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Real Estate Attorney vs Title Company- What Are the Differences?

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The purchase or sale of a home is a big deal for anyone who finds themselves in that situation, regardless of how many times you have done it. It doesn’t matter whether you are the buyer, seller, or real estate agent. It involves life-changing decisions with far-reaching financial and legal consequences.

The state’s regulations where the transaction is going down have a bearing on the kind of 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. This presents the most critical life-changing decisions in real estate transactions.

At the point of transfer, most buyers are usually already fatigued by the seemingly extra costs of the transaction, and the thought of adding more is not welcome. A common predicament is usually between engaging real estate attorneys versus title companies or having both.

Having both is the ideal situation, but each option has its unique advantages and limitations if you have to choose. Your experience will depend on the specific service provider you choose. Let us see what they are all about. Read on for the differences: real estate attorney vs title company.

Real Estate Attorney

Residential Real Estate Attorneys

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, and facilitating the transfer of funds between the parties, and other real estate law aspects involved.

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 pegged on whether the parties involved in the transaction engage them, the state law requirement, and what is needed for the transaction to be neatly concluded.

They will review documents from all involved parties: the seller, buyer, and mortgage lender, when applicable. These include contracts, agreements, title transfer documents, and any other that is relevant. If you engage a real estate attorney, they will also attend the real estate closing physically or virtually.

Occasionally, they conduct searches for the property titles to confirm if 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 cases that will arise which may stall or complicate the sale.

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 interests of the lender, who usually settle their fees.

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 to have an advisor who is bound to look out for your best interests.

You need to be aware that a real estate attorney only represents your interests if you hired them as your personal advocate. If they are working for your lender, they represent their interests. If they have been enlisted due to the state’s requirement that an attorney must be 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

This firm has been given the mandate to verify that the title for the real estate in question has been legitimately transferred from the seller to the buyer. A title agent facilitates the sale, purchase, and refinancing of real estate.

They come in after the buyer makes an offer and comes to an agreement with the property owner. Their services are often enlisted by the real estate agent or the attorney we just discussed if any of the participants already have one. The participants are free to use any legitimate title company if they feel they can get better services than 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. At this point, 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 the funds in their escrow accounts until the sale is completed. This protects both seller and buyer interests because they will ascertain all terms of the contract 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 period of the loan 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 should it turn out it was not the envisaged cookie-cutter deal. So many real estate deals fail on account 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 there or remove to protect your interests. They can also negotiate the terms and draft addenda to capture the revised conditions. You will need to engage a separate lawyer for this if you use a title company 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, and it works under their umbrella. This solution is the most ideal as you will get legal services for free because they can’t unlearn their legal knowledge and experience when representing your interests.

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