The Chicago Real Estate Minute

5 Must-Knows about the Attorney Review

4 minute read

The attorney review is a vital step in the overall process that is rarely if ever waived by either party. The real estate attorney plays a pivotal role, assisting their client in under­stand­ing their options and ensuring they under­stand every­thing from a legal perspective.

Why Attorneys are Involved

Throughout the United States, there are both attorney and non-attorney states — Illinois is a state that cus­tom­ar­i­ly uses them. When involved, they review the contract and other documents and act as your primary rep­re­sen­ta­tive for inspec­tion and con­trac­tu­al language related items. They negotiate on your behalf at this juncture much as your agent did for price, closing date and other terms of the deal.

Real estate contracts are boil­er­plate “fill in the blank” documents, so agents (who are not attorneys) can use them to write and negotiate offers. The attorneys step in once under contract to tweak how the standard language reads to fit their client’s specific needs, as well as discuss inspec­tion concerns. Agents can also discuss these with their coun­ter­parts, but it’s just con­ver­sa­tion — only the written com­mu­ni­ca­tion and agree­ments completed by the attorneys are legally binding.

Potential Changes in Verbiage

Rarely are important para­graphs removed from the contract, but there are often requests to change the legal language or remove a specific phrase/sentence. Changing some of the nuanced details is standard practice in most real estate trans­ac­tions, so don’t let this concern you.

How Inspection Items Get Addressed

One of the main aspects of the attorney review is often to work out items found during the inspec­tion. Everything from defi­cien­cies in the elec­tri­cal system to the mechan­i­cals to appli­ances to plumbing to windows and even exterior items such as the roof, brickwork, decking and stairways can be brought up by the buyer’s attorney via an official letter.

Options Available During Attorney Review

Image by Gerd Altmann from Pixabay

There are many “checks and balances” that are auto­mat­i­cal­ly built into real estate contracts. Both buyer and seller have options available to them during the attorney review, including the right to kill the deal if they so choose. Most people don’t want to do this of course, but it is always there in the back­ground as a possibility.

The attorney review does need to be initiated by a date set forth on the contract, but the overall timeframe is open-ended. Until the two sides agree on the changes that the attorneys have been nego­ti­at­ing, the appraisal usually doesn’t get ordered nor can the deal be consummated.

Changes Following the Attorney Review

The deal advances sub­stan­tial­ly once it’s completed — when the appraisal is normally ordered, the final install­ment of the earnest money is given, and the lender really gets going full steam ahead.

The freedoms that existed during the attorney review are gone. In most instances, most buyers only real out is if they no longer qualify for their loan under the terms of the contract. And sellers do not normally have any out at this point unless the buyer misses their mortgage con­tin­gency deadline and refuses to move forward without an extension to it.

Final Word

Attorneys are involved in some capacity through­out the entire contract-to-close time frame. Their most active portions being during this attorney review, however they also attend the closing and is the person explain­ing all the paperwork and ensuring accuracy before you sign.

A word to the wise: Do not, under any cir­cum­stances, use an attorney who does not work primarily/exclusively in res­i­den­tial real estate. I cannot emphasize this strongly enough. Your family member “who does some real estate on the side” who’s trying to save you a few hundred bucks may end up costing you tens of thousands of dollars for missing a vital deadline, because they’re used to a totally different form of law. It sure would make for a tough con­ver­sa­tion over Thanksgiving if they’re just cost you tons of money — well inten­tioned or not …

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