Do You need an attorney when buying or selling a property in Florida? This is a question that we receive frequently in our real estate practice at our Boca Raton real estate brokerage. The answer is both yes and no. It is not required but you do need one.
Unlike many states, Florida law does not require you to involve a lawyer in closing a real estate transaction. Real estate agents are trained to complete contracts (i.e. fill in the blanks) which are prepared by the Florida Bar in conjunction with the Florida Association of Realtors. Regardless of the experience or expertise of your Realtor, most are not attorneys. In my opinion, you do need an attorney to represent your interests as well as to protect you should problems arise. There are many potential landmines and pitfalls that can arise between the time of contract and closing. The agents at Boca Expert Realty always recommend that our clients avail themselves of the services of a good attorney.
The following article is written by Boca Raton real estate attorney James N Reyer and outlines several major reasons why hiring an attorney is important:
The Use of an Attorney in Real Estate Transactions
by James N. Reyer, Esquire
A team approach
The first point that needs to be understood is that in almost every real estate transaction, there is a team of professionals working for you. You will have a real estate agent, a mortgage broker or lender if financing is involved, and an attorney. In addition, these individuals will engage the services of a building inspector, appraiser and other service providers to work on your behalf. A real estate transaction only succeeds through a “team” approach to the process. It is important to understand that every member of your team is specifically trained to provide specific functions as part of the transaction. A Realtor is trained in finding the right property and finding the right seller or buyer for you. They are also trained in filling out standard contracts which have been prepared by the Florida Bar in conjunction with the Florida Association of Realtors. However, Realtors are neither trained nor qualified to recognize some of the legal nuances which are part of every transaction. In addition, Realtors often act in the capacity as “transactional agents” which means that although they owe you a duty to treat you fairly and act in an ethical manner, they ultimately represent the transaction. If you hire an attorney, the attorney in a real estate transaction represents you! The role of the attorney is to act as your advocate, representing your interests alone, regardless of the consequences.
The Purchase and Sale Contract
The starting point in any attorney-client relationship in a real estate transaction starts with the sale and purchase contract. Florida real estate transactions most always start with one of the several standardized contract forms used in our real estate transactions. Often there is confusion by a party to a transaction when they are asked to submit a written offer, not knowing that in effect what they are actually doing is signing what may become a binding contract. Most folks make the common mistake of assuming since they are using what they are told is a “standard contract form”, that the terms and conditions of a real estate transaction are the same in all deals and that there are not any terms and conditions which may differ in their transaction. Our clients will often look at just the numbers and the closing date and little else. Of course, a contract has so much more to it than just a simple recitation of what is being purchased, how much is being paid and when the closing will occur. The contract is obviously a legal binding agreement which sets forth all terms and conditions of the transaction to come. It is not the job of your Realtor or any other party to the transaction to explain the terms and conditions of a contract you may sign with you. It is the rare party to a transaction that actually reads the entire contract or understands what it says. Once your offer is accepted and you have a binding contract, you are bound by the terms and conditions you have agreed upon whether you understand or are even aware of them.
The role of the attorney from the beginning of the transaction is to explain the contract to you. The attorney will review not only the monetary aspect of the contract but the legal requirements as well. These issues range from inspections, contingencies, financing, repairs, approvals and which party is responsible for paying costs and fees. There are special issues dealing with such items as associations, mold and special assessments which can be potentially expensive or detrimental to your interests if not handled properly. No two real estate transactions are the same - your contract should deal with your specific wants and needs in your transaction. It is the job of your attorney to make sure that your contract reflects the way you wish to proceed. In addition, there may be certain unique requirements or estate planning issues for which only an attorney is qualified to advise you.
The issue of inspections is the next issue with which an attorney can be of assistance. Many questions arise soon after the contract is signed that an attorney can answer for you. Does your contract require the seller to make any repairs? If so, what items must be repaired? If not, what are your rights? Do you have a mold or termite issue? What is the responsibility of the seller versus the seller’s association? What are the timeframes in which inspections and repairs must be done?
Perhaps the most important issue with which an attorney can assist you is the matter of title. The primary goal of an attorney in a real estate transaction is to make sure that the seller in the transaction has good title to the property and that the seller has the legal right to convey that title. In addition, an attorney will be able to determine whether there are any liens, judgments or encumbrances on the property which will affect the buyer’s ownership. There are also many important issues as to how a buyer takes title to the property which may be important for estate planning and asset protection. Although a buyer will always get title insurance to a property which is being purchased, it is much easier to avoid problems before the closing of a transaction with the use of an attorney as opposed to making a claim and dealing with the title underwriter after the closing. Just because you receive a title insurance policy does not necessarily mean that you are obtaining good title to your property.
The issue of title becomes ever more important when dealing with a short sale or bank owned property transaction. The title issues in these types of transactions present additional issues. Has the property been properly released from the foreclosure action? Have all proper satisfactions, releases, and terminations been filed and recorded? We have represented many sellers who are looking to sell their properties only to find out that the old owner’s foreclosure action is still of record or that the old owner’s mortgage has not been satisfied. The use of a real estate attorney in these types of transactions will ensure that all necessary steps have been taken to make sure that a buyer has clean title to their property.
Review Mortgage Documentation
We are sure that most folks are aware of the mortgage crisis which affected our economy almost a decade ago. It seems that it was not that long ago that there was a mortgage for anyone who wanted one just for the asking. In today’s market, this has changed dramatically. It can be difficult to obtain mortgage financing and to truly understand the terms and conditions that your banker or mortgage broker has provided to you. A real estate attorney can review all documentation provided to you as part of a mortgage financed transaction so that you can actually understand what you have agreed upon with your bank. The most frequent complaint we hear from our clients who have mortgage issues is that “we did not understand what we were signing”. A good real estate attorney also works with good mortgage brokers and banks and can be of great assistance in referring an honest competent loan officer to you.
Review the Closing Statement
Anyone who has done a real estate closing certainly remembers their closing statement: an often mind-boggling spreadsheet of charges, credits, pro-rations, costs, and fees. If you are obtaining mortgage financing, your lender is required to provide you with an often puzzling Closing Disclosure (“CD”). A real estate attorney can assist you in literally making the numbers add up. Are the fees and costs you are being charged proper? Are the seller and buyer each paying for the costs and fees they are required to pay under the contract and by Florida law? Are the parties being properly reimbursed for items they have paid in advance? Are proper credits being given for items which are not yet due? We find in many transactions that parties pay for items for which they are not required to pay under the contract but which are charged to them nevertheless.
Explain the closing process
When a party attends a real estate closing they often are meeting the closing agent for the first time and are proceeding on the basis of trust that all of the papers that they are being asked to sign are proper and protect their interests. A buyer may have a 125-page mortgage package thrust in front of them with the only explanation being “if you want the money, sign here”. Once a real estate closing is completed the deal is done for better or worse. “Just sign here and sign your life away” may seem humorous at the time, but when dealing with the largest financial transaction of your life why take the chance? A real estate attorney understands the closing process and can review all of the paperwork you will be asked to sign, explain everything to you in detail and ensure that what you are signing is what you have agreed upon.
Post Closing Issues
Just because the closing is over does not mean that the transaction is complete. There are still papers to be filed and recorded such as a deed, mortgage, satisfactions, and releases. The proper parties must be paid and funds distributed properly in accordance with the contract. A proper title insurance policy must be issued. The job of the real estate attorney does not end when the seller gets his or her check and the buyer gets his or her key. The real estate attorney will follow through to make sure that everything that needed to be done after the closing is done.
The final point to be made is that after the real estate transaction has been completed if you used an attorney you now have a relationship with a qualified legal professional. Have questions about the homestead exemption, property appraiser notices, and real estate taxes? - the attorney you hired is still there for you. Association questions, estate planning and tax issues relating to the property, these items are within the scope of the real estate attorney as well. Chances are also pretty good that your real estate attorney may practice in other areas of law and would be available to assist you with other legal needs.
So again - in the largest financial transaction of your life, why act as your own attorney? Using a real estate attorney is not only a good start to your real estate transaction, but also will make for a good finish as well!
James N Reyer is a Boca Raton real estate attorney. He can be reached at (561)241-9003 or firstname.lastname@example.org.
Gloria Singer is the Broker of Boca Expert Realty, a boutique Boca Raton real estate company with a focus on professional service and an unparalleled customer experience. Our select agents are amongst the top performing professionals in the field. Visit www.BocaExpert.com for information on Boca Raton, Delray Beach and Highland Beach real estate and to connect with an expert in the local market.