Why it is important to hire an attorney when purchasing a home.
As a New Jersey real estate lawyer, I represent both buyers and sellers in
real estate transactions. Buying a home is one of the most significant investments a person can make. So much so, that the majority of people purchasing their home use the bulk of their savings and incur debt (borrow money) to come up with the purchase price. This is significant as a person may have now gone from being in the black (a good financial situation) "cash wise", to in most cases being in the red (not in a good financial situation) cash wise. Consequently, if the purchased property has problems, the purchaser may or may not have the means to rectify them if the sale goes through.
In light of the above, it is extremely important to flush out as many of the problems prior to closing, so that a person can accurately assess as to whether or not it is worth going forward with the transaction. Many times purchasers rely on the boiler plate contracts that are given to them by their realtor, believing that it adequately protects their interest. The problem is that the majority of transactions are different, and while the boiler-plate contract has some protections it is not a "one size fits all". As such, it is extremely important to have an attorney experienced in residential real estate review the contract, and make amendments that are in your favor. Otherwise, should a problem arise and you failed to hire an attorney experienced in residential real estate, you may be stuck with the problem under the boiler-plate contract.
Many times clients are fearful that they are already spending so much money on the transaction (e.g., the purchase price, lender's fees, title insurance, survey, etc) that they do not want to spend any additional sums hiring an attorney; especially when it appears the boiler-plate contract covers many potential diligence issues. However, have you ever heard the line "Penny-wise, Pound Foolish"? It means saving a little today may costs you a lot in the future. This is applicable to a real estate transaction. By saving a little today and not hiring an attorney, you may be spending a lot at a later date on items that an experienced attorney would have protected in a rider to the contract by (i) having the seller pay for them, (ii) having the seller reduce the purchase price to compensate the purchaser for this expense, or (iii) allowing the purchaser to cancel the transaction.
Additionally while the initial cost (legal fee) may seem a lot (e.g., Nine Hundred Dollars ($900)), in the scheme of a Three Hundred Thousand Dollar ($300,000.00) purchase of a property, it is approximately one third of a percent (.33%) of the entire transaction. Alternatively, not being able to get out of a transaction as a result of (i) a title issue due to the automatic passage of a time period and (ii) the failure to properly negotiate a liquidated damage clause, may end up costing you thousands of dollars. Again, it is better to spend a little money to hire an experienced residential real estate attorney then it is to deal with expensive issues that could have been avoided by hiring such an attorney at a later date.
*The information in this blog posting is for general information purposes only. Nothing in this blog or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. The information in this blog is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship.