As a Home Seller do You Need to Hire an Attorney When You Transfer Your Property?
Copyright © 2014- 2023 AUTHOR: Paul R. Marino, REALTOR®, e-Pro®
"Do I need to hire an attorney?" Maybe. Maybe not. This is one of the most frequently asked questions we get from sellers. We'll be looking at both perspectives in this article. It is important to separate fact (law), from opinion. FACT: In every state in which we are licensed (New England), all of them mandate by state law that an attorney oversee the closing. That includes Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island, and Vermont. All of them. Does that mean you need to run out and hire an attorney? No, it doesn't.
So let's say you're selling your home. You might be selling it with the assistance of a traditional real estate broker, who, is likely charging you in the vicinity of 5% to 6% to broker your property. On a $350,000 home sale, a $19,250 hit to your bottom line is the painful result. Or, you might have wisely opted to pocket the $14,413 in sales commissions you would have saved by using the Flat Fee MLS listing programs of Landfall Properties, LLC. $14,413 is the average amount a home seller saves by using our Flat Fee MLS Connecticut, Flat Fee MLS Massachusetts, Flat Fee MLS Maine, Flat Fee MLS New Hampshire, or Flat Fee MLS Vermont program. It doesn't matter how you list (traditional, or Flat Fee MLS), you need an answer to this question: "Do I need to hire an attorney?"
Before I answer that question, let's cut right to the chase. What do you want as a seller? I can tell you what you want. You want full price, and you want to make sure that when you sign over the deed to the new owner, and the buyer hands over a check, you want the check to clear, and you want those funds safely stashed in an account of your choosing as quickly as possible. It's really that simple. You also don't want any blowback (i.e. lawsuit) from the sale in the event some system or component fails after the deed is signed over and you are no longer the owner.
Every sale starts with a showing. The recommendation from this office, regardless of what the state says about it, is to include a Seller Disclosure Statement with your MLS listing. Some New England states mandate you include this document (like New Hampshire and Vermont). Others do not, like Massachusetts. What is a Seller Disclosure Document? It's a document filled out by the home seller that is basically a questionnaire, asking you to answer questions about all major systems, components, and issues affecting the lot, pretty much everything a buyer might want to know in order to make an informed purchase decision. You should be as truthful and forthright as possible when filling out this document. If the questionnaire asks: "Have you ever had water in the basement?" Be honest. Tell the truth. Do you really want to be looking at a buyer lawsuit two months after the closing? Of course not. Filling out this form is your best protection against an after the sale lawsuit. It's also in writing, which carries an enormous amount of weight. If not in writing, it will be a "he said, she said" argument in front of the judge. Our office recommends that you let the Seller Disclosure Statement do all the talking for you. Fill it out accurately, and refer buyers and buyer brokers over to the statement. This way, you avoid any off the cuff comments (seemingly harmless to you) that get you in hot water.
OK...so you're passed the home showing phase, and the buyer or buyer broker has elected to put forth an offer. You should know that in the overwhelming majority of residential real estate transactions conducted throughout New England, the contract paperwork used is standard, boilerplate language, as put forth by the state Board of REALTORS®. Each state has it's own set of contracts and related real estate transfer paperwork. They're all a little different in their precise verbiage, but they're similar in content. This set of contract documents is drawn up by state REALTOR® board attorneys. Do you have to use these forms? Unequivocally no. No state in New England requires you to use a particular contract form. You could draw something up on a napkin, but I wouldn't recommend it. Because these documents are used in a very high percentage of residential real estate transactions, every agent and broker in the state is familiar with them, and the specific verbiage they contain. Similarly, all attorneys operating in a particular state are likely very familiar with these documents. Because their use is so widespread, the real estate community has developed a high degree of comfort using these documents.
Here's a good tip that can help save you if you're in a bind. Let's say you elected not to engage an attorney. The buyer broker presents an offer with strict language that states: "This offer is only valid for the next 24 hours, at which point it is considered null and void." But there might be some language in the agreement you're not comfortable with, or maybe there's something in there that just doesn't sit right, or maybe you're uneasy with the financial viability of the buyer. No problem. Simply insert a simple little sentence in the addendum. And that sentence is: "This agreement is subject to review by the seller's attorney, which shall be provided no later than 72 hours after the effective date of the agreement." There. You're protected. Now, go out and engage an attorney and get your questions answered.
Regarding the buyer's deposit(s): It is customary in every New England state for the listing brokerage to retain the deposit. A buyer broker might try to insert language stipulating that their brokerage hold the deposit, but this is not the norm, and should be avoided. You could engage an attorney to retain the escrow deposit, and disperse on closing day, or Landfall Properties, LLC can hold the deposit. Escrow services are included as part of our Level Two - Premium Marketing Services at no additional charge, or you can purchase this service for a nominal fee by visiting our product page. Escrow checks should be made out to "Landfall Properties, LLC Escrow Account" in the states of CT, ME, NH, and VT, and made out to "Paul R. Marino Lic. MA Real Estate Broker Escrow Account" if the property is located within the state of MA. These accounts are carefully monitored by state real estate commissions, and are subject to no notice inspection. There is virtually zero risk that your buyer's deposit will not arrive in the hands of the closing attorney on closing day, in the form of certified funds (same as cash).
When the offer does come in, it will usually be initiated by the buyer broker, and it will be put forth on a Board of REALTOR® standard contract form. If it isn't, ask why it isn't. If it comes in on something other than a standard form, you should be especially vigilant in examining the language, and you should retain legal advice if anything is unclear. You should pay particularly close attention to any addendums, since an addendum can modify, delete, or otherwise override anything relating to the contract. Many experienced home sellers are well equipped to read and review standard Board of REALTOR® contract forms. Newbies might need some hand holding. The Principal Broker of Landfall Properties, LLC (Paul R. Marino, REALTOR® since 1988) can review your contract documents and make recommendations. Bear in mind, we are not attorneys. However, we have reviewed literally thousands of contracts (as both a broker and an appraiser), and there is precious little we have not seen. If you are the type of person that is unable to accept any risk in your financial world, we recommend you engage an attorney. It helps some people sleep at night, but it is definitely not a state requirement (in any New England state), and many waive this option in the interest of saving money.
Now what? You're under contract. Great. What typically comes next? The home inspection. In the contract phase, it is our recommendation that you should encourage the buyer to secure a home inspector of their choosing. This provides you with an additional layer of protection. First was the Seller Disclosure Statement and the second is to have a home inspector (hired by the buyer) look over every nook and cranny of your home. It will be far more difficult for a buyer to prevail in a lawsuit if you've meticulously filled out Seller Disclosure Statement, made sure they've seen it (secure signatures of course), and also allowed them to hire an inspector who is advocating on the part of the buyer.
If you've managed to make it past the showing, the offer, the contract, the home inspection, and the buyer clearing the financing obstacle, you should be nearing the finish line of your transaction. Three days prior to your closing, federal law mandates that you be provided with a copy of the closing statement by the closing attorney so you know precisely what every line item is that affects your transaction. This includes important pro-rated items like mortgage balance payoff amount(s) real estate taxes, water and sewer pro-rations, state transfer tax amounts, etc. If you have purchased our Level Two - Premium Marketing Services, a comprehensive review of your closing paperwork is conducted by Principal Broker of Landfall Properties, LLC (Paul R. Marino, REALTOR® since 1988)
If the buyer is financing the property, which is the case in the overwhelming majority of transactions, it will be the lender's attorney that conducts the closing, and fulfills the state requirement that the closing be managed and overseen by a licensed attorney. In the much more unlikely event the transaction is cash, then it will be necessary for you and the buyer to make arrangements to have an attorney oversee the transfer of title and disbursement of funds. In these instances, you might agree to have the buyer's attorney conduct the closing if they have one. If the buyer has elected not to engage an attorney, then you might collectively (both you and the buyer) engage an attorney to act as a facilitator and manage the details on closing day.
Finally, on closing day, you want to ensure that the amount of money that is due you is appropriately dispersed in a manner you find satisfactory. There should be no surprises here. You want to know the precise amount, and the precise method of payout (cashier's check, wire transfer, etc.). And there you have it. So, do you as the seller need an attorney? It depends. But there are many, many sellers that successfully make their way to the closing table without one. If you are an especially jittery, nervous type, we recommend you engage an attorney. You should feel comfortable with your transaction.
