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First-time homebuyer considers hiring attorney for closing
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First-time homebuyer considers hiring attorney for closing

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Q: I’m a little embarrassed to ask this question, but do I need to hire an attorney for closing? I’m a first-time homebuyer purchasing a new construction home and I hope to close at the beginning of next month.

I have not received the actual closing date yet. The attorney that is holding my earnest money sent me an email stating they will be the closing attorney; however, I did not pick them. The builder did. So, is this company also representing me? I’m a little confused. I appreciate your feedback.

Ilyce’s book (“100 Questions Every First-Time Homebuyer Should Ask”) has been helpful during this entire process. Thank you so much!

A: Thank you for buying and reading Ilyce’s book. We’re glad that you found it helpful. Full disclosure: Sam is a real estate attorney with more than 30 years of experience helping buyers, sellers, renters, investors and companies complete their purchases, sales and leases of various forms of real estate.

Let’s start at the top: You should know that real estate attorneys are customarily used to close real estate deals in some parts of the country and not others, but Sam would like to see all homebuyers have an attorney represent their interests when they close on a home. That means you, the buyer or seller, has to actively engage a real estate attorney to represent your interests only in the transaction.

We can’t emphasize this enough. When you live in an area that does not customarily use attorneys to represent buyers and sellers in real estate transactions, you do not have anyone representing your particular interests. The closing attorney does not represent the buyer or seller. The role of the closing attorney is to facilitate the closing process. This means that the attorney handles the paperwork to get the deal closed and may also handle the issuance of the owner’s title insurance policy for the buyer.

The closing attorney does not get involved in disputes between the parties and does not make a determination on whether one party is right or wrong. In fact, while the closing attorney may handle title issues, it’s only so far as to insure title in the name of the buyer.

The closing attorney will not determine whether there are matters on title that could cause a potential issue to the buyer. When the buyer has a lender, the closing attorney may need to clear title issues but only because the lender will have certain requirements that the closing attorney must comply with to get the deal closed.

As you approach your closing date, you can’t rely on the closing attorney for legal advice or any advice on issues pertaining to your deal with the new construction seller.

There is a saying in real estate law from Latin: caveat emptor or buyer beware. You are on your own to buy the home and it’s up to you to know what to look for and what to ask for.

As you approach the closing on a newly built home, you may decide you need legal advice or someone who can explain to you what documents you’re signing. While many homebuyers go through that process without anybody telling them anything about the documents, and everything turns out OK, you have a chance now to figure out what you want to do and how much information you want to receive.

Often, when closing on a newly built home, not everything is quite finished. In Ilyce’s book, she writes about creating a “punch list” of almost-finished items, or things that were not done correctly, and making sure that this list is attached to the closing documents, so that the builder is legally required to get these items finished after the closing.

You may want to hire a professional home inspector to do the final walkthrough with you and help you create the punch list. And you may want to hire an attorney to see that the list is attached to the closing documents correctly, and if there is a major fix that needs to happen, some money is held back in escrow to make sure the builder complies in a timely way.

Of course, if you hire professionals to help you with these things, it will cost you money and there is a balance between how much you should pay and the risk of having something happen and then paying to fix it down the line.

We understand that the process is confusing. That’s OK too. Most homebuyers are overwhelmed with the whole homebuying process. You have to buy your new home and then make myriad decisions in short order, including choosing movers, deciding whether you need to buy furniture, furnishings and other items for the new home, fixing or renovating anything before moving in, remembering to set up utilities, cable and internet packages, and more.

At least with a newly constructed home, you shouldn’t have issues relating to renovation and repairs, but you still need to walk through the home with the builder (and hopefully a professional home inspector with experience in testing out new homes) and make sure everything was done right.

If the home is in fine shape, you need to educate yourself before closing on what to expect at the closing. You can find much more information about that on Ilyce’s website, ThinkGlink.com or in her book as well. And, if you’re still confused and worried about a particular issue, hire an attorney to walk you through the closing.

(Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the CEO of Best Money Moves, an app that employers provide to employees to measure and dial down financial stress. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact Ilyce and Sam through her website, ThinkGlink.com.)

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