There are many clients who wonder why you need a lawyer in a real estate transaction in Illinois. It is true that lawyers are not used in many states for real estate transactions, but there are several meaningful reasons why it is wise to enlist the assistance of a knowledgeable attorney when buying or selling real estate. Here are 5 key services an attorney will undertake in the course of your real estate transaction. Your lawyer will:
1. Negotiate your contract. Your attorney should negotiate the final terms of your contract. In the commercial realm, your attorney will often participate in negotiating and drafting the contract before you sign. Most of the forms used for residential real estate contracts provide for an attorney review or approval period after you sign. This means that your lawyer has a set number of days to review your contract and make any changes needed to properly reflect the agreement between the parties, narrow your liabilities and ensure that your interests are protected. What are some of the changes that your lawyer might raise?
- Ensuring that the owner of record is correct, as many people transfer title into a living trust and this may need to be addressed.
- Ensuring that a Seller restates certain warranties and representations upon closing of your transaction.
- Ascertaining whether your property is subject to flood risks.
- Asking for condominium or homeowner association documents and preserving your ability to terminate the transaction if you do not approve of the HOA or condo association documents
- Making sure that you have a “contingency” for your financing, meaning that you can terminate the contract if you do not secure financing on certain terms.
- Making sure your financing contingency is appropriately worded to protect your interests and that your loan terms are appropriate. For instance, you don’t want your contingency to be based on obtaining a loan for 50% of the purchase price when you actually need a loan for 80% of the purchase price.
- Making sure that your property is being sold AS IS if needed.
- Solidifying your closing date.
- Making sure that you are giving or receiving the right amount of credits for real estate taxes.
- Addressing any questions or concerns you have with the other party.
2. Facilitate the transaction. Your attorney facilitates interactions among all of the parties. Did you know that there are, at least, 6 people involved in your transaction? Think about it. There’s you, your lawyer, your real estate agent, the other party, their lawyer, the lender and the title company. You need someone to make sure that everyone is on the same page, to communicate about key issues and to keep the transaction moving forward. Your lawyer should be a point person and a resource for the parties throughout the transaction.
3. Review and prepare legal documents. Your attorney protects your interests by proper review and preparation of documents. Your attorney will either issue title insurance on your behalf, if you are the Seller or review the title insurance policy that you are receiving, if you are the buyer. What is title insurance? Title insurance insures your title to the property and covers you in the event that there is an unknown defect in title to the property. Essentially, your title insurance policy insures your ownership to your property except for certain encumbrances on title, such as real estate taxes, association covenants and utility liens.
4. Advocate for your best interests. Your attorney advocates for you. If you want a certain amount of money in lieu of necessary repairs to the property or if you are having concerns about the possibility of mold, or if you want to address virtually any item of issue with the other party, your attorney is the person to talk to. Your real estate attorney’s primary goal is to protect you and your interests throughout the transaction.
5. Attend closing. Your attorney will attend your closing. If you are the Seller, your attorney will likely prepare closing documents for you to sign prior to closing, so you don’t have to attend, and will close the transaction for you without your physical presence. If you are the Buyer, your attorney will meet you at closing and walk you through your loan and title-related documents. Your attorney, regardless of what side they are representing, will be intimately familiar with the numbers involved in the transaction and will explain to you the mathematics of your deal.
Don’t let yourself be taken advantage of in the course of your real estate transaction. Whether you are buying or selling commercial or residential property, an attorney knowledgeable in the real estate arena can navigate the legal aspects of your transaction and protect your interests.
*The Supreme Court of Illinois does not recognize certifications and this certification is not necessary for the practice of law in Illinois.