The Role of Real Estate Attorneys as Real Estate Brokers
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Who is a Real Estate Attorney?
When you’re looking for help with a real estate transaction, it’s essential to look for attorneys who are both real estate brokers and attorneys.
Author: Stan Faulkner, Founder, Perigon Legal Services, LLC
Mr. Faulkner is an experienced counselor and litigator with 15 years of experience, having held bar licenses in four states (Mo, Il, Ct and Ga). Stan Faulkner uses this experience and focuses his skills in the pursuit of assisting individuals in probate (trust and estate) matters, guardianships and conservatorships, estate planning, business disputes and contract disputes. Published on April 30, 2022.
Real estate lawyers are licensed legal professionals that help people complete their real estate transactions. Usually, they handle the legal aspects of property transfer.
Unlike other real estate professionals such as agents and brokers, real estate lawyers are familiar with the legal requirements of property transactions. Also, in some states, it is a legal necessity that property transactions be concluded with the assistance of real estate attorneys.
What Does a Real Estate Lawyer do in Property Transactions?
The role of a real state attorney includes the following;
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Representing residential and commercial tenants in landlord-tenant issues
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They help their clients cope with foreclosures, bankruptcies, and short sales.
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Advising clients on important real estate laws
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Creating a purchase agreement, title paperwork, and mortgage agreements
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Assisting house buyers and sellers in completing the transaction and preparing home purchase documents
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Real estate attorneys may also represent their clients in court
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Helping landlords with rental applications and lease arrangements
A trusted real estate dispute lawyer can help resolve conflicts resulting from property transfers. Your attorney may also double as an estate-planning attorney and offer the related services.
Real estate investments can cost a lot of money. If you must do it correctly, you need to know whether to use a real estate attorney or real estate broker.
Some first-time homeowners prefer that real estate agents assist them in navigating the home purchase. Others are more comfortable engaging real estate attorneys.
So, what’s the difference between these two, and which option is right for you?
Differences Between Real Estate Attorneys and Brokers
The following are some key differences between a real estate attorney and a real estate broker.
Education
The first and most obvious difference between these professionals is their education. Real estate attorneys are lawyers, so they must have a law degree. Such attorneys must be graduates of approved colleges or universities and have completed their three-year degree programs.
On the other hand, realtors only need a high school diploma or equivalent. In addition, they must finish real estate education courses in management, sales and marketing, sales closing, taxes, and financing. Aspiring realtors must also complete many training hours to learn about the real estate industry.
Training
Most real estate attorneys’ training consists of working at a real estate-focused legal firm. More experienced professionals mentor aspiring real estate attorneys. That level of exposure helps the attorney get better at their job.
On the other hand, realtors learn a great deal on the job. Some realtors work as agents for real estate agencies before becoming realtors. Through a more experienced professional mentorship, the training enables new realtors to understand how the real estate industry operates.
Certifications
To practice, a real estate attorney must be licensed. The qualifications for licensing vary by state; however, passing a bar test is a typical requirement. Some lawyers also get additional real estate law certifications.
Similarly, realtors need a real estate license to practice. Aspiring candidates must sit for and pass an exam to obtain these licenses. The following are the conditions for obtaining a license:
- Candidates must be at least 18 years old at the time of the exam
- Candidates must have completed their real estate courses;
- Candidates must write and pass the licensing test;
- The candidates must join the National Association of Realtors (NAR)
Realtors may also obtain extra qualifications to improve their job abilities like the following:
- Certified Commercial Investment Member (CCIM)
- Seller Representative Specialist (SRS) certification
- Accredited Buyers Representative (ABR) certification
Payment
On average, real estate attorney costs vary. Clients may pay attorney fees according to an hourly rate. Depending on the law firm, the lawyer, location, and other factors, the hourly rate can vary widely.
Transaction closing costs are usually an agreed percentage of the real property purchase price.
However, real estate brokers get their payments as a flat fee or percentage of the real estate transaction. This could be between 5% and 10% depending n negotiations between the seller and the agent.
Can a Real Estate Attorney Act as a Real Estate Broker?
For a real estate attorney to act as a broker or real estate agent, they might need a real estate license. Generally speaking, the law allows attorneys to take on both roles. However, such attorneys have to comply with the ethics of both professions.
Should I Hire a Real Estate Attorney or Real Estate Broker?
Real estate attorneys and real estate brokers are two different professionals. Deciding which one you need will depend on many factors.
According to many states’ laws, real estate attorneys must be present when making real estate transactions. If you are buying a property in one of those states where attorneys are required to supervise real estate deals, it can make sense to hire a real estate attorney.
In such states, you might still have to hire an honest broker. The reason is that while the role of real estate attorneys includes providing legal advice to their clients or acting as a closing attorney, they may not have the skill to handle sales and purchase of properties.
During a real estate property tour, an attorney might not have the skills to assist you in preparing a competitive market analysis report, negotiating for repairs, or spotting issues. On the other hand, a skilled realtor is a professional salesperson who usually understands how to handle these tasks.
But then, real estate agents cannot provide legal advice. They are not allowed to give legal advice under the law.
Therefore, you might need the service of both real estate brokers and attorneys since they both play critical roles in the home-buying process.
What Should I Consider When Hiring a Real Estate Attorney as a Real Estate Broker?
You must consider a few factors when hiring a real estate attorney as a real estate broker. First, you must realize that the two professions are different. While a real estate attorney might be skilled in giving legal representation and advice, they might not be effective salespeople.
Also, another issue to consider is the few ethical issues that might arise when you use real estate attorneys as brokers.
For instance, realtors and brokers have an ethical duty to disclose information about real estate properties to concerned parties other than their clients. However, attorneys do not have such privileges. If an attorney were to divulge such information, he would be violating the attorney-client relationship.
Take your individual situation into account when deciding whether to engage a real estate attorney and broker separately or to hire one person to do both jobs.
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