June 3, 2012
By Jeremiah Budin
Attorneys sometimes get a bad rap because they dress all fancy and intentionally confuse you by using words they made up on the spot, such as “litigious.” However, if you’re buying, selling, or renting a home, they could be the only thing standing between you and financial ruin. A good lawyer is like fine cheese: it may seem gross and unnecessary when you’re younger, but the older you get, the more you appreciate its true value, especially if a dishwasher falls on your foot in a Bed Bath & Beyond. Okay, disregard that last sentence. Here now, the Complete Guide to Hiring a Real Estate Lawyer:
Do I really need an attorney?
“Whenever somebody is making a decision or signing a document that potentially has legal consequences, that may have monetary consequences, they should consult someone,” says Ron Gitter, a practicing real estate attorney based in Manhattan. In other words, you’re probably not super qualified to read and evaluate legal documents, and signing a legal document that you don’t fully understand is not the best idea, especially when there’s a lot of money on the line.
But lawyers are soooo expensive
Practicing attorney Adam Leitman Bailey, author of Finding The Uncommon Deal, writes, “I have litigated cases where people have lost their life savings and homes as a result of the failure to use an attorney or the proper attorney.” For many buyers and sellers, a real estate deal is the biggest financial transaction they will ever undertake. When you think about it in those terms, it makes a lot of sense to have someone who knows what they’re doing in your corner. Also, keep in mind that even if you really like your real estate agent, agents usually work on commission and only get paid if the deal goes through, therefore an agent may be more motivated to make sure you end up buying or selling than to act in your best interests. “The consumer doesn’t appreciate that the one person who can protect them from perhaps making the biggest mistake of their life is the attorney who is going to review all of the due diligence materials in connection with their purchase,” says Gitter.
Okay, fine, I’ll get a lawyer. How do I find one?
Bailey suggests speaking to people you trust and asking them for references instead of looking online or in the yellow pages. Gitter advises people to get a lawyer who is local, or at least one who “understands the customs, practices and rules of engagement where the property is located.” He is is slightly more in favor of looking online, but admits that “picking a lawyer from an online white pages can be the equivalent of flipping a coin.”
I’ve narrowed it down to a few candidates. How do I decide?
Both Gitter and Bailey advise that if an attorney seems unresponsive, you should just move on. “Whether or not this individual promptly—and by that I mean within 24 hours—returns your phone call is [an] important factor to consider,” writes Bailey. “The number one complaint that clients have about their lawyers is the lawyers’ failure to return phone calls.” In addition to gauging their levels of responsiveness, try to figure out how much experience attorneys have by asking them questions about whether or not they’ve been involved in transactions similar to yours and whether they’ve dealt with the type of property you’re buying (condo or co-op.) In addition, Bailey advises, “For larger law firms … you should ask for clarification as to how involved your attorney and other staff members will be. If other staff members have substantial input, you should speak with them to make sure that you are as confident and comfortable with [them] as with the lead attorney.”
How much is this going to cost me?
“In today’s world, the minimum going rate for an attorney that has a good sense of what they’re doing is twenty-five hundred bucks,” says Gitter, adding, “but we live in a very complicated world today where lenders are incredibly difficult and an easy, non-problematic transaction is the exception, not the rule. There has to be a flexibility to it, because in so many of these transactions issues can come up, whether the issue involves the lender, problems with the co-op or condo, a dispute between the parties, a delay in closing, there are so many variables that people don’t appreciate.” Bailey writes, “You should ask the attorney to tell you the fee and whether it will be fixed or hourly. If fixed, what services are included in the fee and what would be additional? If hourly, what are the rates for the people involved, and what is the estimated total fee? Ask for a written engagement letter which explains all that.”
What is my attorney actually going to do?
Your attorney is there to protect your interests. He or she will review all the necessary documents before you sign them and negotiate changes on your behalf. There are different rules and procedures involved with buying and selling a condo, co-op, multi-family home, etc. and hopefully you will have selected an attorney who knows how to navigate your specific type of deal.
My attorney is beautiful, but he has a gambling problem and is convinced someone is trying to kill him. How should I proceed?
You are in the movie Michael Clayton. Don’t get into any cars with him.