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View Full Version : Buying a house without a lawyer?



Wade Lippman
09-13-2017, 9:45 AM
I have bought 3 houses in NY. On one, the lawyer found there was still a $70,000 lien on it at closing; and we had a full moving truck on it's way. He got the lien removed and compensation from the seller. Sure am glad we had that lawyer.

My son is buying a house in WI. They don't use lawyers in WI. I pointed out that the seller has to deliver good title; but how is he to know if the title is any good, siince he has no idea what it is even supposed to look like. He doesn't know, just that no one he knows has ever used a lawyer.

So, how does that work? It seems crazy to me to save a few hundred dollars and risk a $400,000 disaster, but perhaps there is a reason for it.
Anyone know?

Adam Herman
09-13-2017, 10:00 AM
that's why you hire a title company. they insure the title is good, and make all the necessary filings. The title company has insurance that will cover their mistakes.

no Realtor involved?

we have never hired a lawyer for a real estate transaction.

Greg R Bradley
09-13-2017, 10:02 AM
Lots of different systems to ensure the title is clear. Sounds like NY uses a lawyer, which sounds completely strange to me in CA where we use a title company through the escrow company. State law probably requires a certain procedure and may be quite different in different states.

Jim Becker
09-13-2017, 10:05 AM
Each state is different in how this kind of thing is handled. Here in PA, lawyers are not the norm, but title search and title insurance is part of the process for closing on a property. The title company conducts the actual closing, too.

BOB OLINGER
09-13-2017, 11:49 AM
For what it's worth, we use attorneys in Iowa. I wouldn't buy real estate without a title opinion which we get from attorneys in IA.

Scott Brader
09-13-2017, 12:10 PM
I've used a lawyer in WI just to make sure my interests were protected. Plus, having him go over everything ahead of time makes for a very smooth and very fast closing. The title company lawyer said my closing was the fastest he had ever seen. It cost me a few bucks, but it was worth it when he had a few tweaks done to the paperwork before closing.

Scott

Pat Barry
09-13-2017, 12:28 PM
MN banks require a Title company for loan origination. If you buy in cash then you better hire the Title company or get a good lawyer.

Jerome Stanek
09-13-2017, 1:21 PM
I go to the court house and search the title

Wade Lippman
09-13-2017, 1:48 PM
Well, the title was just an example. I am sure there are other problems a lawyer would pick up that my son wouldn't. Making sure surveys are in order, that all fixtures are included; whatever.

Perry Hilbert Jr
09-13-2017, 5:08 PM
I just retired from practicing law in PA. Having a lawyer at settlement is not uncommon, but certainly not normal. A standard bank mortgaged transaction with title search and title insurance is fine, but it does not cover those instances where the sale is not performed under the regulations pertaining to mortgages and banking. A cash sale, a transaction between family, or a rent to purchase arrangement are just a few examples. Such non-mortgage transactions happen more than some folks think and it makes me nervous to think folks do it without at least having title searched etc. Had one client that bought a house and tried to get a mortgage years later to build a large addition. Seems the bank's staff realized the house he was living in for 15 years was not on the lot described in the deed he was given. He came to me to straighten the mess out. Much Much more expensive than having a lawyer at settlement. In my practice, I represented many sellers in the transactions. I drafted the sale contract, I drafted the deeds, I wrote the disclosure notices if there was a problem with the property. On two occasions I felt the buyers were foolish for not having an attorney. I have also seen situations where folks had sale contracts with sellers who did not own the property. A lawyer may not catch everything, but a real estate lawyer knows where to look and the places where problems hide.

Rich Riddle
09-13-2017, 5:16 PM
Purchase the title insurance......it's a policy that guarantees the title. Many title companies employ lawyers who look over documentation prior to closing. The closer at our last house from the title company was an attorney.

Jim Becker
09-13-2017, 5:30 PM
Perry, you bring up some good points and clearly, I generalized too much in my previous statement. I was thinking about my own transactions, which always involved mortgages and title searches with the title company "running the show". It's absolutely true that many, many transactions are different and I agree that a qualified attorney is worth whatever the cost is to insure that the transaction is handled efficiently and with complete due-diligence. Thanks for your mentioning that!

Bruce Wrenn
09-13-2017, 10:12 PM
Bought a lot, with lawyer doing closing. Found out ten years later I didn't own the lot. Surveyor and lawyer both missed it. Church next door owned it. We found this when church needed me to sign off on them building an addition closer to property line than zoning allows. (I furnished both plans and some materials for addition.) Church has grave yard located on next guy over's land. Been there since 1952. He gave church grave yard, plus a buffer, and church gave me what I had supposedly bought. Things turned out well for all. Having a lawyer didn't prevent mistake, and he didn't work out details. We as neighbors did.

Rich Engelhardt
09-14-2017, 3:16 AM
Title company & title insurance here in Ohio also - even for cash purchases.

Jerome Stanek
09-14-2017, 7:00 AM
Is a lawyer responsible if something goes wrong and there are problems after the sale

Perry Hilbert Jr
09-14-2017, 7:51 AM
Mr. Stanek: I hate to say this but truthfully the words "it depends" apply. If it is something the lawyer should have caught and corrected, yes. Somethings are really extreme and are so far out of the ordinary that no one would catch them. The old story that truth is stranger than fiction does apply to some situations. I did a deed plot in every transaction. It took 20 minutes to an hour depending on the number of separate lines. At least one in three properties in my practice had deed descriptions that did not match up or did not match up with the neighbor's lines. Usually it was just an extremely minor thing. Sometimes the deeds were so far off that the plot looked like the big dipper. (really) Sometimes there were huge areas between properties that were left out. And once, I found a four acre swampy area that was never claimed even when the state was settled in colonial days. ( This is a problem peculiar to the eastern states that rarely pops up out where the "section" system of selling and dividing land was used.) If there was a large area between deeds, then I notified the owners/sellers and traced the deeds back to see where the mistake may have been. Often it was just a transposed number not correctly carried over from a prior deed. I have search back in deeds to colonial days to find the mistakes. For instance a line may really be North 4 degrees 10 minutes East and the person who drafted the next deed put North 10 degrees 4 minutes East. or even South 4 degrees 10 minutes East. I find it amazing that such mistakes just got carried on from one deed to the next and title companies did not catch such things until recently.

Curt Harms
09-14-2017, 8:09 AM
Each state is different in how this kind of thing is handled. Here in PA, lawyers are not the norm, but title search and title insurance is part of the process for closing on a property. The title company conducts the actual closing, too.

In Pennsylvania, Real Estate brokers are allowed to practice Real Estate Law (sales people are not) and yes there is a title company involved. At least that's how SWMBO explained it to me. She'd been a R.E. Broker for 30 years.

roger wiegand
09-14-2017, 8:42 AM
In MA lawyers are the norm (you still buy title insurance). In my experience of four transactions they are a great deal. They do most of the actual work to make the transaction happen, making it very easy for both the buyer and selling side, make sure all the paperwork from the realtors and banks are correct (it never is), and they get paid the least of anyone involved. In two of four transactions they discovered important issued with our properties; eg, in one case our neighbor actually had no easement for the shared driveway that crossed our property, and we had no easement for the part that crossed the next neighbor's lot. The RE agents had all assured us that it had been taken care of by the builder and there were "no problems". The lawyer actually looked at the relevant documents and deed descriptions.

If you are buying a property the lawyer you hire is the only person at the table who is there to represent you and your interests, everyone else is working for the seller or for their own interests. For the $800 or so that they charge I've found them to be a bargain, and wouldn't do another real estate transaction without one.

Jim Becker
09-14-2017, 9:07 AM
Perry, in my area of SE PA, I have no doubt that a lot of the "strange, but true" is, um...true. And there are also some interesting features that are somewhat common, such as the un-deeded easement that the north side driveway along our property lies on. We share that drive with our neighbor, but neither of us owns it. It's also not owned by the property owners behind our lands (the end of a mountain...essentially a cliff), yet it's there to insure access to that land. "Nobody" owns that narrow strip. :) And on the south side of my property, there was always an assumption that the line was congruent with the tree line. Not so...a survey we had done when putting on our addition clearly showed that the actual property line was about 8' farther south, much to the current dismay of the adjoining property's tenant who now has to move his brand new fence. :)

A lot of the original land arrangement in this area dates back to when William Penn, umm....appropriated it from the native Americans. Large chunks went to a single family. That was further broken up into ~100 acre sections which over time was broken up further. I'm sure there were lots of opportunities for tees not being dotted and eyes being crossed along with transpositions and other errors in recording. 'Nature of the beast...

Wade Lippman
09-14-2017, 3:58 PM
I just retired from practicing law in PA. Having a lawyer at settlement is not uncommon, but certainly not normal. A standard bank mortgaged transaction with title search and title insurance is fine, but it does not cover those instances where the sale is not performed under the regulations pertaining to mortgages and banking. A cash sale, a transaction between family, or a rent to purchase arrangement are just a few examples. Such non-mortgage transactions happen more than some folks think and it makes me nervous to think folks do it without at least having title searched etc. Had one client that bought a house and tried to get a mortgage years later to build a large addition. Seems the bank's staff realized the house he was living in for 15 years was not on the lot described in the deed he was given. He came to me to straighten the mess out. Much Much more expensive than having a lawyer at settlement. In my practice, I represented many sellers in the transactions. I drafted the sale contract, I drafted the deeds, I wrote the disclosure notices if there was a problem with the property. On two occasions I felt the buyers were foolish for not having an attorney. I have also seen situations where folks had sale contracts with sellers who did not own the property. A lawyer may not catch everything, but a real estate lawyer knows where to look and the places where problems hide.

This is a cash transaction, but the seller is required to provide title insurance.
I think a lawyer is prudent; my son says no one uses them and he is not about to waste money.
Is this worth fighting with him about it?

Roger Feeley
09-14-2017, 4:18 PM
We've always used a real estate lawyer. We make it very clear that, at closing, we will not sign anywhere that's not first initialed by our lawyer. Closing can be pretty intimidating but those initials make it a snap. The closing people courier the papers to the lawyer a day or two an advance. The lawyer reviews and we have a short conversation. Most of that stuff is boilerplate so it doesn't take a lot of time. We never paid more than $400 for the review and conversation.

But we are very risk averse. We sort of go crazy with inspections:
-- We go out and find our own general inspector. We never use on recommended by any agent involved in the sale.
-- We use our own pest control inspector
-- We hire a structural engineer
-- We invite a roofer after making it clear that this is a sale and they may not get business out of it. it's always been free.
-- We invite a siding specialist (same as above) also free
-- Then I poke around a lot
-- there was this company in KC where we lived that would come out and look at the grading. Those guys were experts and could tell you if you had low spots. Free.

We had some friends that found leakage in the basement a couple of years after buying. The seller had hidden a sump with carpet and a bunch of dryer sheets to mask the mold. We had moved away. I told them they should stop and photograph everything and that they could probably go after the inspector. They never did. They are still fighting water in the basement.

Jim Becker
09-14-2017, 4:39 PM
This is a cash transaction, but the seller is required to provide title insurance.
I think a lawyer is prudent; my son says no one uses them and he is not about to waste money.
Is this worth fighting with him about it?
Yes, it is, IMHO.

Perry Hilbert Jr
09-14-2017, 4:49 PM
Seller to provide title insurance? Sounds odd. If I buy a property, I want a title insurance policy that names me as the insured under the policy. I don't care what title insurance covered the seller. Is the seller paying for the title insurance policy that protects your son? Has any one plotted the deed? what is the title insurance company's report about title. Liens, right of ways, easements, who will pro rate the taxes, sewer and other municipal stuff? In many states, the seller may provide a warranty deed. That is not the same as title insurance to protect the buyer. A warranty deed states that the seller guarantees title. If the seller is retiring to Florida that warranty may be impossible to enforce if a problem does come up. And worse, to enforce the Warranty portion of the deed, you have to sue the seller. ten years from now, the seller may be dead and gone. Does your son have a sales contract? Who prepared it? Hopefully a realtor used a standard approved agreement. What of the seller disclosures? Has he given a deposit? Most state laws provide certain mandatory minimum things at or before settlement. Unscrupulous sellers love to push through cash sales because it avoids a lot of the federal regulations. A few hundred dollars to an attorney now may be a bit cheaper than finding out he paid tens of thousands or hundreds of thousands for a white elephant.

I do not know your son or how business savvy he is or is not. I once dealt with a similar situation with a relative who was very inexperienced in business in another state. I called, hired and paid for the attorney to represent that relative and the attorney saved the relative almost $5,000 in bogus closing costs, transfer fees etc. Sorry, but the words "cash sale" raise a lot of caution flags in land sales.

Chris Padilla
09-15-2017, 7:39 PM
How about one's house being sold without one's knowledge? I have a dear friend back home in CO who is (likely) to be kicked out of her home because somehow the house was sold with her knowledge. I don't have any details other than that but it sounds completely crazy that her and her family may need to vacate the home they've lived in for 15 years! As far as I know, they've paid their mortgage regularly and on time. (If this derails the thread at all, I'll move it to a new one so my apologies in advance)

Perry Hilbert Jr
09-15-2017, 11:05 PM
If she is indeed the owner of record, the house can't be sold without her NOTARIZED signature. The main exceptions are where the property is taken under eminent domain, sold for a municipal lien, or where she is in the property under a rent to own contract that was not recorded, or where for some reason, her deed was never recorded. She needs to run to an attorney, like yesterday. If she is "owner" but her deed was not recorded, the seller can sell it all over again and the buyer gets it. Of course the seller should go to jail for fraud. Same if her rent to own contract was not recorded. Any creditor of the seller could force the property to be sold, because in the property records, he is still the owner. I am just giving semi educated guesses on what could be happening and I certainly do not know the nuances of real estate law in that state. A friend/neighbor of mine purchased a property (before I knew him) and three years later, the property was listed for tax sale. The title company never recorded his deed and the tax collector kept sending the tax bills to the seller who in turn kept throwing them away. I got on the title company for him and they made everything right, including paying all taxes (it was 4 undeveloped acres with minimal taxes) interest penalties and got him an extra grand for his aggravation. Had the title company gone under and the records gotten lost, there would have been major headaches. Had the seller gone bankrupt during those years, the property could have been sold out from under my neighbor by creditors.

Brian Elfert
09-17-2017, 10:06 AM
I bought a house in MN with cash and I still went through a title company. I bought title insurance although not required with a cash transaction. Never heard of using a lawyer in Minnesota, but I assume the title company has a lawyer on staff.

Todd Mason-Darnell
09-19-2017, 8:31 AM
This is a cash transaction, but the seller is required to provide title insurance.
I think a lawyer is prudent; my son says no one uses them and he is not about to waste money.
Is this worth fighting with him about it?

Yes it is.

As others have mentioned, all the Title Insurance does is guarantee that the seller is free to transact the property (or identify any encumbrances to the transaction), it does not govern the terms of the transaction or protect your interests.

I have bought a couple of pieces of property in cash transactions using a lawyer (no real estate agent) and title insurance. A couple of samples of clauses that my lawyer caught in the sales contract:

1. The seller could insert a clause requiring "right of first refusal" at the original purchase price if I put the property up for sale in the first 5 years
2. The seller tried to put a clause in preventing me from reselling the property to a person of color (unenforceable, but still annoying).

It should cost your son ~$500 for a lawyer to review the contract. It is well worth it.

Perry Hilbert Jr
09-19-2017, 9:08 AM
Mr. Darnell said " all the Title Insurance does is guarantee that the seller is free to transact the property (or identify any encumbrances to the transaction), it does not govern the terms of the transaction or protect your interests."

No NO NO! Title insurance covers the BUYER in the event that anything affects his clear title from the seller, or any other title problem from a previous owner, or from anything else. At closing the Title company provides a list of encumbrances, rights of ways, easements etc that are known. Any OTHER cloud on the title that may crop up later is on the title company if it existed prior to closing. But it covers the BUYER's expenses in fighting for clear title, or his losses caused by that cloud. I have helped clients make claims against their title policies. It is a one time premium that covers you as long as you own the property. This from wikipedia: Title insurance is a form of indemnity insurance predominantly found in the United States which insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage loans. ... There are two types of policies owner and lender.

Stan Calow
09-19-2017, 10:05 AM
Two years after we bought our house we received notice of a lien on the property filed by the city for previous owner's failure to pay a fine for not mowing the grass. The title company was responsible for reimbursing us the cost of the fine.