By Scott D. Stovall
The short, honest, and admittedly self-serving answer to the question posed by the title of this article is “always.” A more specific and conservative answer is “the sooner the better, but definitely before you sign the real estate contract.” For most of us, our home likely will be the largest investment we make and depending upon who you ask, either our biggest asset or liability. Once the ink dries on the contract, there is little (with some exceptions) you can do to change the purchase price of the home. As a result, our natural instinct is to cut out what we perceive to be worthless but expensive closing costs such as surveys, enhanced title insurance policies, various home and system inspections, and, gulp, attorneys’ fees.
The Code of Virginia allows “non-lawyers,” such as title insurance companies, to close real estate transactions; most non-lawyers charge a fraction of what you would pay an attorney. Despite the fact you’ve just signed a contract for a multi-hundred thousand dollar home, the cost savings afforded by using non-lawyer (say $100 to $200) may result in your decision to purchase the home without the aid of an attorney. Whether you have a smooth closing or one that gives you heartburn, the few extra dollars spent on a closing performed by a lawyer will prove to be money well spent.
Reasons why you should use an attorney for your next real estate closing include the following:
- An attorney represents you and your best interests. A real estate attorney, pursuant to Virginia State Bar ethics rules, must provide zealous representation to his or her clients. As a result, your attorney can serve as a neutral party with no vested interest in whether the transaction closes and can provide you with an often needed reality check about your home purchase or sale. Furthermore, the attorney (or others in his or her firm) can represent you if the need for legal action in the courts arises.
- You’ll get your money’s worth. Your closing attorney is more than a paper pusher. He or she can review your contract, address issues that may arise prior to closing, explain title issues and imperfections, and ultimately review and translate the pile of documents you’ll sign at closing. Minus unusual circumstances, most attorneys will provide all of these services for a flat fee that pales in comparison to the price of your home.
- An attorney can provide comfort and confidence during an inherently stressful event. Two things involved in every real estate transaction inevitably lead to stress-moving and money. Add to that the issues that can occur during the closing process-home inspection issues, interest rate locks, title defects, cold feet-and you may consider renting instead of buying your next home. An experienced real estate attorney (together with his or her staff), who handle these transactions on a daily basis, can navigate you through the complicated closing process, calm your worries, allay fears, answer all of your questions, and ensure that important details don’t slip through the cracks. This leaves you to worry about coordinating moving vans and utility hook-ups.
- An attorney is a one-stop-shop for all your real estate needs. While the Virginia legislature has allowed non-lawyers to perform closings, it did not give them the power to practice law. A non-lawyer settlement agent cannot (but a lawyer can): draft deeds and other legal instruments, explain the rights and obligations of the buyer and/or seller pursuant to the purchase contract, the meaning of loan documents signed at closing, or the impact of title defects or title insurance policy “exceptions,” or offer answers to or opinions on certain questions that may arise. Only a licensed attorney can perform these actions and offer legal opinions in response to the following types of questions: “What should we do?” “What rights and obligations do we, the buyer (or seller), have?” “What is a Deed of Trust and what does it mean to us?” If you were closing with a non-lawyer and any one of these issues or questions arose, you could end up needing, and thus paying for, an attorney’s services on top of those provided by the non-lawyer settlement agent.
- Spending a few more dollars at closing can prevent you from spending much more after a closing or failed closing. To paraphrase a law professor with a strong dislike for taxes, attorneys are like the I.R.S.-you can pay them now or pay them more later and only after a lot of headache. An attorney, unlike a non-lawyer settlement agent, can recognize, advise you of, and hopefully defuse or avoid the many potential legal landmines that lurk beneath the surface of any closing. There is no feeling worse than closing on a home only to discover that the garage violates a county set-back requirement and must be moved or torn down and the basic title insurance policy you purchased doesn’t cover such a problem. (True story). The goal after all is to buy a home, not a lawsuit.