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I thought my real estate agent would cover the whole thing. How does an attorney get involved? Why do I need to hire one on my side?

I ask this because I have read about it in first-time buyer help sites but they don't say why do I need an attorney.

Also, my credit union just sent me this memo:

Once you've considered the down payment, make sure you've got enough to cover fees and closing costs. These may include the appraisal fee, loan fees, attorney's fees, inspection fees, and the cost of a title search. They can easily add up to more than $10,000 - and often run to 5% of the mortgage amount

I don't get it.

[update] I'm in Los Angeles, US, my real estate agent told me to get one.

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4 Answers 4

To the best of my knowledge, Los Angeles County does not require a lawyer to be involved in a real-estate transaction. I looked through the County Recorder site and found no evidence that a lawyer is required. I live in a different county in California where a lawyer is also not required for real-estate transactions. Some counties do require a lawyer to be involved.

That said, a purchase contract - is a contract. A legal document which you sign. A realtor may be able to help you understand the housing market pricing trends, but cannot (not allowed by law) draft the contract for you or advise to you on the clauses of the contract you're signing. Only a lawyer licensed in your State (California) is allowed to do that. So if you want a legal advice about the contract you're going to sign - you need to talk to a lawyer. Especially if you want a contract drafted for your own special needs, or have some specific titling requirements (for a company, or a trust - for example). Same goes for the mortgage contract and any other piece of paper you'll be signing during the closing meeting (and there will be plenty of such signatures).

So it is not a question of need, it's a question of should.

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Remember, the bank and seller will have lawyers analyze the contracts to protect their interests. Those lawyer are under no obligation to protect your interests -- in fact, it can be argued that their responsibilities to their clients include taking you for all they can get. This is not a small or simple or reliably standardized document. There are plenty of ways to get it wrong, or at least wrong from your point of view. –  keshlam May 8 at 22:17

Somebody will have to file all the required paperwork and fees with the local government, state government and even the federal government. This paperwork is used by these governments to record who owns the property and how it is owned.

Prior to the settlement date they also will need to verify how the property is described and owned so that you are sure that you are being sold the exact property you expect, and that it is delivered to you free and clear of all other debts.

If this is done wrong you might discover years later that you paid money for something that you don't really own.

In some jurisdictions this has to be done via a law office, in others there is no requirement for a lawyer. Because a mortgage company, bank, or credit union is giving you money for the loan, they may require you to use a settlement attorney. They don't want to discover in 5 years that a simple mistake will cost them hundreds of thousands to fix.

The mortgage company is required to give you a more detailed estimate of all the closing costs before you are committed to the loan. The quoted paragraph is not good enough.

Even if you can avoid the use of a lawyer these functions still need to be done by somebody, and that will still cost money.

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Maybe things are different in California. I live in Michigan and have bought several house (over the course of many years) in Ohio and Michigan, and I have never hired a lawyer. Yes, there are all sorts of contracts to sign, but these are all standard contracts. I'm sure people contracting for a $50 million office building have lawyers and haggle over contract terms, but for the typical home buyer, the realtor shoves the contract in front of you and you sign it. Your choices are basically take it or leave it. If you don't like it, you're going to find that all the realtors in the state use pretty much the same standard contract.

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Whether you need to hire a lawyer depends on whether you are capable enough to understand the fine print and it's consequences in all the contracts you sign with the Builder or not. Even though the REPC is a standard document, the Builder may add additional addendum voiding many of the rights Buyers normally have. If you are not sure or have doubts about specific verbiage, I recommend that you at least get your Realtor to spell it out for you or hire a lawyer as an alternative.

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