There are many advantages for a seller of real estate to have an attorney represent them through the process and at closing. Many sellers believe that since they have a real estate agent working for them that there is no need for an attorney. This is a common misperception and could turn out to be a big mistake.
A real estate closing is a complex legal transaction involving a large amount of paperwork. There are many moving parts to a real estate closing and as such many opportunities for problems to arise.
In this article I will provide a brief overview of the benefits for the Seller in a real estate transaction to have an attorney from day one. A real estate transaction is usually one of the largest transactions a person will be involved in. For the nominal fee an attorney will charge to represent a seller relative to what is at stake, a seller should never go into a real estate transaction without an attorney.
When a person sells a piece of real estate they are obligated to produce certain legal documents before and at the closing. If a seller does not retain an attorney the attorney hired by the borrower normally prepares these documents for the seller and charges the seller a fee for doing so. Most sellers do not realize this until the closing. By then it is too late.
Furthermore, you are paying a fee to the borrowers attorney for the legal documents and that is all. You do not obtain the attorneys legal advice and guidance at the closing or during the process. Most seller's attorneys will charge you the same fee that the borrowers attorney will charge but will not only draft the documents for you, but will give you proper legal advice and will be present with you at the closing.
Retaining an attorney early in the process will help ensure that your legal interests are protected. The attorney will draft and review the purchase and sales agreement. This is one of the most important documents in the sales process and dictates the obligations of the buyer and seller in the transaction and the deadlines involved. If issues arise during the negotiation or home inspection an attorney can assist you in resolving these issues effectively.
The buyer is responsible for conducting a title search on the property at his/her expense. But if the title search reveals a problem it is the sellers obligation to cure the title problem in order to provide good and marketable title to the property and consummate the transaction. Again, if you do not have an attorney the buyers attorney will attempt to cure the title problem and will charge you for this service.
If you are a non-resident of the state of Rhode Island there is an additional consideration that you must take into account. The State charges you what is called a non-resident withholding tax that can be quite considerable. You may qualify to be exempt from any tax liability but you as the seller must file and obtain the appropriate paperwork and calculations to the State of Rhode Island within a certain time period before the closing. If you retain an attorney, your attorney will do this for you. If you don't, you may find yourself paying 6 - 9% of the net sale proceeds at closing to the state.
At the closing it is imperative to have an attorney present representing your legal interests. Although you may have a real estate agent present, they cannot provide legal advice to you. A seller's attorney will review all of the closing documents including the HUD settlement statement to ensure that the prorations for taxes, water, sewer, etc... are accounted for and are accurate and insure that no miscellaneous fees show up on your side of the settlement statement that should not be there. A sellers attorney will explain in detail the Closing Disclosure/HUD settlement statement and will review and explain all documents presented to the seller for signature at closing. Many times the buyers attorney or bank's attorney will have the seller sign documents that are not required and that are favorable to the buyer. Having an attorney present will help protect you from signing away your rights or taking on additional liability you were unaware of or not responsible for.
The bottom line is if you think you are saving money by not retaining an attorney to represent you as the Seller in a Rhode Island real estate transaction - you are wrong! Not only will you pay the buyers attorney to draft your documents for the closing but you will lose out on having the legal advice and guidance from an attorney representing your interests who may find overcharges on the HUD and in the prorations and could even save you money at closing.
The need for the Buyer’s attorney is obvious. But a Seller's attorney is equally as important.
Tomassi Law Associates, LLC represent Buyers and Sellers. We strive to offer our clients the most competitive rates possible and the highest level of service possible. There will be no surprises at closing and we will help ensure that you have a smooth, seamless and successful closing. Contact us today to learn more. 401-941-5291 or visit our website for more information.