Real Estate

McHenry County & Crystal Lake

Karen M. Lavin - Real Estate

With interest rates dropping to the lowest they have been in decades, I am frequently asked whether an attorney is necessary at a refinancing or a real estate closing. An attorney is not essential to a refinancing, but having one is a very good idea for a number of reasons. Having an attorney explain all of the documents that need to be signed, including the new mortgage and promissory note, gives the home owner essential information. It is very difficult for the lay person to translate all of that legalese into mainstream language that is comprehensible. As a result, most people sign documents without having any idea at all what they are committing to and what the ramifications are. A good attorney will explain all of the paperwork and translate it to easily understood language.

The next reason for having an attorney, which is by far the most important to a lot of people, is that attorneys frequently catch costs that were never agreed to by the home owner. It is very common for lenders to add costs at the closing that were not disclosed prior to that. You should provide your attorney with your Good Faith Estimate from the lender; prior to the closing so that he or she can cross check all of the expenses and costs that are on the final closing sheet known as a HUD I or RESPA. It is important that an attorney review the terms of the mortgage to make sure that there are no provisions that conflict with what the homeowner was told by the lender. A common situation that comes up is the homeowner agrees with the lender that they will not have their real estate taxes paid monthly along with the mortgage payment and held in escrow. Then, the mortgage language requires a real estate escrow account, directly in conflict with what the lender promised the homeowner. Attorney's fees usually amount to $300.00 to $400.00 on refinances, an amount that you can easily save by the attorney catching hidden costs and unnecessary expenses.

An attorney is essential to a real estate transaction. The attorney's role should begin immediately after the contract is signed, and all contracts should include an Attorney Approval Rider. Attorneys can pick up all sorts of discrepancies and problems with the contract that the homeowner and realtor missed. Just yesterday my office caught a discrepancy between the closing dates for my clients' purchase and sale, that left my client homeless for a month. It is very easy for the parties to make a mistake with the contract, as real estate transactions are often very emotional issues. You have to consider where real estate contracts are often signed, as well. It is not usually in the calm and quiet of an office setting. It is often at a person's kitchen table, with the kids running through making noise and distracting the realtor and buyer or seller. Having a trained professional review that contract, insures that you are not overpaying in real estate tax pro-rations, that the personal property listed in the contract is accurate, that all dates line up, as well as avoiding a multitude of other problems in advance.

An attorney will review the title insurance commitment; make sure that there are no "clouds" on title that will impair the buyers selling the property at a future date. Clouds on title can often be negotiated with the title company and insured over for a nominal fee.

Having an attorney's office keep track of the contingency dates is crucial. If written notice of an extension request is not sent by the mortgage contingency date, buyer is obligated to purchase the home whether they obtain a mortgage or not - not a feasible option for most buyers. At the very least, you will lose your earnest money with that situation. Other contingency dates are just as important and can be even more costly.

Attorney's generally charge between $400.00 and $600.00 for handling a real estate closing. Choosing an attorney by the fees they charge is not a good way to make a decision on legal representation. As in all areas of life, you get what you pay for. Kids fresh out of law school are charging less then the more experienced attorneys. There is no price you can put on experience. An experienced real estate attorney will make sure that when you walk away from that closing, you will not have future problems. If things are done incorrectly or sloppily there is no end to the problems that can arise after the closing which will cost far more to resolve than paying an attorney to do it right in the first place would have cost. Using a local attorney who is in the area where you are purchasing the house makes the most sense. There are all sorts of issues unique to an area that somebody coming in practicing from a different county or the city or suburbs, would not be aware of. I recently had clients purchase property in Colorado, and advised them to seek counsel from a Colorado attorney in that county. They did so, and found out some very significant information about mineral rights that ran with the property. Miner rights are not an issue that ever comes up in Illinois in residential closings. It would not have crossed my mind to check on mineral rights, but the local attorney knew exactly what the issues were with regard to mineral rights, knew where to check to see if any one did have mineral rights under that property, and in fact ascertained that a local gas company had rights to drill on the clients' contracted property for natural gas. A fairly significant development, I would say.

An attorney also prepares the transfer documents that have to be signed, such as a Deed, Affidavit of Title, Real Estate Transfer Declaration Act Form, ALTA Form, Bill of Sale and HUD 1. They also check and double check all of the figures, including the credits due the seller, the real estate broker's commission, real estate tax pro-rations, Illinois and County transfer tax amounts, etc. Using an experienced, local attorney for a real estate attorney is cost effective measure and just common sense.