It's time to close your mortgage loan. Expect a crowded room at closing day. You'll be there, of course, and most likely so will your home's seller. Your real estate agent, the seller's agent, the representative from the title company and a loan officer from your mortgage lender should all be there.
But should there be at least one other person at the closing table? Should you have a real estate attorney present to protect your interests?
Legal professionals say you should always have your own attorney present on closing day. And most real estate agents we spoke to for this story agreed. But not all of them. Some said that an attorney was only needed for unusual closings, such as when buyers are purchasing a property that is involved in a lawsuit.
What's the right choice for you? That depends on how comfortable you are sorting through, and trying to understand, the many documents involved in closing a mortgage loan.
"I believe that an attorney is always needed," said Yael Ishakis, president of FM Home Loans in Brooklyn. "Home buying is probably the biggest financial transaction of an average person's life. They should be protected by an attorney trained in real estate law."
The role of an attorney
Depending on where you live, you won't have any choice when it comes to hiring an attorney for closing. That's because several states require an attorney to present at real estate closings. These states frequently change, so check your state’s laws to determine if a real estate attorney needs to be at your mortgage closing.
Usually, buyers pay the fee charged by attorneys. That fee varies, but sources quoted for this story said that real estate attorneys will charge $500 to $1,800 to attend closings, depending on how complicated a real estate transaction is.
Real estate attorney Rick Davis of Rick Davis Legal in Leawood, Kansas, said that attorneys provide a valuable service during closings. When hired by a buyer, their job is to study the paperwork that the buyers are signing to make sure that these documents are correct.
"Most home buyers do not deal with contracts on a regular basis, and a home sale often involves a significant amount of money," Davis said. "Having an attorney to ensure the paperwork is all correct or to help ensure the sale closes if there are issues can be very valuable to all parties."
Attorneys are especially helpful if there is something unusual about the real estate transaction, Davis said. Maybe there are existing tenants on the property that buyers are purchasing. Maybe the sale involves a complicated financing structure. Maybe there's even a pending lawsuit involving the property.
Attorneys are important, too, when issues pop up unexpectedly during the closing, Davis said. What if the buyer gets nervous and wants to back out on closing day? What if a title search uncovers a lien against the property? What if a last-minute easement or boundary issue comes up? Attorneys can help resolve these issues, Davis said.
John Keenan, a real estate lawyer in Redford, Michigan, said that buyers should hire an attorney to represent them through the entire real estate process, not just at closing.
No one else in the real estate process will look out for your best interests, Keenan said.
"Real estate agents are interested in collecting their commission," he said. "You can't rely on them to look out for your best interests. That's why you always need an advocate, engaged by you, to make sure everything is done right."
And when you get to the closing table? Then you certainly need to hire an attorney to make sure that you aren't signing anything you might later regret, Keenan said.
"Sure, transactions without attorneys can, and do, work out all the time," Keenan said. "But when they don't, it can be a nightmare to fix."
Easing the tensions
Marcia Clarke, a real estate broker with M C Realty Consulting & Management in Brooklyn, said that attorneys play an important role at the closing table.
Attorneys calm their clients when they get overwhelmed, she said. And they help ease the tensions in the room thanks to their expertise; buyers feel confident that a professional is looking out for them, so at least some of their nerves are settled.
Most importantly, attorneys make sure that their buyer clients aren't paying unnecessary closing fees, Clarke said.
"They keep an eagle eye on the lender's mortgage paperwork, as closing expenses can vary from one lender or mortgage broker to the next," Clarke said. "An attorney would generally query any fee or charge that they feel may be out of line with the norm.
Clarke said that attorneys also oversee the actions taken by the representative from the title company. Many buyers mistakenly think that the title rep is there to protect them. They're not. Title representatives are at the closing table to protect the interests of the bank or lender providing the mortgage.
"At the end of the day, the common denominator for both the seller and the buyer are the reams of paper lobbed at both," Clarke said. "Not having an attorney at the closing table puts them each at risk."
A different opinion
Not all real estate professionals, though, agree that buyers always need a real estate attorney at the closing table. In some cases, they say, hiring one is a waste of money.
Glenn Phillips, chief executive officer of Lake Homes Realty in Pelham, Alabama, said that most real estate closings are routine affairs that can be handled without the services of an attorney.
"In most cases, the attorney is little more than an expensive notary," Phillips said.
Phillips said that consumers in some states think that real estate attorneys are necessary when a more affordable notary public can instead conduct the closing process.
Phillips, though, did say that there are times when borrowers should employ a real estate attorney at closing, even when their states' laws don't require it. When real estate contracts have something that is out of the ordinary, he said, an attorney can be useful.
"There are times when a real estate attorney is very valuable at closing," Phillips said. "If the contract has unusual aspects that are still being negotiated at the closing table, an attorney hired specifically to represent only the buyer or only the seller can help protect their client's interests."