I can't believe what just happened AGAIN! My second deal to fall through this month because of bad lawyering.
On both occasions, my sellers insisted on using "their" attorney to handle the transaction, and in both cases, the attorneys were not real estate lawyers. One was an attorney the sellers had used "forever" for things including drawing up their wills and settling their parents' estates. The other was a relative who gave them a "good deal" for drawing up the contract. He was a litigator by specialty but agreed to handle the deal anyway. But because of either inexperience or ignorance of the nature of real estate law on the part of these lawyers, two home sales fell through.
In many states including New York, a lawyer is a regular part of the home buying process. For most, real estate law is all they practice. Most problems arise when buyers or sellers hire the wrong kind of attorney to help settle a real estate deal. Lawyers often specialize in certain areas of law, and the categories range from Admiralty and Adoption Law to Zoning. Real estate law is a form of contract law, but with many nuances not covered under general contract law practice.
For example, in the case of the litigating attorney who worked for my sellers, the deal fell through because he handled the transaction the way he would a lawsuit. Defending litigators commonly protect their clients by dragging out a case for as long as possible, throwing roadblocks in the way of progress wherever possible and blocking communications as much as possible. This lawyer flat-out refused to speak to any realtors involved in the deal. Weeks went by without a contract. Real estate lawyers know that "time is of the essence" in property transactions. Most typically generate a finished contract in a matter of days if not hours. By not using attorneys well versed in real estate law and practices, my two sellers threw away two ready, willing and able buyers.
How real estate attorneys can help
Real estate lawyers' primary function in New York is creating, negotiating, and reviewing the sales contract. But they also can check for compliance with all terms and conditions of the contract, perform title searches to uncover liens or encumbrances on the property, explain any easements or use restrictions, or protect you in the event of a contract dispute at closing. Even in states where it isn't required to hire an attorney for a real estate transaction, it can be a wise thing to do. Things have a way of getting complex in real estate.
Unforeseen circumstances - unpaid taxes that are discovered last minute, hidden property damage or code violations which need fixing, title issues - all can ruin a transaction. If you don't use an attorney and a deal goes awry, you'll still have to hire one, usually at the last minute and for substantially more money. Better to work with a lawyer to structure a contract, rather than save it.
Attorney's can also be especially important should problems arise after transactions are complete. For example, if a basement floods during the new owner's first rainstorm and the sellers' disclosures never noted the problem, an attorney can work to have the sellers compensate you for damage caused by water and for the cost of a sump pump or whatever else is needed to mitigate the problem.
Fortunately in New York, lawyers are required for a real estate transaction. But unfortunately, some homeowners and buyers don't realize that not all are created equal. Make sure your mouthpiece speaks real estate!