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So Your Friend/Cousin/Uncle Is An Attorney, Eh?

Today's closing drama, brought to you by the numbers '$550' and 'I' (that's short for "I don't DO real estate closings on a regular basis")

Buyers and sellers. We know that you have friends and family members who are attorneys. We as real estate professionals applaud them for surviving the three (or more) grueling years of law school! However, you should know that just because they had to study real estate law as a course or two while in school, they may not be experts in real estate law.

Case in point.

*Allow me to preface this story by saying that I am NOT a lawyer and that North Carolina's policies and traditions may be different than those in your state. Please consult a local expert!*

My closing today (I represented the seller) was a fiasco. The buyer's agent had originally selected a local real estate attorney for the closing-he's very good and very efficient. But then the buyer wanted to change to a 'friend of the family' who would 'do her closing as a favor'. (In NC, the buyer, seller, and lender are all represented by the same attorney at closing, buyer selects).

Define 'favor.' We'll start with the fact that he charged her $100 than the first guy her agent recommended. My seller was planning to attend closing, but his wife couldn't get off work for the drive (they now live out of state), so her documents needed to be sent to her and notarized before closing. My assistant chased that attorney for three weeks trying to get the documents sent to the wife-he kept saying he was 'too busy' and 'would get around to it' or that he was 'tied up in court.' Aha. We finally get the docs sent down at the last minute. The lender dragged around sending the package (for a 10a closing today, package finally arrived at 9a but the paralegal didn't know how to open the email....aaarrrrrghhhh.....). Could the attorney call them and ask for it? Oh no-he was 'too busy'-again. So the buyer, buyer agent, seller and myself are sitting around for an hour in the lobby til Mr Friend of the Family Attorney strolls in at 1050a. So sorry he was late, he had 'important meetings' to attend to. Oh-so we're NOT important? Thanks.

We finally sit down to close at 1130a. My seller is already steaming out of his ears because he needs to get back to work. He hands over his docs, signs the HUD-but there's no 1099 for him to fill out. You know, the 'yes, we have no bananas' double negative question form. I ask the attorney where it is-he claims he's NEVER HEARD OF SUCH A FORM. And looks at me like I have grown three additional heads in his office. I explain that he needs it for his files since he's not going to report this sale to the IRS, as my seller did indeed live in the house two out of the past five years. He says that he can 'make up' a document if it will make me happy. So I excuse myself, and call the attorney with whom I do a LOT of closings to verify what I need to get out of this guy. My Professional Full Time Real Estate Attorney says that we're probably better off having a CPA certify it, than a made up form by this guy. So my seller and I leave.

My seller says: 'This guy must not handle any real estate, you do a HELL of a lot more closings than he does.'

So sellers and buyers-if your friend or family is a full time professional real estate attorney, then we can talk about using them. But if it's a favor? Do yourself a favor and use someone who specializes. All doctors go to med school but you sure wouldn't see a proctologist for strep throat, now would you?

Posted by Leigh Brown Charlotte NC Broker/Owner on 12/14/2006 03:02 PM

Comments (51)

closing, listing agent, real estate attorney, featured post

51 Comments on So Your Friend/Cousin/Uncle Is An Attorney, Eh?

DEC

2006

Leigh, sorry to read about this fiasco....I also had a closing today with an attorney as my borrower...and everything went just fine, eventhough it took longer than usual since she was reading it all.

Leigh, I am so happy we don't use Attorneys for closings in my area. Must don't have a clue about Real Estate. I had a closing a couple of years ago where the buyer had an attorney come to closing to review docs for them. When he looked at the survey, the AC pad was 4 inches into the utility easement, a very common occurrence. His solution was to have the seller agree to escrow $65,000 so the buyer could have the left side of the house removed and moved in 4 inches so the pad could be replaced outside the utility easement! In his mind there was no other solution. I picked up the phone called the utility company and had a variance faxed over to the title company within 15 minutes. Problem solved.

Eli-one of my favorite attorneys once said, quite sagely, that the more education a buyer has, the more they want to read....i think it hits the other side of the pendulum when it's lawyers though. =)

Bryant-that sounds like a classic example of throwing around a lawyer title to make himself look big and important. sheesh. This is why my listings explicitly state that we expect to use a professional real estate attorney for closing-because the only ones who can get by the usual small stuff are the ones who see it every day.

Oh good grief... what a fiasco! I'm with BB and really glad we don't use attorneys for closings in AZ.

Now if we could just figure out how to handle the buyer's agent that is the buyer's third cousin twice removed on his mother's side...

I can relate to your story I had about 3 closing with attorneys who were friend of the family or a relative and things went really reallybad because they did not specialise in real estate. I really tried to convince my clients That they should use a real estate attorney but my advice was ignored

I agree. From time to time, I'll have a local buyer that wants his attorney friend to do the closing. Fine, I say, just sign this acknowledgement that I have warned you of the risks associated with using a non title attorney or company to conduct the closing. I have "hold harmless" document that I also use.

That stops them cold.

Leigh- My husband is a Corporate Lawyer, CPA and specializes in commercial real estate transactions and tax issues.... I get calls from friends going through divorces that will tell me some long hairy story about their marriage and they want to have my husband give them a call because they want to use him for their divorce...

You are right about Attorney's specializing in specific areas of the law...It sounded like you got stuck with someone that wasn't a Real Estate Attorney.

I used to work in Massachusetts which used attorneys - one for the buyer, one for the seller, and one for the lender to handle the clsoing (who can also serve as the buyer's attorney). Most of the time it all went well, espeically if I could recommend the people that I KNEW would do a good job. Did have a couple of "friends" who were not versed in RE law, adn one seller (where I was the buyer) was an attorney and did all the legal stuff hersel from start to finish - what a mess that was. Too cheap I guess to pay for counsel, or maybe she could rack up the charges for her law firms billing stats. The "friend" of the family can be a problem elsewhere too - lender, inspector, etc..

Don't you just hate it! I have a few stories of my own to tell but my favorite was when a buyer bought a building lot for cash and used his "friend" the attorney. He was charged $1600 by this "friend" the attorney. It would normally have been no more than $450. It was really hard to sit there and be professional. I just keep my mouth shut but have told the story many many times to buyers who want to use their "friend" the attorney.

We use limited practice officers in Washington. They're licensed by the state bar, but they're not attorneys. It's a pretty efficient system. It also saves some of the trouble you mention above because most LPOs know what they're doing, so even if someone does do a friend a favor, the transaction can run smoothly. It's also nice for the attorneys, who can focus on other aspects of their practice.

Luckily here in california we dont use attorneys for real estate closings. An attorneys Specialization is the key to less headaches.

Leigh... You sound frustrated and I am sorry that this took place. Take a deep breathe, you'll be fine. It does stink though when not only you have to go through this, but your seller. Sorry to hear about this.

Many of you are lucky that you don't live in New Jersey. The state is split in half. From Central to North Jersey, it's an Attorney's State and south of this, title companies rule. Luckily I have a title company in North Jersey to help my clients. And it saves them $500 to $800 out of pocket. Don't get me wrong, attorney's can be good, but only if you don't have faith in the mortgage company or think that the seller might pull something.

Again, Leigh, sorry that this happened.

I guess that would be another reason why we don't put buyer and seller in the same room together for closing!

Leigh! What a nightmare! Makes me appreciate that I live in a state that doesn't do attorney closings. Hope your next one is a piece of cake!

Donna.... not always the case. Each state is different. With most settlements in New Jersey.....at least South Jersey, the buyer and seller are together 95% of the time. just an FYI..

I am always wary of people that want to use friends, family, the family pet in lieu of a qualified professional. Glad you got through the day relatively unscathed!

Amen, Leigh. We've all had it happen. Most of our Florida closings are at "Title Companies" I've had a few when the buyer/seller had an attorney involved and most are a fiasco. The last, the receptionist came out in a tube top and Daisy Dukes and said she didn't have it ready and wasn't doing it, it would be ready Monday. I swear. As a point (on a Friday) I sat in the lobby until 5:30 p.m. until they closed, just to mess up her happy hour plans.

Boy does that sound like a lot of fun! Bad enough having to have so many people involved in the closing - let alone ones who don't have a clue!

Hi Leigh, I thought I was reading a post from someone who sells real estate in NH and has a buyer represented buy a Massachusett's Attorney who can practice Law in NH. The Mass. attorneys mostly mess up the paperwork and we have to straighten it out. We continuously have to tell Mass. attorneys they are in NH.

I feel your pain.

Thanks Jay

As a fellow NC agent, you should have kicked the attorney out and closed the transaction yourself. We can close them ourselves you know.

Derek Burress

http://www.derekburress.com

Golly, I go put the kids to bed and get behind!

Jay-when you figure out how to boot THAT kind of agent, we expect a special posting!

Jennifer-it's a battle all the time isn't it?

Lenn-who drew up the hold harmless doc? can you share?

Lauren-I bet your husband is smart enough to turn it away, eh?

Jeff-you're right-friendship should be left at the door sometimes.

Linda-it's hard to be quiet when you KNOW they're getting the raw end of their own deal...what's the answer on that one?

Devon-are LPOs like title companies?

Eddy-it actually normally works very smoothly and saves money for all parties using attorneys-AS LONG AS they know what the heck they're doing. it's one of the reasons NC is one of the least expensive states for closing costs-

Jeff-ouch-two different practices in the same state? that could be a sticky wicket-

Mary-you're right-I can't complain too much since it closed-i just have to save this tale for future reference!

Chris-that receptionist must have been a top dollar hire, eh?

Suzanne-what's the old saying about too many cooks spoiling a pot?

Jay-you would think they would know it's best to stick close to their home state-wouldn't you? i wouldn't dream of doing a SC closing in NC....

Derek-i didn't know that, actually. but it wouldn't apply anyway since this was the attorney retained by the buyer....

What do you call 10,000 lawyers at the bottom of a lake.....never mind bad joke.

We also do our closings w/o lawyers but we do talk to them quite a bit.

As we say in the South, bless their hearts! lawyers are easy targets most of the time...and they know it!

Unfortunately this is an all too often occurence. Most of the buyers get their lending from Mass. lenders who in turn use Mass. attorneys.

You'd think the smart lenders would have attorneys in both MA and NH....or is that too obvious?

Glad we are title company state. Although sometimes, they can be problematic as well, especially when they are friends of the clients. There was the one that only had one phone/fax line. Try sending documents for an end of the month closing.

Hi Leigh,

I'd say a little too obvious. You know the saying it's not what you know it's WHO you know.

Thanks Jay

I missed Donna and Michael earlier...

Donna, there are definitely closings that need to be separate-but around here most are all in one room. And the buyer, bless her heart, was about 300 years old and i can't blame her...and i'm trying not to blame her agent since i'm going to assume she was warned before switching.

Michael-i love attorney closings most of the time....quick, painless, inexpensive...but when it goes ugly, it's ugly!

Melissa-ooh-i love that-one phone line....and i bet they took the phone off the hook promptly at 5p too, didn't they?

Oh boy, what an experience. Good post.

Hi Bruno-you can laugh or cry about these stories, and either way you can learn from others, right? =)

It was insane. Phone/fax was always busy. I mean, haven't people ever heard of e-fax? We and the lender ended up scanning in the documents and emailing them. On the plus side, it made me appreciate having an outside vendor for faxes. Never have to worry about a busy signal.

I'm impressed they had email...that sounds like the kind of operation where they'd have dialup if anything!

Leigh,

Your story resonates a very familiar chord for us this year. Our daughter is a Real Estate paralegal and although we try to get the Attorney she works for some clients, it's more important to us to have someone on the inside. We just haven't found the right dialogue to teach our Buyers and Sellers how important it is to have the Attorney that does have time for you. We are currently in Attorney Review on a Condo for TWO WEEKS. Everytime either I or our Buyer calls "HIS" Attorney, the secretary says he's on an important call and can't be disturbed. Sound familiar? I told the Buyer, he can change Attorneys if he's not happy but for some odd reason he's insisting on using him. I would like to post a blog about this delicate issue. I think it's more important than most unsuspecting Buyers and Sellers know! Thanks for the blog!

Lisa

Ahhhhhhhhh, an attorney closing state.........sounds like nirvana! Actually, I had to catch myself as I thought your post was about Realtors. "So your friend/cousin/uncle is a Realtor, eh?"

Sorry you were given such a hard time. Maybe I should move to NC. Is your market any better than Michigan right now?

I have never had an attorney involved in a closing, whether it be while I represented a client or if it was one of my own properties being purchased or sold. If I recall, the practice of using attorneys for real estate transaction representation was primarily an east coast tradition/rule. Can someone refresh my memory as to which states permit/allow this? Thanks,

NJ (northern) uses attorneys to close and many specialize in Real Estate; I have had only one deal where the attorney wasn't a Real Estate expert but he was efficient and we had no problems. Guess he wasn't doing a +$100 favor!!

Leigh, we use attorney's on 99% of our transactions. Most of the time it's with Real Estate attorney's and everything is fine. In fact it can make our lives easier as agents because there is less that we need to do.

But when the family attorney or friend gets involved...look out! They can take a simple transaction and tie meaningless knots into it, creating strife that is completely unnecessary. Sometimes costing their clients a bundle.

DEC

2006

Attorneys, Realtors, plumbers, doctors; what ever the service use a professional always! Life is just too short.

Lisa-we LOVE having an inside track with a paralegal-talk about an easy transaction!

Stefan-call or email me. Our market is strong and we have just about every builder in the world here since land is relatively inexpensive and buyers are still buying. I can help you!

Kaushik-i can answer for NC and SC-and I know that in NY it's a nightmare with three attorneys for closings (we get delayed quite often on NY domino deals because they get delayed all the time)

Joanne and Angus-glad to know you can feel my pain!

Randy-define professional....that could be a post in and of itself!

Leigh, Thanks for the post. How many times do you hear about the friend or family member, who is an attorney, loan officer or unofficial home inspector. In my 23 years, all of these encounters detracted the process. In the end the consumer was under represented or overcharged.

You're right, William! I only have 6 years-and my dad has 28 years-and every single time it winds up hurting the buyer or seller who wants to have their friend help out...maybe one day folks might heed our warnings?

Makes me QUITE happy that we don't have to do attorney closings in the great state of Florida. I'm glad you got it worked out and still came out of it as a professional in your seller's eyes.

Joe-my title company stories are worse...since they don't do much here in NC. I just wish there were a way to force a specialist on buyers. But alas. =)

I have found the best attorneys - Scheduled closings that actually take place on-time. I know about them a week in advance. A good real estate attorney is worth his weight in gold! Thanks for the story. It is bookmarked for th enext client who wants to use a "friend of the family"

My pleasure, Carl. Hopefully your folks will listen to you and save themselves the $$ and heartache!

Some of the scariest words you can hear your customers say are "I have a friend/family member who is a lawyer" or I have a friend/family member" who is a mortgage broker". Those never seem to work out smoothly. Sometimes it is best to keep friends and family seperate from business dealings.

Just as has been said over & over again here, I've never had a good inspection from "Uncle Charlie" nor has the buyer ever saved closing costs on "Cousin Lender Larry". One buyer paid almost double in closing costs from his own brother! And we almost didn't close because the brother didn't due his paperwork correctly. And I always shudder when they want their handyman relative to do the inspection. He arrives with his flashlight and ladder. UGH!

Fortunately, we close at title companies - that are selected by the seller, but usually recommended by us. That definitely helps eliminate some of the issues mentioned here. Attorneys seldom attend unless there is something out-of-the-ordinary that requires their special services for their client.

Don-unless it's us, right? =) of course, i have referred out some family and friends to keep that business side out of our personal stuff.

Elaine-i'm going to get in trouble with my good attorney friends-I love my attorneys-the ones i know and trust, our closings are usually short and sweet and inexpensive for buyers and sellers. This one was just not a real estate attorney. =)

Good post. With everything that can go wrong with a closing I dont see why people allow friends that dont have experience to get involved. In Texas we dont have attorney at the closing but use a closing agent. All they do is closings all week long. We almost purchased a property where the seller was an attorney and not a real estate agent. We backed out partially because they were difficult to deal with because they didnt understand the standard methods for moving through a real estate transaction.

DEC

2006

You should post this in the War Stories Group. No matter how many times we tell them...they still won't listen.

Great post, nightmare story.

JUL

2007

I understand your pain. I have never had a situation with an attorney. However, I have had many clients want to use their friend who is a lender and that has been a total mess if you know what I mean. The worst was when the lender was out of state. He kept assuring me the closing would close on time. We ended up closing almost 2 weeks late. This was a great story. Hopefully agents who have not had this problem will strongly suggest to their clients use a professional if this situation comes up.

Thanks

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