Here’s an email from the “Ask the Broker” page I just received:
I am a first time homebuyer. I am close to settlement/closing and up until now I have done well with understanding all the documents placed in front of me coming from my realtor, mortgage broker and whatnot.
Long story, short….do I need a real estate attorney?
I’ve been looking for one and I was recently told by a colleague that Arizona doesn’t require a Real Estate Attorney for the buying & selling of residential properties and that the Title company does all that work for a quarter of the cost.
Is this true?
The documents coming from the title company seem to be much more ‘legal oriented’ (as far as language) and I want to make sure I am not missing anything or agreeing to something I may have issue with. They may seem like boilerplate docs to a lawyer, but I am not a lawyer.
I could really use some guidance on this issue.
Thanks!
Great question!
BIG GIANT DISCLOSURE: I’m a real estate broker, not an attorney. My position on this may will be biased, and nothing I say here (there, or anywhere) should even remotely be construed as legal advice. And, this opinion only holds true for real estate in Arizona. Local and state real estate laws, rules and regulations vary. What you read here may quite possibly be meaningless in other states/jurisdictions.
The short answer:
No, you are not required to use an attorney in a real estate transaction in Arizona.
The lengthy answer:
Arizona is somewhat (if not completely) unique in that the Arizona State Constitution specifically permits real estate agents and brokers to prepare instruments (purchase agreements, contracts for sale, deeds, etc ) incidental to a real estate transaction.
Article 26, Section 1 of Arizona State Constitution:
1. Powers of real estate broker or salesman
Section 1. Any person holding a valid license as a real estate broker or a real estate salesman regularly issued by the Arizona State Real Estate Department when acting in such capacity as broker or salesman for the parties, or agent for one of the parties to a sale, exchange, or trade, or the renting and leasing of property, shall have the right to draft or fill out and complete, without charge, any and all instruments incident thereto including, but not limited to, preliminary purchase agreements and earnest money receipts, deeds, mortgages, leases, assignments, releases, contracts for sale of realty, and bills of sale.
Preparing real estate transaction documents and understanding them and the legal implication of them are two different things. As Michelle Lind, General Counsel to the Arizona Association of Realtors, wrote in a paper on the background of Article 26 points out:
These cases, and subsequent clarifications by the Arizona courts, indicate that Article 26 imposes a duty upon brokers and salespersons to give competent advice to their clients and to understand the legal implications of the documents they prepare. (My emphasis in bold.)
“Imposes a duty…” So us agent/broker types should be helping our clients understand all the documents surrounding their real estate transaction. In all honesty, I think the vast majority of agents do a good job of this. In my opinion, explaining the nuances of the documents is one of our most important duties to our clients. But let’s face it, as with any profession, not all practitioners are equal. Just because case law and court clarification imposes a duty does not mean that duty will always be successfully executed.
The bottom line answer:
You are not required to use an attorney in Arizona. An agent / broker can prepare documents, and a title company will help in managing the process. An agent should be able to explain the documents to you in a way you can understand. But these documents are prepared by attorneys and often the language is convoluted and peppered with “attorney speak”. You need to feel comfortable that you understand every aspect of your real estate transaction, and if hiring an attorney makes you more comfortable / confident, then by all means, hire one. If expenses are a concern, ask your agent to explain things in a different way, or ask their broker to explain it (or your title / escrow officer) – sometimes just having a different perspective and/or style of explanation might be all the clarification you need.
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{ 3 comments… read them below or add one }
Arizona is not unique in this, Colorado has much the same system set up. As a recent seller though, the fault of Colorado’s system, is that it is entirely too easy for buyers to walk away from a sales contract, all the way up through not showing up for closing. That didn’t happen to us, but it came very close.
.-= Terence´s last blog ..Hello Lost Fort Collins =-.
I was in the mortgage business for a while and although I think most people, assuming they put in effort, should have no trouble understanding their docs, I saw a lot of stuff go on that would make me a little leery about not having an attorney. Especially for such a major transaction as purchasing property. I’d almost rather have an attorney around just so I could relax and not think, “Hope I didn’t miss something.”
Then again, the attorney could be no good, so there’s a bit of risk there as well.
.-= Jack´s last blog ..Free Mortgage Calculator – Version 1.2 Released =-.
to be honest, i’m glad this is one area that the government hasn’t stuck its nose in (yet). Did you hear that they are going to be voting on whether or not to continue to allow seller financing?! If you WANT to use a laywer, you should have the right. But if you don’t want to spend the money for an expert, you should have the right too. I hope it stays that way.
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