Legal Topics

Why You Need a Lawyer for Your Real Estate Purchase or Sale

The Role of Attorneys in Pennsylvania Real Estate Closings

The real estate closing process begins with a purchase agreement signed by the buyer and the seller. Most residential real estate purchase agreements are prepared and negotiated by real estate agents and presented to their clients for their signatures. If there are no real estate agents, either the buyer or the seller may hire an attorney to draw up a purchase agreement. Either party may also elect to have an attorney review a purchase agreement prepared by an agent or by the other party before signing.

Pennsylvania law allows attorneys and licensed settlement agents, usually title companies, to handle real estate closings. However, since title company settlement agents are not as common in Pennsylvania as in some other states, attorneys usually take over after a purchase agreement is signed and handle the settlement process.

The buyer’s attorney is in charge of most aspects of the closing process. First, the buyer’s attorney will conduct a title search to see if there are any unpaid liens or judgments against the property, and to make sure all prior deeds were properly recorded, so that the seller has the legal right to sell the property. The buyer’s attorney and the seller’s attorney will work together to clear up any issues that might arise during the title search. For example, the seller’s attorney may contact the holders of judgments to obtain payoff amounts, or to negotiate settlements. All liens and judgments must be paid and cleared before the closing, or arrangements must be made to pay those amounts out of the seller’s closing proceeds.

After the title search has been completed, the buyer’s attorney will arrange for title insurance. This is required when the buyer is purchasing the property with a mortgage, and highly recommended for buyers even if purchasing with cash.

The buyer’s attorney will prepare a settlement statement listing all of the money paid by the buyer or his lender, and all expenses, such as real estate commissions, current mortgage payoffs, recording costs, and other expenses associated with the transaction. Once the closing is completed, the buyer’s attorney is responsible for making sure all parties are paid, the deed and mortgage are properly recorded, and a title insurance policy is issued.

The seller’s attorney is responsible only for preparing a deed, reviewing the settlement statement, and helping resolve any issues revealed during the title search.

Many parties ask if they can use one attorney to handle both sides of a real estate closing, for convenience, and possibly to save money. While not prohibited by law, the practice of using one attorney to handle both sides can become difficult if any disputes arise between the parties during the process. In such a situation, the attorney cannot advise either party about their rights and obligations, and both parties must hire new attorneys. 

Buyers may also ask whether it is better to have an attorney or a title company handle their closing. Title companies are permitted to handle real estate closings in Pennsylvania, but may not prepare deeds or mortgage documents, and may not give legal advice.