Do You Need a Lawyer to Buy a House?

Hiring a real estate lawyer is often a good idea

Glenn Curtis

Updated March 26, 2022

Reviewed by

Erika Rasure

Fact checked by Marcus Reeves

"Why do I need a lawyer?" many a do-it-yourself-oriented homebuyer often asks. "Can't real estate agents see me through?" Well, they can in most states. That doesn't necessarily mean that they should. Although using an attorney can cost thousands of dollars, it is often money well spent. Read on to find out how a real estate lawyer can help you close the deal and avoid the pitfalls.

Key Takeaways

It's often worth it to spend money on a real estate attorney, but it is not legally required in most states.
Attorneys make sure all paperwork is properly drawn up and filed with the authorities.
Attorneys do title searches and can negotiate should a search uncover a problem.
Ideally, buyers and sellers in a real estate deal should be represented by lawyers to safeguard their rights and watch their interests.
While lawyers can help if you face discrimination when buying a home, there are also less expensive options.

Contracts

Most individuals can negotiate face-to-face with another party. However, the terms of the deal must be properly recorded in a contract for them to be legally binding. Attorneys can negotiate on your behalf and also make sure that the contract adheres to all state laws. Furthermore, they can address any specific issues that might affect the future use of the property.

In many states, the buyer and the seller have three days to review a real estate contract before it becomes legally binding. Some buyers and sellers aren't aware of this. A lawyer will make the client aware of it, review the contract for legal glitches, make necessary changes, and insert useful contingencies.

Title Searches

Another vital service that attorneys perform is called a title search. Its purpose is to ensure that the property is free of any encumbrances, such as liens or judgments. The title search is essential because it reveals whether the seller has the legal right to sell the property. Although anyone can do a title search, an attorney will be able to do it faster and better. If they don't do it themselves, they'll often have working relationships with title search companies specializing in this service.

If the search uncovers something problematic, your attorney can counsel you on how to proceed. Suppose a title search reveals that the sellers must pay a lien or outstanding court judgment before selling their home. A lawyer might negotiate a price reduction on the property to compensate you for the delay. The lawyer may also provide the seller with suggestions or sources for financing so that they can satisfy claims.

Furthermore, attorneys can secure proof that judgments or liens have been resolved. That is important if you ever plan to obtain a mortgage or loan against the property.

Property Transfers

When one or more parties are corporations, trusts, or partnerships, the contract preparation and the ensuing negotiations are complicated. An attorney understands these different types of business arrangements and their legal boundaries within your state's law. The attorney will ensure that the contract is consistent with the law and the partnership's, trust's, or corporation's charter agreements.

Filings

Real estate deeds often need to be filed at the county and state levels. An attorney will be able to do this quickly and efficiently. In some cases, the transaction might involve property in an area where certain types of construction are not allowed. If that happens, an attorney will be able to navigate the maze of state regulations so that you can complete the transaction.

If the transaction revolves around commercial property, securing an attorney is even more critical. The attorney will be able to cut through government red tape to establish your corporation or sole proprietorship as a valid business entity for state tax purposes. An attorney can also secure your actual business license through the municipality.

Failing to file the appropriate documents at the state or county level may result in dire consequences.

If a deed is not transferred correctly, it could lead to income or estate taxes for buyers and sellers.
If building permits are not filed on wetlands, certain structures may have to be rebuilt, or owners may incur fines.
If it is a commercial transaction, and the business is not correctly registered at the state level, the business might be forced to close.

Sellers Need Attorneys Too

If you're selling a property, having an attorney represent your interests isn't a legal requirement in most states. However, not having one increases your chances of being sued by the opposing party for failure to disclose certain information. That is because an attorney must review the home inspection and disclose relevant facts about the property to the other party.

Suppose the other party is a corporation or a partnership, and the transaction is improperly completed. Then, they might sue you for not clearing the title to the property, failing to disclose certain defects, violating a corporate charter, or something else. While having a lawyer will not insulate you entirely from such litigation, obtaining legal counsel will certainly reduce your risk. An attorney will be much more likely to secure a clear title and make the appropriate disclosures.

Dealing With Discrimination

Lawyers can certainly help if you face discrimination during the home-buying process. Even though most real estate lawyers do not specialize in that area, they will probably know an attorney who does. However, don't let anyone convince you that you need to have lots of money or a high-priced legal team to respond to discrimination. Laws exist to protect everyone, regardless of income.

Mortgage lending discrimination is illegal. If you think you've been discriminated against based on race, religion, sex, marital status, use of public assistance, national origin, disability, or age, there are steps you can take. One such step is to file a report to the Consumer Financial Protection Bureau or with the U.S. Department of Housing and Urban Development (HUD).

Do I Need a Lawyer to Buy a House?

Buying a house isn't as simple as handing over your credit card and taking home your purchase. Homebuying (and selling for that matter) is a complicated legal transaction subject to state and local regulations. An experienced real estate lawyer can guide you through the step-by-step process of closing on your home. You could do all the complex paperwork yourself, but it will be extremely time-consuming, and if you don't file various permits and financial documents properly, it could cost you the sale.

What Does a Real Estate Lawyer Do?

When you hire a real estate lawyer, their job is to make sure the process of legally transferring the property occurs from the seller to the homebuyer. Their tasks may be varied, depending on the deal, but they must adhere to all state (and sometimes local) laws. Typically they prepare and review documents, oversee the transfer of funds and hold them in an escrow account, and make themselves available to answer questions. A real estate lawyer often negotiates with the seller's or buyer's lawyer in lieu of the seller and buyer speaking directly to one another during what can be an emotional process.

How Much Does a Real Estate Attorney Cost?

How much a real estate attorney will cost you depends on the job and the attorney. Some attorneys charge an hourly rate, which may vary ($150 to $350 or more) on where you live and the attorney, themselves. Some attorneys may simply charge you for each service they provide, like a home closing, or a double-checking a title search.

The Bottom Line

Having legal counsel makes good business sense because of the complexities that come with real estate transactions. Experienced real estate attorneys can help to protect your interests. They ensure that your transaction adheres to the applicable rules of your state and municipality. That way, the closing process can work to the satisfaction of all involved.