Real Estate Attorney (10)
A good Buyer’s real estate attorney should review the Contract during the Attorney Review period to make sure the real estate tax prorations are appropriately calculated in the contract. Property taxes are paid in arrears in the state of Illinois. For example, real estate taxes payable for 2018 are paid in installments in 2019. Therefore, if a property closes in 2019, the Seller will give Buyer a credit at closing for the 2018 real estate taxes that are payable in 2019. If the 2018 real estate tax bill has already arrived, then the Seller will give Buyer a credit at closing for the actual amount disclosed on said real estate tax bill. If the 2018 real estate tax bill has not arrived as of the time of closing, Seller is required to give Buyer a credit at closing for a set percentage of the last ascertainable real estate tax bill to cover any increase in taxes there might be in the 2018 real estate tax bill. Typically in Cook County, this percentage is 110% of the last ascertainable real estate tax bill. Typically, in Lake and other collar counties, this percentage is 105% of the last ascertainable real estate tax bill. The Seller will also give Buyer a credit for either 110% or 105% of the last ascertainable real estate tax bill for the number of days in 2019 that Seller owned the property. Typically, the prorations are final at closing and Buyer bears the responsibility of paying the real estate taxes when the real estate tax bills arrive post-closing.
Typically, the Seller chooses the title insurance company that will issue the title insurance policy and conduct the closing. As soon as the attorney review and inspection issues are resolved, a good Buyer’s real estate attorney should request a copy of the title commitment to review the state of title and the invoice for title services so the Buyer can understand and prepare for the closing costs that are payable at the closing.
Title insurance insures the state of title on the property prior to the Buyer’s purchase of the property – It is insurance that the property the Buyer is about to buy does not contain any restrictions, encumbrances, liens or judgments that would affect the Buyer’s ability to live at and enjoy the property. Just like any kind of insurance, title companies routinely raise exceptions on the policy that are not covered under the insurance. A good real estate attorney will review the title commitment closely prior to the closing on the transaction to ensure that the title is clean and that there are no unwanted exceptions raised on the policy that would affect the Buyer’s ability to live at and enjoy the property.
Buyer can ask Seller to fix things that are broken, constitute a current threat to health or safety or are not performing the function for which the item is intended. An item or appliance that is very old in age may not be part of the inspection contingency as long as it is performing the function for which it is intended. It is crucial for Buyers to be aware of this standard so they can determine if they still want to place an offer on the property fully knowing that the Property has a very old HVAC system or very old roof. Sometimes motivated Sellers may be willing to extend credits to compensate for these items. However, the Contract does not require Sellers to fix or replace these old, yet functioning items.
The 5 business day period following the Seller’s acceptance of the Contract during which time legal changes to the Contract are negotiated with the Seller, via the Attorney Review Letter, taking into account the Buyer’s specific circumstances. This is a very important period in the Contract which allows Buyer’s attorney to suggest changes to the Contract and raise inspection related issues to the Seller. Failure to timely send the Attorney Review Letter will result in Buyer forfeiting the ability to negotiate key issues with the Seller.
: The role of a real estate attorney is primarily to guide the client through the entire process and answer questions related to whatever comes up, i.e. contract matters, title related matters, inspection and loan issues. However, the following is an overview of what the attorney does:
a. Review the Contract and suggest revisions that are favorable to the Buyer during the attorney review period;
b. Negotiate inspection related fixes, repairs and credits with Seller within the inspection contingency period;
c. Review the title commitment and confer with Seller and title insurance company regarding exceptions raised on title that may be unacceptable to Buyer;
d. Negotiate appropriate extensions to the mortgage contingency period to assure that Buyer has the desired amount of time to obtain mortgage approval prior to being obligated to purchase the property;
e. Attend closing and ensure that Buyer gets clean title from the title insurance company and Seller;
f. Attend closing and fully explain the loan documents and all of Seller’s closing documents (including the settlement statement) to the Buyer.
Just like all services, you get what you pay for when it comes to legal services. A typical real estate attorney would charge anywhere from $500-$600 for a routine residential transaction. If you are a first time home buyer and need a lot of guidance and advice, interview a couple of attorneys to get a feel for their personality and their willingness to spend time on your matter. Shopping around for the cheapest attorney may not always yield the best result because an attorney who is charging below market rate may have no incentive to spend time on you and your matter prior to the closing date if you are not compensating them appropriately. Often times, purchasing a home is the single most important and expensive purchase of your lifetime. Do not cheat yourself out of the proper guidance and advice you deserve from a qualified attorney!
While it is ideal to consult with an attorney while contemplating a purchase, that doesn’t always necessarily happen. However, it is a good idea to have someone in mind and have a preliminary consultation with right before placing an offer on a property. An attorney should be brought in immediately after the Seller formally accepts the offer since that acceptance date triggers several deadlines under the Contract in the way of Buyer and Seller obligations.