Choosing a closing attorney

I'd love to see some of the comments here... we just had an offer accepted on a house, and aren't sure if we should hire an attorney or not. My mom is pushing us to get one, but it doesn't seem too popular in NH (where we're buying the house). We wouldn't love to forgo this added expense, but are nervous about the whole house-buying process (obviously first-timers here), and feel like we can't trust anyone in this process!

Absolutely get your own attorney.

"The [closing] attorney represents the lender at closing." That is all you need to know. Should buyers work directly with listing agents? Of course not. Although the lender and buyer have similar interests, those interests are not always aligned. Just like a listing agent has no obligation to keep what a buyer tells him or her confidential, a closing attorney could tell the lender something confidential he or she heard from a buyer.

In addition, most closing attorneys have a very close relationship with the mortgage broker/loan officer that referred the business in the first place.

In my experience, many mortgage professionals will tell borrowers that their closing attorney "will review the purchase and sale agreement for free." You get what you pay for. This usually results in a couple of minor changes to the Standard Purchase and Sale Agreement, if any at all. I have heard of situations when the review comes after the parties have signed. That's a real big help!

A real estate attorney representing a buyer should add a multi-page addendum to the P&S that protects the buyer's rights, interests and deposit. The Standard Purchase and Sale Agreement dramatically favors the seller.

"The closing attorney is in a better position to solve problems with the lender at closing." So what? S/he can still do that when the buyer has a personal attorney.

"Buyers, what did you do? Did it work out?" The problem with this question is that 99.9 percent of buyers who are not real estate lawyers would not know whether their deposit was at risk or whether their loan commitment/rate lock could have expired. Just because those things didn't happen doesn't mean everything with the P&S was fine. It's not what you don't know, it's what you don't know you don't know.

I am sure that there are many closing attorneys that do an excellent job for buyers, but situations do arise that make it impossible for a closing attorney to effectively represent the buyer and the lender.

On the other hand, using a lawyer that doesn't do real estate very often might not be a much better situation.

I'm an active real estate investor. The big scam from closing attorneys is the title insurance. you ask an attorney to review title and then pay insurance to make sure they did their job properly and then they take about a 50% margin on the insurance which I believe should be a disclosed fee but is hidden in the price of the insurance. I've had some luck getting it negotiated down but not as much as I would like. Any thoughts on further savings?

"The [closing] attorney represents the lender at closing." Enough said.
Say you have to go to trial for a crime (committed or not), would you use the prosecutor as your defense attorney?

As someone who used to practice law (guess I am still an attorney, the taint lingers)

I wouldn't care either way that much. More important is too A) Have an attorney - this is essential, not optional. I always use one and I AM an attorney. B) Hire a good one. Lots of bad lawyers out there C) Get the Attorney involved BEFORE the offer. Most people get the attorney involved at too late a stage, at which point the attorney has much fewer options for protecting you.

You should use a specialist in real estate law, not a lawyer who does a little bit of everything.

If you hire the lawyer before the offer, conflicts of interest at closing are really unlikely - I've never wasted money on separate attorneys, its less likely to be useful that the approach above.

You should have an attorney involved from the beginning of the process, starting with the offer. I work as a real estate paralegal. I cannot tell you how many times buyers end up calling our office after they have signed an offer which is legally binding, with dates too close together or not enough contingencies to protect themselves etc, then there is not much we can for the buyer unless the sellers agree to extensions.

In today's real estate and lending market, it is important to have someone representing your interests and protecting when you are making one of the biggest investments of your life.

As both an investor and buyer agent, I use the same for both in my personal deals and suggest to my clients that they look into this option with several attorneys. I use a reputable attorney and they are legally and ethically required to inform you when a conflict of interest arises. At that point I would hire a separate attorney, but fortunately, I haven't gotten there in any of my past deals.
Also, for bank-owned properties I negotiate a deal on the fee because there is no P&S drafting or negotiation, I just need a good legal explanation and then I spend more on the inspections and title insurance if it is cash.
There are so many other ways to go horribly wrong with an attorney. The biggest mistake is using one that does not practice real estate law. The other is hiring a part-time attorney and another is going with law students. The reason being, real estate deals are about negotiating and meeting at terms that are agreeable to everyone, attorneys that are not practiced in this tend to argue everything and tend to kill a negotiation very fast. That said, a good attorney will also tell you when to stop arguing and walk away because the legal issues are too large to ignore.

Title insurance is well padded, to say the least. Necessary, but brutally bad value for money - its almost all commission.

The Buyer should have his own lawyer who should be a real estate specialist.. The lawyer has a most important role in the drafting of the Purchase and Sale Agreement which controls the entire transaction and specifies contingencies, if any. As a retired practicing lawyer, I always referred my clients to such a specialist. They always earned their fees. In any event, the Buyer should also purchase a Buyer's title policy since the lender's policy does not protect the buyer's equity which grows over the years. Further, bring the lawyer in at the earliest opportunity- prior to the P & S agreement.

I bought my first condo in 1998 in Brookline. I was referred to my friend's closing attorney when she bought her condo 2 years before me. trust me, you want to get your own attorney ans as someone else said earlier, get your attorney invovled as soon as possible before you even identify a house that you want to buy. When I sold my condo in 2002, I also used the same attorney.

I would like to comment further on title insurance. It is ridiculous that after paying for title insurance when you purchase a home, you have to pay again for a title search and for title insurance each time you refinance. The entire process is complicated and although there are some contingencies when you refinance that can reduced the cost, as a consumer you are still stuck paying a sizeable fee. It is a "tax" that you pay twice (or as many times as you finance). The price of title insurance is not insignificant. There are also different types of policies and the first time we refinanced we were not familiar with all of them and were placed on the spot when these were abruptly presented to us at the time we needed to sign the final documents. We no longer use this attorney.

Rich Rosa (comment 2) gives excellent advice. I always recommend that buyers get their own attorney to protect them in what is likely one of the most expensive purchases of their lives.

Title insurance bothers me as it does poster#3........if the required title search was done properly, then why should a buyer want to buy this insurance, which they can only buy at closing, only from an attorney, and for which there's no competition (in MA)? *Because the title seach only goes back 50 years* and there could be problems that pre-date that time. I'm not sure why they only go back 50 years, but I suspect it's because those are generally easy and quick searches; deeds from before than can be difficult to understand, and the boundaries are often described as things like "northwesterly from the pile of rocks to the birch tree at the edge of the stream."

Ten years ago, at a closing my lawyer whispered to me as we sat down that most people probably don't even read the documents being signed.

The lawyer for the lender told us (the seller) that we needed to sign some forms. My lawyer said hell no. The bank's lawyer said yes. My lawyer said we would walk away before we signed documents that were between the bank and buyer and started to pack up. Needless to say, we didn't sign those documents. And he ammended other documents at the close. My lawyer paid for himself that day.
My real estate agent complained that my laywer made the closing last too long.
At the next sale that I attended, my lawyer was again there, but I had a new real estate agent.

It is best to use the same atty for both the P&S and the lender. In this dual representation the attorney has more pull with the lender and also reviews the title. As just a buyers atty the lender may not respond to their inquires and also the buyers atty does not get to review the the title. As for the title insurance all buyers should purchase an owners policy. The policy insures against forgeries, mis-spelled names etc. So, if the seller had 3 mtgs but on the last one the registry worker mis-spelled the last name why would the atty take the fall? Hence, title insurance. You are either an insurance person or not. It is not a scam.

Title insurance is BOTH a good thing (essential even) and a scam. The scam is in the markup - the lawyer's commission is insane.

People should still get it, though

We had our own lawyer, who drafted the offer letter and the P & S when we bought. He reviewed all the documents for us and provided me with valuable advice, as it was FSBO without a buyers' agent. The bank's and the seller's lawyers were at the closing, ours was on speed dial. I would never consider doing it without my own lawyer as they are truly the only ones that work just for you, not on a commission. I did have to call a few to find one that I liked, however, and it did have an upfront cost, but I'm glad I did.

OK here is my comment...on title ins.......I hate it because you pay an lawyer to search a title to expose any problems...then if he screws up sue him/her....why pay 500....to....2000.......to ins. they have not made a mistake?.........Its bacwards..the lawyer should pay for the ins.....bill