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. This makes 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 NY 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 him/her aboard. We provide a roadmap to help you with this critical decision.
Table of Contents
- Why you need a Real Estate Attorney to close a deal
- How to find a Real Estate Attorney in NYC?
- Where to find a Real Estate Attorney?
- How much does representation cost?
- What is his/her specialty?
- Can you speak to your lawyer directly, and are they responsive?
- What does the attorney do for their fees?
- Attorney Services Rendered
- Other stuff
- Final thoughts
- Recommended Real Estate Attorneys
Why you need a Real Estate Attorney to close a deal
Each state has its own set of real estate rules. For most of them, a real estate attorney is not required. New York State, though, is one of several in which law requires their physical presence in a real estate transaction. A broker can help you with a lot of tasks that border on legal areas, but only an attorney is allowed to prepare the home purchase documents, 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. This is on 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, an attorney will be needed to sort things out.
Therefore, it is imperative that you ask how much experience he/she has with co-ops/condos, and what his/her process entails.
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. He or she can help you navigate the complicated and often contentious process. Besides a buyer’s agent who represents your best interests in a real estate transaction, an attorney represents your legal and contractual rights.
Where to find a Real Estate Attorney?
Your buyer’s agent is an excellent source for a recommendation. Combined with his or her colleagues, they have done many transactions over the years, and can confidently recommend an attorney. By the way, an attorney is not allowed to accept a referral fee from a real estate broker, which should raise your confidence that he/she is on your side since there are no outside incentives.
Take a referral from a friend with a grain of salt. Remember, individuals are probably only going to buy or sell a home three or four times in a lifetime, at most. That means he or she has limited experience using a real estate attorney. Still, this is better than randomly picking a lawyer blindly from an advertisement or Yelp review. There are certainly plenty of lawyers advertising for your business. But you have better options than merely picking one from the Yellow Pages (if you are old school) or an Internet advertisement, however.
You are certainly welcome to interview the lawyer. You can ask about his/her experience and see if you are comfortable working with him/her. The Office of Court Administration allows you to check that the lawyer is licensed and in good standing.
How much does representation 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. You should approach any outliers with skepticism.
What is his/her specialty?
Unfortunately, real estate may be one of many legal niches he/she practices. 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, in the event he/she has more than one practice area, you want to make sure your lawyer spends most of his/her time on real estate. You can ask how many real estate clients he/she has versus other areas.
Can you speak to your lawyer directly, and are they 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 that he/she is 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 he/she was responsive to questions.
Additionally, you should ask to meet the lawyer’s team.
What does the attorney do for their fees?
Your buyer’s agent helps you find the right property, advises you on the price to offer by running comparative market analysis, and providing you information that you can use to your advantage. He or she negotiates the final price with the seller’s agent. Once a price has been accepted, you have your 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. He or she is also conducting 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 it is 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 deal
At this point, your lawyer prepares for the closing. The attorney communicates with you to ensure you are providing the necessary information to obtain your mortgage. He or she is also preparing the breakdown of closing cost fees you will owe to the various parties at closing. At closing, he or she has the documents for you to sign in order for you to get the keys and disburses the funds.
Attorney Services Rendered
Compiling Legal Documents
Some documents can only be drawn up by an attorney. Probably the most important is the contract of sale. 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.
There will be a lot of documents going back and forth. The attorney is there to review 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.
Property law can be dense and be intimidating for the uninitiated, even for brokers. 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 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 whether there are any outstanding liens against the property. Additionally, if any defects could mean a price reduction and all else that could affect the sale of the property, including the potential increase in common charges/maintenance costs.
After a purchase agreement is signed, the state of the seller’s title to the property must be established. An attorney will either do this or review the title abstract or title insurance commitment.
Close the Sale
At the closing, the deed and other closing documents must be drawn up. Both 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 to solve the legal disputes that are almost guaranteed to happen.
These are significant issues, but there are still other things to cover. You may have unique circumstances that you will want to ensure your lawyer can handle. In this case, ask if he/she has ever confronted this in the past, and how it was handled.
Exploring these areas should give you the information you need to make an informed decision. However, do not underestimate your need to feel comfortable discussing things with your attorney. At the due diligence stage, communication with your lawyer is likely increasing, and you should feel confident in his/her ability to handle the job and that your case is essential to him/her.
Recommended Real Estate Attorneys
Lori J. Braverman, Esq.
Attorney at Law
280 Riverside Drive
New York, NY 10025
Lisa Breier Urban, Esq.
The Breier Deutschmeister Urban Fromme Law Group, PLLC
156 Fifth Avenue, Suite 600
New York, New York 10010
Gordon I. Remer, Esq.
1359 Broadway, Suite 2001
New York, New York 10018
Seth A. Romanick, Esq.
Romanick & Skolnick, PLLC
142 Joralemon St., Suite 5A
Brooklyn, NY 11201