So much decision-making goes into your home buying experience. You’re nearing the finish line.
Should you retain a real estate attorney or fly solo?
Hold on a tick! Purchasing a home isn’t like going before a judge—why would I NEED a lawyer? The stakes are so high in NYC that having an attorney who specializes in NYC real estate on your side is both customary and imperative—no matter which side of the deal you’re on.
Almost without exception, both the buyer and seller have a lawyer for real estate closings in New York. In New York State, the contract of sale must be drawn up by the principal aka the seller or their attorney. But there are also laws mandating that legal documents are drawn or reviewed by licensed attorneys. This legislation prevents realtors and others from offering legal advice or drawing up contracts as that would constitute ‘unauthorized practice of law.’
As a buyer you may think: hey, I can save here. But this is not a place to cut corners. Buying a home in NYC is a massive financial commitment. There are an extreme amount of details to review within the contract of sale and any riders. A lawyer whose bread and butter is real estate law is worth every penny. They can spot potential pitfalls before it’s too late—and save you from the associated heartache and cost. Additionally,the lender in the transaction will most likely require that the buyer has an attorney.
- Review the contract. There’s a lot of legal jargon and your lawyer will interpret this for you. Contracts can vary greatly and language regarding various contingencies is nuanced. This is expertise you can’t teach yourself over a weekend.
- Due diligence: Review board minutes, financials, bylaws, and other documents regarding the building. The buyer’s lawyer should do their ‘due diligence’ by carefully examining these documents to protect their client from potential disastrous repairs and situations that have or haven’t been disclosed. There may be complaints against owners in nearby units or repairs that haven’t been officially slated yet—these are the kinds of things that will jump out to attorneys who review these documents on the regular.
- Negotiate the final terms of the contract. The buyer’s lawyer will try to get the most favorable terms on behalf of their client.
- Order the title report. The buyer’s lawyer does this on behalf of their client to make sure that the title is clean and there are no liens against the property. The title report also lists any violations cited against the property. The attorney and title insurance company review a new or existing survey of the property to ensure that the property in question and any neighboring properties are maintaining the appropriate boundaries.
- Attend closing. The buyer doesn’t fly solo—they are majorly backed up at closing by their attorney. This is especially useful since the seller and lender will also have their lawyers present at closing.
- Possibly hold funds in escrow. Every situation is different, but it is possible that your lawyer will hold funds in escrow, orif need be, make sure you get your funds back if another party is holding the funds and you are entitled to getting them back.
This is a time to hire a lawyer who specializes in New York City residential real estate. Buying a property in NYC is a lot more involved than in most places across the country.
Ask friends, colleagues, and your agent for recommendations. You can also contact the New York City Bar Association and ask for a referral. Here are some more questions to ask when deciding on the right real estate attorney.
- Read potential real estate attorney reviews.
- Ask what their residential real estate experience is.
- Ask exactly what the lawyer will do (as opposed to what a paralegal will do).
- Will you be charged a flat fee or by the hour?
- What ‘due diligence’ will the lawyer perform? Is this included in the fee?
- Is the lawyer familiar with the building you’re purchasing in? Have they been involved with any other sales in that building? If not, any buildings similar to yours?
Note: If an attorney offers to sell title insurance for the deal—walk away. It is unethical and a conflict of interest for the attorney to sell title insurance for a deal they have brokered.
There are a lot of decisions to make when you buy a new home, but hiring a real estate attorney is a no-brainer. Securing an attorney early in the process will provide time for ‘due diligence’ research and will help you look like the strong, committed buyer that you are. And in the end— a good real estate attorney can make the transaction run more smoothly and protect you from potential pitfalls.
The New York City Bar Association on the sale/purchase of real estate and how your attorney fits into that picture.
The New York Attorney General recommends that you have a real estate attorney and offers more tips!
Unauthorized practice of law.