Why Do You Need a Closing Attorney in Real Estate Transactions?
To put it simply: it’s the law.
From state to state this requirement varies. Some places, like our neighbors in Tennessee, only require the use of a title agency.
Other states, like Georgia, require an attorney to do the title work and loan disbursements.
This isn’t the only reason we recommend you use a closing attorney when buying/selling your home, though.
Like most people know, law school is full of reading. Non-stop reading. So when you’re drowning in paperwork when going through this process, it helps to have a closing attorney on standby to help you understand what you’re reading.
It’s no secret that most formal documents and contracts are written with confusing language and way too many words.
It can trip up just about anyone if you’re not paying close enough attention.
That’s why a closing attorney comes in handy! These documents are literally in our wheelhouse; we’re used to reading their confuddled sentences and “legalese.”
If anything isn’t 100% clear to you in the purchase agreement, titles, or any other documents, we’re more than happy to help you sort it out.
Making sure each side understands what deal they’re entering into is important to us and crucial in order for the purchase to go smoothly.
2. Review Title
First of all, a title search is an examination of county records to see the property’s title history.
The records examined include deeds, court records, name indexes, property indexes, and several others.
We do title searches to verify that the seller is the actual legal owner of the property.
It also makes sure the title isn’t clouded- no mortgage claims, liens, title claims, judgments, or any other outstanding claims that can jeopardize the grantee’s right of ownership.
Having a closing attorney to assist in this is beneficial in the event that something is wrong with the title.
This could mean you have to have a quiet title proceeding, which usually happens if there is someone else who claims to have title to the same piece of property.
And if there are liens on the property, your closing attorney might try to negotiate those amounts down for you or the buyer.
To put it simply, having a closing attorney at your disposal can make or break your transaction (regardless of your state being “an attorney state.”)
In most cases, the closing attorney is looked at as the middleman.
They help coordinate and communicate between the buyer and seller but not only that!
They also keep in touch with surveyors, mortgage companies, inspectors, and any other party that plays a part in the deal.
And with so many moving pieces, it’s easy for buyers and sellers to get overwhelmed.
- Who needs to be where?
- What time is the inspection happening? And how many days do they have to complete it?
- Do I need to bring anything to this meeting?
Instead of you having to worry about all of those different dates, meetings, and details, your closing attorney will have it under control.
Usually, they’ll be the ones to schedule the closing date and keep everyone aware of what they need to do beforehand.
A closing attorney is kind of like your event coordinator.
They’re pulling all the strings to make sure this transaction happens smoothly and in a timely matter.
This might be the most important part of a closing attorney’s job!
They’re literally responsible for “closing” the transaction, meaning they have to distribute all the money.
Once everything is said and done, the closing attorney will update the title and record the deed.
Then we get to the good stuff: paying everyone out.
Your closing attorney will make sure all fees get to where they need to be. Such as:
- Brokerage fees
- Homeowner insurance premiums
- County taxes that are due
- Payoff for existing loans
- Inspection fees
- HOA dues
- Mortgage fees
- Seller’s proceeds from sale
ROLE OF CLOSING ATTORNEY
So, I’m sure you’re probably wondering who does the closing attorney “represent?”
In general, a closing attorney doesn’t necessarily represent either the seller or buyer.
Usually, they’re representing the lender that’s providing the loan.
But that doesn’t mean you can’t hire your own, personal attorney for a transaction to represent you alone.
Many times, there are three different attorneys in any given real estate transaction. One for each party!
Sometimes this can be overkill, but many people find it more comforting to have an attorney that’s exclusively on “their side” of the transaction.
As a buyer, you need to be aware that in some circumstances sellers will try to induce you to use their closing attorney.
This happens often when buyers are purchasing a home from a builder.
The builder or their lender will offer to pay a portion of your closing costs if you agree to use the builder’s closing attorney.
Saving money, though, isn’t always worth it when you remember that the builder’s attorney represents the builder and NOT YOU!
Therefore, if you are concerned about making sure your interests are protected at closing, you should choose your own closing attorney.
And if you just REALLY want to take advantage of the builder paying your closing costs, you can agree to close the transaction with seller’s attorney.
BUT, at the same time, hire your own attorney to review all of the closing documents prepared by seller’s attorney.
This way you know your interests are protected and you’re still getting a good chunk of closing costs paid for by the other side.
Making sure you’re entering into a fair transaction is definitely more valuable and important than saving a few thousand dollars by the seller covering closing costs.
So never be afraid to hire an attorney on the side or to demand an unbiased closing attorney be used.