Real Estate Closings: Why Do I Need a Lawyer?

In South Carolina, buyers and sellers are required to select an attorney in order to close a real estate transaction. I have had clients in the past ask me, why do I need a lawyer? Well, here's why...

By definition, a contract is an agreement entered into voluntarily by two parties or more with the intention of creating a legal obligation. Any time I see the word legal, I am thinking lawyer! The fact of the matter is that a real estate contract is not something to be entered into lightly; it is a legally binding document enforceable even upon the event of death (yes, if you sign an agreement to purchase real estate and kick the bucket, your heirs will be liable!). It is not a bad idea to have your attorney review the purchase agreement BEFORE you sign it, so that you can be sure you are protected.

Once offer and acceptance are made, there is a meeting of the minds, and buyer and seller have signed the document, it is lawyer time. Buyer and seller select an attorney to handle their side of the transaction. If you do not have a preferred real estate attorney, your REALTOR will usually have a few suggestions of offices they have worked with in the past. In Pawleys Island, you will have to choose an office that can close transactions in Georgetown County. My personal favorites are Sean Phelan with Elliot and Phelan Law or Jimmy Moore with McNair Law Firm.


So what does the lawyer do?


On the buyer's side, the attorney (or more likely the proficient paralegal) will perform a title search on the property.  This process establishes and double-checks the chain of title, which answers three important questions:

1. Does the seller actually OWN the property and do they have the right to sell it?
2. Are there any restrictions, easements, or allowances that affect the use of the land?
3. Are there any liens (mortgages, back taxes, mechanic's liens, assessments) that must be paid off at closing?

Anyone can conduct a title search, as ownership of real property is a matter of public record. However, in SC, and attorney's office can conduct a most thorough and exhaustive search. If a cloud is found on a title, meaning an irregularity in the chain of title, then it will have to be corrected before the sale can close. It is a good idea to purchase title insurance that protects a buyer from any title problems that may come up after closing. Ask your attorney about this.

Your attorney also prepares all of the legal documents that transfer ownership of the property to the buyer. You can review your HUD-1 Settlement Statement one day prior to closing. It details all services and fees associated with closing and gives you your bottom line (how much money you need to bring to closing, or how much you walk away with as the seller).

When you meet with your attorney the day of closing, he or she will go over the HUD-1 and the hefty stack of documents which you will sign to transfer ownership. Closing can be done remotely, meaning you do not actually HAVE to be present on closing day; the attorney can Fed-Ex all documents to you for signatures. This is particularly common here in Pawleys Island, where many properties are purchased as a vacation home or investment. 

Once all signatures are acquired, the attorney has goes to the court house to record the deed in the name of the new owner. At that moment, ownership is officially transferred. Champagne time!

The purchase of real property is somewhat complicated affair. Wars have been fought over who has rights to certain properties. In my opinion, the details are best left to a good attorney. Do your research and find a lawyer you trust and feel comfortable with. A real estate lawyer is certainly there to help you with a smooth closing, but you may want to "shop around" to find your best fit.  Don't be afraid to ask lots of questions; that's what they get paid the big bucks for...see HUD-1....:-)

Happy House Hunting!