by Pamela Dittmer McKuen
At one residential real estate closing, the buyer offered to pay $5,000 less than the amount written in the signed contract.
At another, the lender mistakenly filled in the interest rate as one-eighth of a percent higher than the agreed-upon amount.
And at yet another, the seller had left in a house more than a dumpster full of-to put it politely-junk he didn't want.
In all three cases, attorneys were instrumental in smoothing out the rough edges of the deal.
The buyer was told he was legally obligated to pay the original amount, the interest rate error was corrected and the seller put up money for refuse disposal.
"It's like Murphy's Law," said John O'Brien, a real estate attorney in Arlington Heights and president of the Illinois Real Estate Lawyers Association. "If something can go wrong, it will."
Even when something doesn't go wrong, and usually it doesn't, the process of buying or selling a house is extremely complicated. Thousands of dollars are changing hands, dozens of documents must be signed and many local, state and federal laws must be followed.
In Illinois, it is customary, although not required, for home buyers and sellers to hire attorneys to represent them. The cost typically runs $300 to $750.
Downstate lawyers tend to charge an hourly fee, said Mary Lee Faupel, a real estate attorney in Eureka and Peoria and chairperson for the Illinois State Bar Association Real Estate Law Section Council.
"It's well-spent money," said real estate broker Dick Post of ERA R.M. Post Realtors in Tinley Park. "Whenever we've been brought in where there is not an attorney, problems are compounded. Closings get delayed because things were not done on a timely basis or the figures are incorrect. And from a liability standpoint, we have to be cautious. We can't be practicing law."
"At a real estate closing, tensions run high," said Linda Pease, vice president and manager of Loop operations for Chicago Title Insurance Co. in Chicago. "Closings go more quickly and are more comfortable and disputes are more easily resolved when attorneys are present. Attorneys are looking at the closing from a business perspective. They don't have the emotion the buyer and seller has."
You can expect your attorney to:
Negotiate the terms of the contract. Most contracts are contingent upon an attorney's approval. You'll usually have between three and five days to get one or waive your right to do so.
"This is the most critical stage of the negotiating process because once a contract is signed, the prospective buyer is bound by its terms," said Peter Birnbaum, president and chief executive officer of Attorneys' Title Guaranty Fund Inc. in Champaign and Chicago.
"If something has been overlooked, we are able to modify the agreement or cancel it for them," said O'Brien.
Another common contingency is the home inspection. Your attorney will want to see the results of that inspection to determine whether any changes should be made to the contract.
"If the roof leaks or the foundation is cracked, the attorney will write the appropriate letter stating that these things need to be fixed on an allowance be given," said Birnbaum.
"The supposition is that the house and everything in it is in working order not only when the contract is signed but when the property is surrendered," said O'Brien.
See that deadlines are met. The attorneys will make sure the parties are doing what they are supposed to do so the closing can take place. They'll monitor the progress of inspection reports, order documents and set the time, date and location of the closing. They'll also want to know the seller is prepared to vacate the property.
"We're sort of a traffic cop with dates and transactions," said Birnbaum.
One of the most crucial deadlines is the time by which buyers will obtain financing, said O'Brien.
"The lawyer is watching that form," he said. "If it hasn't been done, then an appropriate extension letter is written so the buyer can't be considered in default and lose his (earnest) money."
Navigate the paper maze. A typical home sale can involve as many as 50 different documents. Some are provided by the real estate broker, some by the lender and still others by the attorneys. The seller's attorney orders a title search and both attorneys evaluate it to make sure the seller owns the property and that liens have been satisfied.
The attorneys see that all necessary documents are generated and their provisions complied with on a timely basis. Some lenders may ask that a buyer's last two paycheck stubs be brought to the closing to show they are still working, or a statement showing that a major credit card bill is paid off.
"The City of Chicago has a running lien on all properties," said real estate attorney Michelle Laiss of Chicago. "That's their way of getting paid for water bills. You have to have a final reading done prior to closing."
If the property is a condo, sellers must provide either the paid-up water bill or a letter from the association that states it is responsible for water bills, she added.
"The documents you see at a closing are written in legalese," said real estate attorney Joan Dillon of Chicago. "They are confusing, but more importantly, they are final. That is the intention of the parties and that's how they are interpreted by the court later."
Be an advocate for you at the closing. The attorney will explain each document being signed and explain the closing statement, which is a list of credits and debits to each party's side of the balance sheet.
"The first document everybody reads," said O'Brien. "By the third one, you're just signing."
Another function of the attorneys at the closing is to look for mathematical errors and excessive lender fees. Some lenders ask buyers to sign unusual agreements, such as giving the lender permission to correct errors after the fact or exempting the lender from liability in the event of a Y2K failure. Many attorneys won't let their clients sign these agreements.
With the sale of new construction, sometimes the closing takes place with a punch list of items that have yet to be finished or corrected.
"Perhaps the driveway and sod aren't in," said Pease. "The attorneys will negotiate an amount of money to be held back to take care of that."
Selecting a real estate attorney can be confusing, particularly if you have had limited experience with buying and selling homes. You will want one who concentrates in residential real estate transactions. Also, because of the many local ordinances that must be followed, you'll want someone who practices in the area of the home being sold. You can find an attorney in several ways:
Be forewarned that your attorney can't do the work alone. You'll have to supply documentation, meet deadlines and abide by the contract.
Most importantly, bring your attorney into the deal as soon as possible, even before you list your home or make an offer on one.
"If I negotiate the contract, I'm in a much better position to bring finality to the process and negotiate from a position of strength," said Birnbaum. "I can't do that if the deal is already done."
Faupel agreed. She asks sellers for the title policies they were given when they purchased the home, and reviews disclosure forms with them so they can be filled out properly. She explains standard contract provisions to buyers so they are better prepared to make offers, and gives them a checklist of common inspections--including asbestos, lead and radon--to ask for.
"It's easier for me to advise my client through a transaction than to repair it afterwards," she said.