Florida lets you close on a house without an attorney in the room. Plenty of states don't. In New York or Massachusetts, lawyers sit on both sides of the table as a matter of course, and the paperwork doesn't move without them. Here, a title company can run the whole closing, and in most residential deals that's exactly what happens.
That's the setup for a lot of expensive surprises.
The reason is that a title company is working on the transaction, not on your behalf. They are there to close the transaction and issue the policy. Nobody around the table has any incentive to point out to you that the contract you signed three weeks ago gave up your right to an inspection contingency, or that the survey reveals the neighbor's fence encroaches 4 feet into your newly purchased property. The only person in the deal whose sole duty is to protect your best interests is a real estate attorney. Everyone else, the agent, the lender, the title agent, gets paid when the deal closes, whether or not the deal is good for you.
Review Contracts Before You Sign, Not After
Contract review is where you'll see the bulk of the benefit, and it's the stage most buyers completely skip. In Florida, the purchase and sale contract is usually a boilerplate form, and most buyers approach it as such. Initial this, sign there, finish before dinner.
The problem is that a real estate contract is legally enforceable upon execution, and every blank on the form represents a decision: how many days you have for inspections, what happens to your earnest money if your financing falls apart, which closing costs are borne by which party, whether the seller is obligated to make any repairs. Most importantly, the contract is what the contract says, and the contract is what will be enforced in court later.
Contract review by an attorney before executing runs a few hundred dollars and a day or two's time. Practically speaking, it's the most affordable insurance in the deal. An attorney will point out a financing contingency with a time period that's impossible to meet, an "as-is" provision you weren't aware you were agreeing to, an escrow provision that jeopardizes your deposit.
Furthermore, they're able to draft a rider when the standard contract doesn't apply, which is more common than one might think. Probate transactions, properties with unpermitted improvements, sellers who are in the midst of a divorce. The contract wasn't drafted with those cases in mind. And should the other party object, you now have someone whose livelihood depends on negotiating on your behalf rather than a real estate agent juggling both her commission and your best interests simultaneously.
Reading the Title Commitment Is the Step No One Does
Florida closings include a title search. Most buyers do not read the commitment letter that results. They should. Within Schedule B of that document is a list of every encumbrance on record: a prior loan that was satisfied but not discharged, a municipal lien stemming from a retaining wall the previous owner constructed without a building permit, an easement allowing a cable company to dig through the site where you intended to construct a pool.
Title insurance will pay for certain title defects. It won't pay for those listed as exclusions, and exclusions are exactly the section of the document that an attorney scrutinizes word by word. A title defect doesn't necessarily mean a transaction can't close. Typically, it just needs to be resolved prior to closing, a release filed, a lien paid from the seller's net proceeds, a missing beneficiary located and given consent. But someone must locate it first, and someone must require resolution while you still hold the upper hand, which is before wiring funds.
Post-closing, the issue becomes yours. Resolving it may involve initiating a quiet title lawsuit in circuit court, which takes many months and consumes a fair portion of what you would have paid the attorney to review in the first place. Boundary disputes fall within the same category. It's common in older neighborhoods in Broward County to find a driveway, shed, or hedge that crosses over the boundary line drawn on a plat map from the 1950s. If the survey comes back clean at closing, consider yourself very fortunate. Get it fixed before closing, and it's the seller's problem. Two years later, when the neighbor wants to sell and their surveyor calls you to tell you they've got a property dispute, it's a lawsuit.
When to Retain a Real Estate Attorney
Not all real estate transactions require the services of an attorney. Buying a new construction home, with clear title, for cash is about as safe as it gets. However, certain situations warrant retaining an attorney before you sign a single document:
- You are selling a home that you have inherited, but no one opened probate.
- The property is a short sale, foreclosure, REO (Real Estate Owned by a Bank), or similar distressed property.
- The property is for sale by owner (FSBO), with no real estate agent helping to facilitate the transaction and paperwork.
- Any commercial real estate transaction. Commercial real estate does not have a standard form contract, nor is there any consumer protection; you are on your own.
- The seller is refusing to disclose defects in the property. Or you have reason to believe the seller is aware of a defect, such as a problem with the roof or foundation, and is not disclosing it. In Florida, sellers of residential real estate are required to disclose material defects that materially affect the value of the property that are not readily observable. Sometimes, sellers just plain forget. An attorney is able to determine what information a disclosure should contain and what it means if the disclosure is missing.
Zoning, Land Use, and Development Considerations
Purchasing land to develop is a much more complicated matter than purchasing a residential property. It's also where a real estate attorney's role transitions from reviewing and negotiating a purchase contract to advising the client about what activities the client can and cannot engage in with his or her property.
The zoning of a parcel determines what can be built on the property, what types of businesses can operate on the property, whether you can raise chickens, and whether you can subdivide the parcel. A parcel's zoning and future land use classification are often modified by local governments through overlay districts.
An attorney familiar with real estate development will make sure all of the information is gathered before the buyer enters into a purchase contract, because a request for a rezoning or variance after closing is a six-month wait to sit before a planning board that doesn't work for you.
One blunt note for buyers of homes in a homeowner association: your HOA covenants are a private set of land use restrictions that exist in addition to those imposed by the government, and they can be more restrictive than the government-imposed ones. Read them, or hire someone to read them.
Leases, Foreclosures, and Other Complicated Transactions
The purchase and sale of real estate is the easy part of this field of law. What follows is the more complicated stuff that occurs when the relationships between the parties involved in the transaction go sour. Leases are contracts too, and a sloppy lease is why your landlord can't evict the guy who quit paying back in March, or why a commercial tenant just learned that "triple net" means he's liable for the $40,000 roof. Lease reviews are a thing, and just as important as a sale contract, but they rarely get the time they need.
The work flows in the opposite direction too. Banks want foreclosures done correctly, and since Florida is a judicial foreclosure state, that's a matter for the courts. Homeowners facing foreclosure also have ways to fight back that are far less known than they should be. Loan modification, short sale, defenses arising from the way the lender handled the note are all on the table. Those defenses are time sensitive. The homeowner who calls a lawyer the week the first notice arrives has alternatives; the homeowner who calls the week before the auction date mostly doesn't.
And then, there is everything in between. A contractor who puts a lien on your home because of a billing disagreement. One partner wants to sell a property when the other doesn't. A buyer who backs out and refuses to give back his earnest money.
Some of these matters head to court, and real estate litigation is its own niche, slow and heavy on paperwork. But many settle without ever stepping foot into a courtroom. Mediation, and other alternative dispute resolutions, resolve most Florida real estate disputes. In fact, in Florida counties such as Miami-Dade, court dockets are so congested, both parties tend to prefer a settlement agreement sooner rather than later.
A knowledgeable real estate attorney will identify whether the problem in front of him is one to spend money on, or one to hammer out during a conference room meeting on a Tuesday.
How Much Does a Real Estate Lawyer Cost?
Less than you think, and far less than the alternative.
Most real estate attorneys charge flat fees for transactional work, so you'll know what it costs upfront. How much is included in that fee will depend on the size of the deal: a low-end deal might involve only a review of the contract; a higher-end deal could include reviewing the contract, the title search and the closing. Some attorneys can even act as the title agent, which could save you some money by applying the cost of their legal services to the title insurance premium. On a 6-figure house, that’s a rounding error.
Contrast that with what you would pay if something goes wrong. A quiet title action: $10,000+ and nearly a year of your life. Litigation over a lost earnest money deposit: even more. Finding out after the fact that the new addition wasn't permitted: no telling how much it costs.
Whether buying or selling, you're paying for the right legal guidance at those two or three times in the process where a mistake could be costly, and for the security of having someone else read all the fine print with his sole loyalty to you.