Difference Between Real Estate Attorney And Title Company

The purchase or sale of a home is a big deal, regardless of how often you have done it. Whether you are the buyer, seller, or real estate agent doesn’t matter. It involves life-changing decisions with far-reaching financial and legal consequences.

What representation is needed?

The state’s regulations where the transaction happens have a bearing on the representation required. For example, some states require an attorney to be present in a real estate transaction.

Others, like Florida and Virginia, do not, so buyers and sellers use their discretion to find an attorney or a title company to handle the closing of their real estate transaction.

At the point of transfer, most buyers are usually already overcome by the seemingly extra transaction costs, and the thought of adding more is not welcome.

Title Company or Attorney?

A common predicament is engaging real estate attorneys versus title companies or having both.

Having both is ideal, but each option has its unique advantages and limitations. Your experience will depend on the specific service provider you choose.

Real Estate Attorney

Read the Purchase and Sale Papers Carefully

The main role of a real estate lawyer is to facilitate the legal transfer of real estate property from the buyer to the seller.

Their work entails document preparation and review, checking whether the title is clean, facilitating funds transfer between the parties, and other real estate law aspects.

The Duties of a Real Estate Lawyer

There are many duties involved in this process that a real estate attorney handles before, during, and after the real estate closing.

These duties will be used according to whether the parties involved in the transaction engage them, the state law requirements, and what is needed for the transaction to be efficiently concluded.

A real estate attorney will review documents from all involved parties: the seller, buyer, and mortgage providor, when applicable.

This includes contracts, agreements, title transfer documents, and any other relevant paperwork. If you engage a real estate attorney, they will also attend the real estate closing physically or virtually.

Occasionally, they search for property titles to confirm they are clean and free from encumbrances. They may initiate the transfer of funds from the buyer or the mortgage lender to the seller or facilitate the whole transaction as a third party.

They are always on standby for any issues that may stall or complicate the sale.

States where you must use an attorney

It is mandatory to have a real estate attorney present for any real estate transaction in some states like North and South Carolina, West Virginia, and New York. They have to be there for some stages of the transaction.

Some states need an attorney’s title opinion letter to show that they have reviewed the title and haven’t identified anything that may deter the real estate transaction. These are North and South Dakota, Alabama, Mississippi, and Louisiana.

Occasionally the presence of an experienced real estate attorney is a requirement from the lender financing the transaction. In such a case, they represent the lender’s interests, who usually settle their fees.

When your state doesn’t require an attorney

You can enlist the services of an attorney even when your state does not require one. However, the legal jargon can be overwhelming, and you can opt for an advisor to look out for your best interests.

A real estate attorney can also connect you with other professionals to help your home purchase become a smoother process. For example, they may know a Certified Mortgage Planner.

Attorney on your side

You need to know that a real estate attorney only represents your interests if you hire them as your advocate.

If they are working for your lender, they represent the lender’s interests.

If they have been enlisted due to the state’s requirement that an attorney is present for the transaction, they are neutral parties looking out for your and the state’s collective interests.

Title Companies

estate agent and customer discussing for contract to buy house

A title company has been tasked with verifying that the title has been legitimately transferred from the seller to the buyer. A title agent facilitates real estate sales, purchases, and refinancing.

A title company comes in after the buyer makes an offer and has an agreement with the property owner. The real estate agent or attorney often enlists their services.

The participants are free to use any legitimate title company if they feel they can get better services than the company recommended.

Their first order of business is usually to conduct a title search which involves confirming who has the ownership rights and whether the seller can transfer the property to the buyer.

They also verify the legitimacy of the title and ascertain that it has no encumbrances.

This is followed by a property survey that confirms the property’s borders to ensure there will be no conflicts with neighbors over encroachment.

They will have enough information to issue the title opinion letter, which states that they have confirmed the real estate property has a valid title and is available for transfer.

A title agent also facilitates the transfer of funds by holding them in their escrow accounts until the sale is completed. This protects seller and buyer interests because they will ascertain all contract terms have been fulfilled before releasing the funds.

It also allows negotiation and modification of funds should new information about the property come to light.

A title company manages the deal’s closing by scheduling the dates, collecting and verifying documents and the owner’s title policy, and registering the transfers.

They also provide title insurance policies to protect the lender for the loan period and the owner for the duration the property will be in their possession. This covers them against any future claims on the ownership of the property or unknown liens that may not have been registered at the time of the transfer.

Home buyer and seller shaking hands

Why Do You Still Need an Attorney?

It pays to have experienced legal counsel in case anything goes wrong with the deal. So many real estate deals fail because of disagreements about pertinent issues in the contract by the parties involved. Sometimes it is the discovery of title defects that can’t be addressed.

Real estate attorneys are not strangers to contractual loopholes and issues that come up afterward that sometimes overwhelm title companies.

They will spot the issues early if you engage them from the onset. They offer protection against unforeseen circumstances as part of the package.

They are also good at drafting legal contracts and will know which clauses to put in or remove to protect your interests. They can negotiate the terms and draft addenda to capture the revised conditions. If you use a title company, you will need to engage a separate lawyer. That is an extra cost.

Attorneys provide legal advice in case the title has defects and will suggest possible remedies. They will prepare the necessary documents to remedy the issue or advise you when it’s time to let the deal go.

The title company will have experience dealing with minor issues, but some cases build up to serious legal matters requiring an attorney’s eye.

It is common to find that attorneys own the title company or it is part of a law firm that works under their umbrella. This is not a problem and can actually work in your favor as you will have a lawyer checking over all the work.

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