When You Should Get a Real Estate Attorney — The Real Story Behind Realty Deals and the Law

When should you get a real estate attorney? In short, always. There are way too many stories of people who thought they could do a deal “between friends” that have ended up in absolute disaster.

housekeysThere was recently a case where a client agreed to do a cash deal for a home and save fees by not involving a realtor and not involving a lawyer. The buyer paid the seller $30,000 as a down payment. The seller then took that money and deposited on a new home they were buying. Both parties were really excited, as they trusted each other completely.

A few weeks later the buyer came back and told the seller they were no longer doing a cash deal, but rather were going to finance, and needed the money back they gave as a deposit to put in escrow. Unfortunately, the seller could not get the money back from the new deal for which they used the money.

The buyer and seller found themselves in a predicament that lasted months. Both the buyer and seller flung accusations at each other. Both argued and screamed. The buyer could not buy the house without getting the money back, but the seller could not give the money back. Moreover, if they did not close on the house by a certain date that was fast approaching, the buyer would lose the deposit on their new home. No party wanted to harm the other and yet no party was willing or able to budge.

What to do? Finally they seller contacted a lawyer. The lawyer explained to them that they should have had a lawyer with them, or at least a realtor with them, from the beginning to ensure messes like this do not happen. Had the seller and buyer simply put the deposit in escrow, they would not have been in any predicament. Moreover, had a lawyer been involved, they would have ensured that the contract was written better, not giving either party as much wiggle room, and room for error, as their contract did.

The lawyer did come up with a solution, however. The lawyer contacted the builder of the new house and discovered that they had placed the $30,000 in an escrow account. The lawyer made a deal with the title company and drew up papers for a double, or simultaneous, close. This deal enabled them to use the $30,000 in escrow for both the old house and the new house. The buyers were able to get their loan and buy the old house and the sellers were able to sell their home and buy their new house.

Thankfully, this story has a happy ending. But it did end up costing both parties a lot of time and energy that they would have saved had they simply involved a lawyer from the beginning.

Thus, when in doubt, hire a lawyer. At least make sure that you have a realtor involved in your deal. Realtors are familiar enough with real estate law to ensure that you do not end up in sticky situations like the one described above.

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