from a real estate broker, which should raise your confidence that they are on your side since there are no outside incentives.
Take a referral from a friend with a grain of salt. Remember, individuals will probably only buy or sell a home three or four times in a lifetime, at most. That means they have limited experience using a real estate attorney. Still, this is better than randomly picking a real estate attorney blindly from an advertisement or Yelp review. There are certainly plenty of lawyers advertising for your business. However, you have better options than merely picking one from the Yellow Pages (old school) or an Internet advertisement.
You are certainly welcome to interview the lawyer. You can ask about their experience and see if you are comfortable working with them. In addition, the Office of Court Administration allows you to check that the lawyer is licensed and in good standing.
How Much Does an NYC Real Estate Attorney Cost?How Much Does an NYC Real Estate Attorney Cost?
The attorney’s fee is typically paid at closing. To avoid unpleasant surprises, you will want to understand the total cost upfront. Usually, the fee is flat from $1,500 – $3,000, but there are costs involved that get passed on to you. These include essential office and administrative expenses, such as copying and printing. Many lawyers state their fees and costs at the initial discussion, which are agreed upon in writing.
In your interview process, you should find the lawyers’ fees are all in a narrow range. It would help if you approached any outliers with skepticism.
What Is Their Specialty?What Is Their Specialty?
Unfortunately, real estate may be one of many legal niches they practice. Many lawyers have multi-tiered practices and include a hodgepodge of areas, such as real estate, family law, bankruptcy, and personal injury.
Ideally, you want your attorney to focus exclusively on real estate. However, if they have more than one practice area, you want to make sure your lawyer spends most of their time on real estate. You can ask how many real estate clients they have versus other areas.
Is Your Attorney Responsive?Is Your Attorney Responsive?
In more significant practices, it is not uncommon for a lawyer to have a support staff. You want to obtain assurances that you can reach your lawyer when an issue comes up. While a lawyer may promise that this is the case and always personally involved in all matters, a reference check can quickly let you know if this is the case. You can also ask them if they were responsive to questions.
Additionally, it would help if you asked to meet the lawyer’s team.
What Does the Closing Attorney Do For Their Fee?What Does the Closing Attorney Do For Their Fee?
Your buyer’s agent helps you find the right property, advises you on the price to offer by running comparative market analysis and provides you information to use to your advantage. Then, they negotiate the final price with the seller’s agent. Once a price is accepted, you have your home inspection. At this point, your lawyer works with your agent.
In New York, the seller’s attorney prepares the contract’s first draft. Your attorney may add additional terms to a contract rider based on your needs and wants. They also conduct due diligence, which takes on extra meaning in New York City condos, co-ops, and townhouses. Among other things, your lawyer should be checking to see if the building has any lawsuits, liens, seeing how significant improvements are handled, building permits, speaking to the property manager, and reviewing the building’s financial statements. You can do some of this work yourself but highly recommended to have a trained lawyer looking too. Assuming there are no issues, both parties proceed with signing the contract.
Organizes, schedules, and closes the dealOrganizes, schedules, and closes the deal
At this point, your attorney prepares for the closing. The attorney communicates with you to ensure you are providing the necessary information to obtain your mortgage. They are also preparing the breakdown of closing cost fees you will owe to the various parties at closing. At closing, they have the documents for you to sign for you to get the keys and disburses the funds.
Attorney Services includeAttorney Services include
Compiling Legal DocumentsCompiling Legal Documents
An attorney can only draw up some documents. Probably the most important is the contract of sale, including contingencies. For example, if the buyer has any special requirements or problems are found in the home inspection, or later the purchase agreement has to include provisions for this.
Reviewing DocumentsReviewing Documents
There will be a lot of documents going back and forth. The attorney reviews each one for vague language and unclear terms that can create legal problems. If you need to sign something, have your attorney look it over first.
Provide ConsultationProvide Consultation
Property law can be dense and be intimidating for the uninitiated, even for brokers who at no point supposed to offer legal advice. However, a real estate attorney can provide consultation and advice for essential questions. For instance, what the tax consequences of a transaction would be.
Conduct Due DiligenceConduct Due Diligence
In NYC, due diligence is conducted before the property goes under contract. Your attorney will review the building financials, board minutes and look into any outstanding liens against the property. Additionally, any defects could mean a price reduction and all else that could affect the property’s sale, including the potential increase in common charges/maintenance costs.
Title SearchTitle Search
After a purchase agreement is signed, the state of the seller’s title to the property is filed. An attorney will either do this or review the title abstract or title insurance commitment.
Close the SaleClose the Sale
At the closing, the deed and other closing documents are drawn up. Both real estate attorneys, from the buyer and seller, must be present for this. They’ll explain the nature, amount, and fairness of the documents and closing costs. There may also be last-minute disputes which your attorney will handle and ensure your rights are protected.
If you feel peeved that hiring an attorney is a legal requirement in NYC for a home purchase, don’t be. They ensure a much smoother transaction and help solve the legal disputes almost guaranteed to happen.
Other stuffOther stuff
These are significant issues, but there are still other things to cover. For example, you may have unique circumstances that you will want to ensure your lawyer can handle. In this case, ask if they have ever confronted this in the past and how they handled it.
Final thoughtsFinal thoughts
Exploring these areas should give you the information you need to make an informed decision. At the due diligence stage, communication with your real estate attorney is likely increasing. However, do not underestimate your need to feel comfortable discussing things with your attorney. You should feel confident in their ability to handle the job and that your case is essential to them.