You’re about to purchase a new home or sell your old one, and you wonder whether you need an attorney or can “get away” using only a title company (as your Realtor may tell you). For little to no extra cost and much peace of mind, using an attorney to handle your closing usually makes a lot more sense.
For most people, the home is the most expensive asset you own. If you were buying or selling a business for the same price, you wouldn’t think twice about hiring an attorney. In real estate transactions, it makes even more sense to bring in a lawyer because in many cases the title company’s fee may not be any lower.
What you get when you hire an attorney over a title company is someone who not only handles the paperwork for your closing, but who also looks out for your legal interests. A title problem pops up during the process? An attorney can quickly clear it up. Get into a dispute about what furniture the seller is supposed to leave behind? An attorney can interpret the contract to see what you’re entitled to, then help you enforce your rights. See charges on your closing disclosure form you wonder about? An attorney carefully evaluates all charges to make sure you are legally bound to pay them—important because people often try to slip in extra fees hoping you won’t notice.
If you are buying a house in Coral Springs or selling one in Palm Beach County (the customs differ), you are generally the one who chooses the title insurance provider/closing agent. If you select an attorney, you get legal representation for a price similar to a title company’s, which doesn’t come with that representation. Attorneys also tend to be more thorough; I have been involved in many deals where the title company doesn’t do a complete city lien search, for example, claiming that is outside the scope of their job. This means if the home has outstanding permits, you may not know it until after you close.
What’s more, I have saved clients hundreds or thousands of dollars because I contested charges they did not legally have to pay. So even if the other side chose the closing agent and they hired me additionally, the savings often more than paid my fee.
Quick Frequently Asked Questions
1. Can a title company provide me with a legal opinion if a “cloud” is found on the title?
No. Under Florida law, a title agency is generally prohibited from providing legal advice or a legal opinion regarding the status of a title. If a Cloud on Title (such as an unreleased mortgage from a previous owner) is discovered, a title company can only identify the issue as an “exception” to the insurance policy. They cannot legally advise you on how to resolve it or draft the legal documents (like a Quiet Title action or a corrective deed) needed to “cure” the defect. Only a licensed Florida attorney can perform these services.
2. Are title insurance rates negotiable in Florida?
The premium for title insurance is actually promulgated (set) by the state of Florida under Florida Administrative Code 69O-186.003. This means the base cost of the title insurance policy itself is the same whether you use a title company or an attorney. The difference in cost usually lies in the “settlement fee” or “closing fee,” which is the charge for the labor of conducting the closing. Because the insurance rates are fixed by law, hiring an attorney often costs virtually the same as a title company while providing the added benefit of legal representation.
3. What is the legal risk of a title company failing to perform a “Municipal Lien Search”?
While a standard title search looks at county records for mortgages and taxes, a Municipal Lien Search investigates unrecorded city issues like utility bills, code enforcement violations, and open building permits. If a title company excludes this from their scope of work, you could inherit thousands of dollars in fines that “stay with the land” after closing. An attorney acting as your closing agent has a Fiduciary Duty to ensure your interest is protected, which typically includes ensuring these municipal issues are resolved before you take ownership.
4. If I am the Personal Representative of a probate estate, can a title company help me with the “Order to Sell”?
No. If you are selling a home that is currently in Probate, a title company cannot draft the Petition for Order Authorizing Sale or the resulting court order required to transfer the property. Because these are court filings, they must be prepared by a licensed attorney. A title company will simply stop the closing and tell you to “go hire a lawyer” to get the order, which can cause significant delays and may jeopardize your sale contract.
5. Who is legally responsible for the “Gap Period” between the title search and the recording of the deed?
The “Gap Period” is the time between the effective date of the title commitment and the moment your deed is recorded in the public records. If a new lien is filed against the seller during this window, it could attach to your new home. While title insurance can cover this, a real estate attorney provides an extra layer of protection by reviewing the Gap Affidavit and ensuring the seller provides proper indemnification, a process that involves legal interpretations a non-attorney title agent cannot offer.
In the state of Florida, the convention is to present an offer in the form of a signed contract. Here again, involving an attorney makes smart business sense. For a client that plans to hire a lawyer as their closing agent, many attorneys will review the initial contract for no extra fee. To keep that contract from being binding before the lawyer sees it, be sure to write “subject to attorney’s review within three business days” into the contract you are presenting as your offer. Then get it to an attorney right away, so he or she can be sure you are well protected.
Contact the Law Office of Gary M. Landau for a free estimate the next time you find yourself buying or selling your home.