I’ve looked at real estate transactions from both sides now, from near and far, from agent and law clerk. And still somehow, it’s life’s illusion I recall.
With apologies to Carole King…Boy! I never knew what illusions I was living under before I gained additional insights working inside a law firm. My eyes are now wide open regarding the real risks involved of not having a client represented by a competent, non-deal killing, real estate attorney from the beginning of every transaction.
A little personal background on me, I have been licensed as a Real Estate Sales Associate for over 25 years, with 100% of my business coming from referrals. Like many solid real estate professionals, I have regularly been recognized for being a multi-million dollar producer and have been involved in hundreds of transactions.
During this same time period, I also worked as a loan officer, gaining deep knowledge of mortgage financing; been an appraiser assistant determining property values: and graduated from law school. In short, I can humbly say that I have a lot of experience and exposure to the real estate business from many vantage points.
HOWEVER, working as a real estate law clerk for Posternock Apell, PC has unequivocally proven to me that when parties do not have a real estate attorney in their transaction from the start, it is like “playing pool with a rope.”
Here are the top five insights I’ve gained:
Experience Matters: If an attorney is involved in a transaction, try to make sure she/she is an experienced real estate attorney. That way, if there are curve balls in the deal, your client can be confident that they will be handled by someone with the necessary experience.
Attorneys save agents time: As a real estate agent, I have new insight into how much time can be wasted negotiating when an attorney may do it better. This leaves us more time to work on other deals while our clients are in good hands. I get the fear that a deal may go south, but a competent real estate attorney will be driven to get the deals down that make sense for their clients. Refer your Buyer/Seller/Tenant/Landlord to a qualified real estate attorney. Let the attorney handle the contract and home inspection repair negotiations. Have the attorney push the lender for the timely delivery of the mortgage commitment and closing documents, as well as oversee the settlement for your client. We, as the agents, can concentrate on making sure that the inspection reports, certificate of occupancy and the list of tasks that no one knows we do behind the scenes are all addressed while still freeing up more time for ourselves.
The law office effect: I’ve observed that the parties involved in a transaction are more proactive and attentive when there is a competent real estate attorney in the transaction. I’m amazed at the instant assistance Dave, the Law Clerk, receives from the parties, versus Dave, the Real Estate Sales Associate. Things just move more smoothly.
More efficient processing: In addition to attention, an attorney’s understanding of the legal needs simply provides more efficient transaction processing. I am licensed to sell real estate in both Pennsylvania and New Jersey. The three day waiting period for attorney review here drove me crazy. It seemed to delay the momentum and kept tension in the transaction as a party may opt to cancel the contract after all this hard work. Having a real estate attorney involved allows documents to ebb and flow between the parties without this constant (3) business day delay.
Increased referrals: The most dramatic thing I noticed being on both the attorney and agent sides of transactions is that having a competent real estate attorney involved leads to a better level of representation and strong client referrals.
Both parties add an absolute value to the transaction, which translates into a superior level of service and protection for the client. In my opinion, there is no better way for the attorneys and the realtors to have better client relations, receive more referrals, and create a smoother transaction than to work together to unburden the clients’ transactions and provide a smooth transfer of title.
Let me share a quick story about how I saw firsthand the importance of having a competent real estate attorney in the transaction from the start. It is about a cash deal for a buyer purchasing a $250,000 vacant, post-foreclosure property, with an 8 day closing. What could go wrong? This deal was a real estate agent’s dream!
The day prior to settlement it was discovered that there were unpaid HOA fees and that there was an ongoing disagreement as to whether they were lawfully sought by the HOA. The Seller was willing to sign a letter of indemnification for the Buyer stating the Buyer had no responsibility to pay the HOA fees and the Seller would make payment of the HOA fees after closing.
Great! Many agents would go to closing figuring the Buyer was fine. Not our real estate attorney. With his experience, he felt that the Seller was not delivering clear title. Additionally, even though there was a letter from the Seller indemnifying the Buyer on fee payments, at no time did this indemnification bar the HOA from bringing suit at a later date against the Buyer in an effort to collect these HOA fees from the Seller. Thereby, potentially embroiling the buyer in a future lawsuit.
Had this property gone to closing, it might have appeared that all was well… but how would the Buyer (and others in the transaction) have felt if 6 months later the HOA had brought suit against him because the Seller reneged on payment of the fees? It’s a potential nightmare waiting to happen.
Instead, our proactive real estate attorney’s approach forced the Seller to put funds in escrow to cover the HOA fees. He also obtained written assurances from the HOA that they would never seek any amount beyond the escrowed funds. The downside was that settlement was delayed. The upside was that the HOA represented the escrow was sufficient to cover the fees settlement and that they buyer would never be subject to a future claim.
The end result: The closing still took place in under 16 days. As important, potential risk was mitigated and the client was extremely satisfied. He raved about both his agent and attorney
I have learned so much from this experience “on the other side of the fence”. I am convinced without exception after being on both the attorney and realtor side, that the dream real estate team is having a competent real estate attorney along with a competent Realtor who both share the same purpose which is “to unburden our clients of the stress that comes with a real estate transaction, by providing a smooth transfer of title.”
Contributed by: Dave Rosania, Law Clerk. Posternock Apell, PC and Real Estate Agent. Reach out to Dave at [email protected]