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
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.
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 …