Very few real estate transactions in New York are closed without help from one or more attorneys. So why are attorneys important to the transaction and who should have an attorney represent them?
The short answers are important as all parties to the transaction should have a lawyer. Of course, these answers bring up more questions. For an explanation, I turned to Patrick Evans and Roger Linden, attorneys for the Jefferson-Lewis Board of Realtors and the St. Lawrence County Board of Realtors, respectively. Both are retained by the associations to advise and represent them in legal matters.
I will start with the attorney’s role. The attorney can be retained to represent the seller, the buyer, or the lender – bank, mortgage company, etc. An attorney should be consulted to review the contract when a seller lists a property. After the seller and buyer have agreed to a purchase offer, it’s a good idea to have an attorney review clause also. In addition to these, when representing a seller, Mr. Linden prepares all documentation, re-dates and reviews the abstract, ascertains if there are outstanding mortgages or liens and arranges for them to be discharged at time of closing, prepares the closing statement which details money owed by the buyer to seller at closing, draws up a bill of sale for any personal property in the transaction (household goods, appliances, tools, etc.), and prepares commission checks. He also determines how to present the transaction to federal tax authorities as it may be taxable if it’s over a certain amount or the property was not used as a primary residence for a specified period of time.
“A good seller attorney gets a head start and cures problems before they get to the buyer attorney,” Mr. Evans said.
So what does a buyer attorney do? In addition to reviewing the purchase offer on behalf of the buyer, Mr. Evans said he wants to ensure the bank, the seller, and agents each deal fairly and legally. He helps protect the buyer’s interests by checking zoning and common restrictions, reviewing paperwork a seller’s attorney sends and comparing it to what the buyer has, reviewing seller concessions, and advising the buyer in all aspects of the sale. Mr. Linden points out that the buyer attorney also checks to see if the title is marketable and there are no outstanding claims on it, helps the buyer obtain title insurance if it is required or desired, records the transfer with the clerk’s office, and oversees the distribution of proceeds of sale, including paying off the seller’s obligations.
I asked both why the buyer needs an attorney since the lender has one anyway and the lender is loaning the buyer the money. They pointed out that while the lender’s attorney can represent both the buyer and the lender, if there is a conflict of interest, the lender is the attorney’s client and an attorney owes primary loyalty to his or her client. The lender’s attorney looks for a “good” title (no liens or questions as to ownership). He or she is not usually concerned with issues of zoning and has no role in a dispute between the buyer and seller.
Both Mr. Evans and Mr. Linden pointed out that a good attorney can help and smooth the process of the transfer of property. Of course there is a fee involved to hire an attorney, but the money spent is more than equal to the money and time saved in the long run.
From May 14 to 18, Jennifer Stevenson, St. Lawrence County Board of Realtors president, and I had the opportunity to attend the National Association of Realtors’ Mid-Year Meetings in Washington, D.C. The highlight of the week was the “Realtor Rally to Protect the American Dream” on May 17 at the Washington Monument. We joined an estimated 13,500 Realtors from all over the country. We also met with Congressman Bill Owens, D-Plattsburgh, and U.S. Sens. Charles Schumer and Kirsten Gillibrand to express concerns about and support for various items of pending legislation. We also attended committee meetings and information sessions that dealt with many aspects of the real estate industry.
LANCE M. EVANS is the executive officer of the Jefferson-Lewis Board of Realtors and the St. Lawrence County Board of Realtors. He has lived in the north country since 1985. Contact him at email@example.com.