Understanding the role of a real estate lawyer is foremost in deciding whether you’ll need to contract the services or advice of one. In more cases than not, the purchase of a home is the largest investment an individual or family makes in a lifetime. A typical mortgage term is 15 or 30 years, and eats up about 28% of your gross income. You will want to seek proper mortgage advice so you can be confident that you’ve made a wise and sound investment.
With so many offers being made on foreclosed homes and short sales in today’s market, more offers for purchase are rejected than are accepted. Because a real estate lawyer is an added expense, sound mortgage advice would be to add a contingency rider to the Contract for Purchase (your offer) stating that the offer is contingent upon the contracts review and approval by your attorney (within 5 days of the seller’s acceptance). If your offer is not accepted, there is no need to involve your attorney.
When you come to mortgage closing, there is generally no one at the table with your interests in mind ― the seller and their agent simply want to close the deal and collect payment. The mortgage lender wants to confirm that all paperwork is in place to ensure they have sufficient collateral and will be able to collect on the loan. Logically, none of these players will review the paperwork with their primary objective being to offer mortgage advice to protect you.
A real estate attorney is there to represent you and you alone. He/she will review all of the documentation ― including the Purchase Contract, the Title Search and Title Insurance Contract, the Deed, the Discharge of Mortgage, Promissory Note, Mortgage, Truth In Lending Statement, Survey or Plot Plan, Final Accounting, etc. The attorney will then be able to offer advice and help you remedy any errors, omissions, or technical insufficiencies.
Before the mortgage closing actually takes place, your real estate attorney should be able to explain and offer advice on the following items:
- Assumption of an existing mortgage, and your liability
- Financing options ― traditional and non-traditional, such as lease-purchase options and chattel mortgages
- Identify any title defects and determine course of action to clear any title defects
- Identify any unrecorded liens (sewer, municipal, second mortgages, etc.)
- Ascertain code compliance and any outstanding fines
- Determine zoning and restrictions, including deed restrictions
- Provide advice on title acceptance (individual, trust, corporate, partnerships, etc.) and provide necessary assistance in establishing the entity, who the mortgage lien-holder will be
- Determine that any contingency clauses in the Contract for Purchase have been adhered to or adequate means for providing the necessary remedies have been provided to insure legal enforcement of those remedies
- Review Part B of the Title Policy, where all of the Title Insurance Exceptions are detailed (including encroachments, fines, and real estate taxes)
The real estate attorney is there to make sure that you are protected and that all of the remedies or contingencies you’ve specified as part of the Contract for Purchase are adhered to. Your attorney will help ensure that, in return for your investment, you are presented with a Marketable Title, and offer advice and instructions to ensure that you’re protected.
Whether or not you decide to hire a real estate agent or real estate attorney, the best mortgage advice is to stay informed and don’t be afraid to seek professional help when necessary.