For many people, buying or selling a home will be one of the most important, complex transactions they’ll ever enter into. With so much at stake, sellers or buyers often hire a closing attorney to represent them throughout the process. But what, exactly, do they do? If you’re thinking of selling or purchasing property soon, here’s all you need to know about the role of a real estate attorney.
What Is A Closing Attorney?
Given the many different tasks which closing attorneys are responsible for, they are sometimes also referred to as escrow agents, settlement agents, or real estate attorneys. All these names ultimately describe the same thing: legal professionals who are involved in facilitating a real estate transaction.
In brief, closing attorneys represent the parties to a real estate transaction to ensure that the sale of the property is legally valid and binding and is completed appropriately. In some transactions, both the buyer and seller hire attorneys to represent them, whereas in other cases, only one party will hire an attorney or the parties may have a title company handle the transaction. The title company is required to represent the interests of all parties to the transaction equally and impartially.
Am I Required to Hire An Attorney?
In the state of Florida, the parties to a real estate transaction are not legally required to hire an attorney, and some parties opt to appoint a title insurance company to manage the closing process instead. However, as will soon become clear, there are many advantages to hiring an attorney to act on your behalf in your real estate transaction.
Let’s Take A Step Back: What Is A Real Estate Transaction?
Many people who have never entered the property market before are under the impression that signing a contract is all there is to buying a home. However, signing the contract of sale is, in fact, only the beginning of the transaction, and there are many different steps that make up the transaction as a whole. These include conducting title searches, arranging title insurance, drafting and reviewing transaction documents, distributing funds, and ensuring the title is transferred smoothly. A closing attorney will take care of each step of the transaction, ensuring it is legally compliant and that your interests are protected.
The Role of Your Attorney At Each Stage Of The Transaction
To help you understand the various tasks which your attorney will take care of in the real estate transaction, we’ve set them out step-by-step below:
1. Drafting and Reviewing Transaction Documents
Once a seller has accepted the purchaser’s offer, one of the first steps is for a contract of sale to be drawn up. If there are realtors involved, the realtors representing the parties will negotiate and draft the terms of the contract. If there are no realtors involved or if both parties have appointed an attorney, usually, the purchaser’s attorney will prepare an initial draft of the contract of sale, which the seller’s attorney will then review.
The buyer’s and seller’s respective attorneys may attempt to negotiate certain terms and conditions of the contract to better protect their client from certain risks. Whether you’re the buyer or seller in a real estate transaction, this is one of the major advantages of hiring a lawyer: they will carefully draft and/or review all the transaction documents to ensure they are ‘watertight,’ that you are reasonably protected from the risks of the transaction, and that the wording of the contract is clear and unambiguous. They’ll also explain complicated legal jargon to you so that you have a clear understanding of what you are agreeing to and what your rights and duties are.
2. Acting As The Escrow Agent
In addition to reviewing transaction documents, one of the most important roles of a closing attorney is acting as an escrow agent. An escrow agent holds the buyer’s deposit and the title deed pending the completion of all the steps in the real estate transaction and releases the funds and documentation once all of the steps required by the contract have been implemented. Holding escrow funds is an enormous responsibility: you want to be sure that the attorney you appoint is a reputable professional of high ethical standards who will keep the funds secure and separate from other funds.
3. Property Title Searches
An important aspect of a real estate attorney’s job is conducting thorough title searches and carefully scrutinizing title documentation to ensure that there are no title defects that would impact the transfer of ownership to the seller. The appointed attorney will investigate the chain of title and the history of the property to confirm that there are no easements, encumbrances, liens, unknown mortgages, or outstanding property taxes – among other potential issues – which would impact the purchaser’s rights to the property down the line.
In lay terms, a title search is like checking that a property has no ‘skeletons’ in the closet. Some parties conduct title searches before signing a contract of sale, whereas most often the contract will make a clean title search result a condition of the contract.
4. Arranging Title Insurance
Once the closing attorney has conducted a title search, they will provide the results of the title search to a title insurer and arrange title insurance for the transaction. Title insurance protects the buyer in the event that an issue with the property’s title later comes to light. Many real estate attorneys also provide title underwriting services and can prepare the necessary policies.
5. Preparing and Reviewing Other Transaction Documents
The contract of sale, title search results, and title insurance contract aren’t the only documents required to implement a real estate transaction. Indeed, depending on the nature of the property being sold, there can be many more, such as Homeowner Association documentation, property inspection reports, and documentation relating to warranties included in the contract of sale.
Unless the property is being fully paid for without third party financing, (a ‘cash’ transaction) there will also be loan documentation to be reviewed and signed. Depending on which party they are acting for, closing attorneys will prepare and review all this documentation and contact with the other party’s attorneys (or the lender’s attorneys) to negotiate changes as necessary.
6. Managing Closing and Distributing Funds
Once the various steps of the transaction have been completed, the closing attorney – acting as the escrow agent – will oversee the release of the title documents to the purchaser and the funds to the seller. They will ensure that the deed is registered in the purchaser’s name. In terms of Florida’s statutes, this is the point at which the purchaser finally becomes the owner of the property in law.
Why You Won’t Regret Hiring an Attorney
Taking a step back from the process discussed above, there are many more general aspects to a closing attorney’s role which are vitally important. For example, there are numerous parties involved in a real estate transaction – attorneys, lenders, property inspectors, insurance brokers, and public officials assisting with title transfer – and managing communications and administrative processes with all of them is a major task.
With an attorney representing you, you won’t need to worry about any of this: they will attend to all communications and document preparations on your behalf. They have years of experience dealing with the many processes and parties involved in real estate transactions and will ensure that all stages of the transaction are properly attended to.
Coral Springs Closing Attorney You Can Trust
At the Law Offices of Gary I. Handin, P.A., we have over 50 years of experience assisting our valued clients with their real estate transactions. Our lawyer and experienced staff have acted as closing attorneys in a range of residential, investment, and commercial real estate deals and are eminently qualified to assist you with the sale or purchase of your home.
Contact us at 1-877-815-4560 today to find out why our lawyer is one of the most trusted legal professionals in Coral Springs.