9 years ago – almost to the day – I wrote a blog post about How To Choose A Real Estate Attorney, in which I explained some of the things that an attorney does to close a real estate transaction and where home buyers and sellers often make mistakes in choosing someone for this important role. Surprisingly, in many states there are no attorneys involved in the closing process and yet somehow they manage to muddle through. But in Illinois it’s hard to imagine how closings would get done without them. I guess the responsibilities are just allocated differently.
Well, here it is 9 years later and we continue to struggle with the aftermath of poor attorney choices. Many of our clients won’t take our attorney referrals and have high confidence that they know a great attorney and then, more often than not, we have to work overtime to ensure that the transaction doesn’t skid off the rails. The fundamental problem is that we can only push so hard on this issue. How do you tell your client that their cousin Vinny is a clown – either before or in the middle of the deal? So no matter how bad our clients’ attorney is our clients usually never find out about it and will probably use them again.
Yeah, we usually know we’re headed for trouble when our client tells us they will be using a friend or relative. It appears that home buyers and sellers often choose a real estate attorney the same way they choose a real estate agent: on the basis of a relationship. And they usually end up with the same problem.
The other warning sign is when we find out, despite our clients ensuring us that they are using a bona fide real estate attorney, that the attorney is really a public defender, an immigration attorney, or a retired _______ who became an attorney as a second career. BTW, I did not make up an of those scenarios and the problem is that, like many professions, experience matters.
So just to give you an idea of how bad it can get here are some of the worst examples from our experience.
Keeping Us In The Dark During The Transaction
This is a big pet peeve of ours. I don’t know if these attorneys purposely don’t want us to know what is going on or if they just don’t think we need to know but when we are in the dark it is more likely that our clients will agree to something they shouldn’t agree to or not agree to something they probably should agree to. Or…see the following sections…we won’t be aware that the attorney is about to screw up. And it doesn’t help matters when the other realtor calls us to discuss an issue that we know nothing about.
Not Managing The Deadlines
One of the most important functions of a real estate attorney is to manage the deadlines specified in the contract. If key deadlines are missed our client can either lose certain rights – e.g. the right to raise inspection issues – or default on some term in the contract, opening them up to losing the deal entirely. Yet we find that inexperienced or incompetent attorneys can screw up this key function with disastrous consequences.
Being Generally Clueless
We’ve seen it all. Attorneys that are so clueless that…
- We get a call the night before closing asking us how to calculate a property tax proration
- They know how to calculate the tax proration but they don’t understand how to adjust for a radically revised assessed value
- They don’t know what a 22.1 is (for a condo sale)
- They don’t know they are supposed to order condo docs
- They don’t know they are supposed to order any number of other documents from various providers
- They (seller’s attorney) doesn’t know how to get a clear title
- They tell their seller not to move out of the home until after closing
- They don’t send needed documents to the other attorney
- They think someone else is supposed to perform tasks that they need to get done
- They don’t have a copy of the closing statement the night before closing
Being Unnecessarily Confrontational
We often see this when the chosen attorney (or even the client) is a litigation attorney or if the attorney is a close relative or friend trying to impress the client with their lawyering prowess. They try dying on every hill, objecting to boilerplate contract language, generating unusually long lists of issues, or refusing cooperation on harmless requests just because they can. This is especially problematic when there are in fact substantive issues to work out. Being unreasonable does not set the right tone for addressing the real issues.
Not Understanding Normal Protocol
This actually dovetails with the previous section. Experienced real estate attorneys understand that there are certain expected modes of behaviors and that certain requests are pretty normal and they react accordingly. However, when you are dealing with an attorney that does not have deep real estate experience everything is unusual and therefore an issue. The best example of this is the request for an extension on the timeline for an inspection. Scheduling problems on both sides of the transaction can delay the inspection, which is on a 5 business day deadline. It is extremely common to request an extension to the deadline and to be granted that extension. However, attorneys who only play real estate attorneys on TV will often refuse this request, which can unnecessarily jeopardize the deal.
The wrong real estate attorney can really screw up a transaction and we’ve even seen them kill a really good deal. If clients would only use our attorney referrals. There is a reason that we have used certain attorneys for dozens of transactions. We’ve seen hundreds of them operate and we know how to tell the difference between good ones and bad ones.
Gary Lucido is the President of Lucid Realty, the Chicago area’s full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market or get an insider’s view of the seamy underbelly of the real estate industry you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.