Mortgage contract
Potential clients frequently ask why they shouldn’t use a title company to handle the closing of their new home. Why spend more money to hire an attorney when a title company can close the deal for less? Excellent question.

Sure, a title company can create the documents necessary to close the deal. They can also generally guide the parties on some issues that might come up, such as what additional requirements must be met when the seller is considered a “foreign person” under FIRPTA.

However, what title companies don’t do is make sure the buyer’s interests are protected. Below are five significant examples of how a buyer can benefit from hiring an attorney when purchasing real property. An attorney will:

  1. Protect your contractual rights. An attorney can review the contract to make sure you understand your contractual rights and ensure you take the steps necessary to protect those rights. As an example, most contracts include a right to inspect the home. I suggest that you make sure you receive the inspection report well before your inspection period runs out. That way, you will have time to review it, discuss it with your attorney, and decide how it affects your decision to purchase before your inspection period expires.
  1. Give advice on taking title. Do you know the difference between tenants in common, joint tenants, and joint tenants with right of survivorship (JTWROS)? An attorney can help you understand these terms, the ways you can take title, the pros and cons of each option, and help you avoid costly pitfalls. As an example, one of my clients wanted to take title as JTWROS, but she told the title company tenants in common, not understanding the difference. After talking with her, we fixed the mistake and avoided the potential pitfall. Along these same lines, if you are considering buying property with a significant other or a good friend, it’s important to understand the legal ramifications of having title in both your names if the relationship falls apart.
  1. Review closing documents. An attorney can help make sure all the necessary documents are present, accurate, and sufficient, as well as make sure you are paying only what you have agreed to and receiving all that you bargained for. Here are a couple questions you might want to ask: Did you get charged for something the seller agreed to pay? Do you really want to swear to all of the items listed in that affidavit?
  1. Guard your title to the property. It is common practice to purchase title insurance when buying real property, and title companies can produce the insurance policies. What they often won’t do is review your title policy to minimize the amount of exceptions to your coverage. After all, it is in their interest to have as many exceptions as possible as an agent for the insurance company. As a good example, in a previous closing, a title agent issued a commitment to my client with all kinds of boiler plate exceptions. After sending a title objection letter, the title agent agreed to remove 10 exceptions, including an exception that would have excluded coverage if a mineral rights owner entered onto the property and started drilling for minerals. 
  1. Provide peace of mind. Wouldn’t it make you feel more at ease to have someone else — someone who understands the closing process and all of the documents — read through the morass of language and words scattered throughout all those documents before you make possibly the biggest purchase of your life?

Before you sign on the dotted line, I encourage you to consider hiring an attorney to protect your interests. If you have any questions or concerns, please feel free contact one of Henderson Franklin’s Real Estate attorneys at 239-344-1100.