Should You Hire an Attorney When You Buy or Sell a Home?

Should You Hire an Attorney When You Buy or Sell a Home?

by Jane Haskins, Esq., February 2018

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Buying or selling a home can be an emotional roller coaster, and the negotiations and paperwork can leave you feeling unsure and on edge. Fortunately, most home sales follow a pretty standard procedure, and real estate agents, brokers, and title and escrow companies generally do a good job of guiding you through the process and making sure everything is in order.

If you have a good agent and things are running smoothly, you may not need a lawyer.

But there are times when it's a smart idea to hire a real estate lawyer. Here are seven home buying and selling situations where a lawyer's insights can prove invaluable.

1. State law requires you to use a lawyer.

In some states, lawyers must be involved in certain aspects of a real estate transaction. In other states, lawyers are optional.

2. There is no real estate agent or broker involved.

A “for sale by owner" deal can save you money on real estate commissions, but you still need someone to prepare the purchase agreement, deed, and other documents. A lawyer can get your paperwork in order, ensure the title is good, and help you with the fine points of negotiating the transaction.

3. You are the buyer, and you don't have your own real estate agent.

If you make an offer on a house and aren't represented by a real estate agent, the seller's agent may offer to take care of everything. This is known as “dual agency," and it can cause problems because one agent cannot truly look out for the best interests of both you and the seller. When push comes to shove, their loyalties will probably be with the seller. When you hire a lawyer, your lawyer only works for you and will make sure your interests are protected.

4. There is a problem with the property or the deal.

A lawyer can help you resolve some of the tougher, more technical issues that might come up. These may include easements, rights of way, boundary disputes, or other issues involving the property the house is on. You may also need legal advice if the property is involved in a foreclosure or other litigation, or if you get into a dispute with the buyer or seller. Always talk to a lawyer if someone threatens to sue you.

5. You are concerned about the tax consequences.

If you are the seller, you could be liable for capital gains tax if the home has increased in value. If you are the buyer, you may be able to deduct mortgage interest, home office expenses, and some or all of your property tax. If you plan to rent the property, you will have to report your rental income and expenses on your taxes. A lawyer or CPA can explain how your home purchase or sale will affect your tax return.

6. You plan to change the exterior of the home.

Your local government, historic district, or homeowners' association may have strict rules about what you can and can't do to the outside of your house. These rules can cover everything from teardowns to additions, to solar panels, to new paint colors. A lawyer can interpret and explain these rules, advise you on the feasibility of your plans, and help you structure the transaction and gain the approvals you will need to move forward.

7. Your instinct tells you to talk to a lawyer.

If there's something unusual or nonstandard about your transaction, or if you aren't sure that the people handling the deal know what they're doing and have your best interest at heart, it's a good idea to set up a consultation with a lawyer.

A home purchase or sale is probably one of the biggest transactions of your life, and the money you pay a lawyer now may prevent you from making a big mistake that you may regret later.

If you're buying or selling your home and have legal questions, check out our personal legal plan and talk to an independent attorney in your state