I always tell my clients that I am here to help. I am here to make their transactions easy. I am here to help relieve stress and pressure. I am here to answer questions. It is a familiar refrain. So why do clients wait until it is almost too late, if not actually too late, to call when they need help?

Just the other day, a friend stopped me and asked me if she needed a title search for the new house she was buying and closing on in a few days. I had done a closing for her several years before and she had referred other people to me, so she knew how I practice. My eyes grew very wide as I told her “of course you need a title search and title insurance”. “Will it take long? Will it cost much” she asked. After a lengthy discussion, my friend e-mailed her contract to me so that I could jump in and handle the closing for her.

What I learned what that, because the house was in Martin County, the seller was to provide the title and had selected the title company. The title commitment had already been issued but because my new client had no attorney, the title company didn’t bother to send it to anyone. When we called to ask for the commitment and copies of the closing documents, we set off all kinds of alarms. The client’s real estate agent became defensive. She said that the title company was handling title and we weren’t needed. Perhaps we had been hired to handle the sale of the client’s house. UH OH! I thought we were working with another real estate agent who doesn’t want to work with the client’s attorney. What is she hiding? Likewise, the title company was uncooperative. Once they knew that we were involved, they should have automatically sent us everything. However, we had to ask for every piece of paper, document by document, page by page.

At this point, it occurred to me that I needed to write this post. I’ve written about the need for real estate attorneys for residential closings before (see post HERE). Obviously, this closing is another example of that need. Your agent should protect you, but an agent is not an attorney and some agents, to this day, believe that attorneys only screw up deals. Good agents don’t think that way. If an agent steers you away from an attorney, you have a bad agent. Relying solely on a title company is also a bad idea. Title companies close title. They are responsible to follow bank instructions and escrow instructions only. They are responsible to the underwriter. If you don’t have an attorney, you likely aren’t providing sufficient instructions to the title company and therefore, aren’t getting adequate protections.

But this post isn’t just about using an attorney. It’s about answering the question, when should you call your attorney. Answer: not 10 days before closing! Here, we were able to clean up messes and prevent the client from accepting title with improper and unacceptable title exceptions. However, we did not have enough time to obtain a survey. The real estate agent told her she didn’t need once since she wasn’t getting a loan. (See prior post on need for surveys HERE).

Certainly, don’t wait until 3 days before closing. This same client got totally freaked out when the closing agent for the sale of her house contacted her real estate agent (a different one) to ask where the closing documents were. The closing agent also scheduled closing for 2:00 in the afternoon. The purchase of the new house was scheduled for 3:30 the same day. Funds from the sale were needed for the purchase. No one told the client how she was to provide the closing documents, how she was to get from Broward to Martin County in an hour with the closing funds or how all this was to work. She was a wreck. I now had 3 days to work it out with the buyer’s closing agent, do the documents, solve any title issues and coordinate 2 closings instead of 1. Both contracts had been signed 7 or 8 weeks prior.

And, finally, 2 days before closing is definitely not enough! My partner, Eric Assouline was with his client 2 weeks ago at a summary judgment hearing. After the hearing, the client casually mentioned that he was closing on an “investment property” in 2 days and needed to “protect” that property in case they lost in the litigation. Eric came back to the office to discuss with me. I asked Eric why we were just hearing of this now. Eric shrugged. Had the client talked to us at the time he signed the contract, we could have devised asset protection strategies and properly closed on the property. 48 hours prior to closing? The client had to proceed.

Like I said, I am here to help. But don’t wait to call. Don’t wait until the last minute!

This past August, my wife decided to take my 96 year old mother in law, Evelyn, to Washington, DC to visit our son. We thought that Evelyn would enjoy seeing where Steven lived and worked.  He works on Capitol Hill as an aide to a Congresswoman.  Steven planned a tour of his office and the Capitol for his grandmother.  All went well.  Evelyn enjoyed everything and was very proud to see Steven at work.  After the tour, they said their goodbyes so that Evelyn could rest up for dinner.  Steven went back to his office.  My wife began to walk Evelyn out of the Rayburn House Office Building when Evenly stumbled and fell.  Paramedics were called and she was transported to the hospital.  The diagnosis was a separated shoulder.

Two nights later my wife and Evelyn came home and we began to worry. What were we going to do now?  Fortunately, Evelyn, upon recovery, made everything easy for us when she told us that she no longer wanted to live alone.  We decided to begin to look for an Assisted Living Facility.

My wife is super organized, but this process is an unknown.  She did her research.  I, however, knew that we first had legal steps to take and I suggested that we retain an elder care attorney to guide us.  My wife and Evelyn agreed and we retained an attorney I know an have worked with.  Everyone was and is very comfortable with him and his staff.  He is great at explaining things in language that my wife can understand.  Evelyn trusts us to carry the ball.  If I have questions, our attorney answers me in the type of attorney shorthand and language I expect.  Unfortunately, my wife doesn’t understand that shorthand.  So, when she had questions about process and I answered her, she did not believe that I was correct.  She heard or understood answers differently than I did and she didn’t factor in my years of legal experience to answer her questions.  It began to dawn on me that the client here was not Evelyn, but my wife.  However, this was our elder care attorney’s problem, not mine.

UNTIL – it came time to sell the condo. Evelyn and my wife wanted to list the condo immediately and the attorney needed to transfer the condo to my wife for planning purposes.  We decided that Evelyn would not move to the ALF until some time in January.  Therefore, I determined that we would not list the condo or retain an agent until January, nor would we transfer the unit to my wife until after the first of the year.  Evelyn, the client, said ok.  My wife asked me why and I explained my reasons, both business and legal.  The elder care attorney concurred.  My wife acquiesced but changed her mind often until the end of the year.  She just wanted to get things done.

I had an agent whom I wanted to sell the condo and whom I knew well and trusted. My wife, not Evelyn, through out the holiday season, made suggestions as to how and when I should contact the agent.

When we met with the agent, Evelyn and my wife were very pleased. The agent sent me all the standard forms, all of which I have reviewed hundreds of times.  I assured my wife all was ok,  yet she remains nervous about the listing.

So far this experience is teaching me that when your mother in law is your client, your spouse is the defacto client. No matter the size of the deal or case, the matter becomes a 24-hour a day concern and you will be 2nd guessed more than any other client  you have ever had.  Maybe this case is more emotional because Evelyn is older and has moved to an ALF and we are dealing with everything in her life; but I don’t think so.  Whenever it’s Mom, hers or mine, there has to be an emotional investment and it becomes a team effort.  Mom isn’t really a client.  She’s just Mom.

Negotiating a deal can be a tricky proposition for an attorney. Every attorney wants to do his/her best job and not only assure that the client is adequately protected, but also to try to get the best deal possible for the client.  As to the former, the attorney is and should be given great latitude.  But ultimately, the client will weigh the risks and make the decision.  If the attorney is doing his/her job properly, legal terms will be thoroughly debated, drafted and re-drafted so that the clients can see a nearly final product and the attorney can say “I did the best I could” and explain how the client is protected and where language could be stronger.  That way, the client can make an educated decision as to whether to proceed.

Business terms are another issue. These are the client’s domain.  The client gives parameters that the attorney should negotiate within.  During negotiations, there comes a point when both sides have to have discussions with their clients about which direction to proceed and whether to alter the parameters or terms.  Sometimes, an attorney forgets this role and speaks and acts as if he is the client.  When this happens, your deal can implode.

I recently worked on a future advance loan for a client. For some reason, the bank did not retain the same attorney to close the future advance loan who closed the original loan 2 years prior.  The original loan was an $8.9 million term loan which we amicably negotiated.  We hammered out all of the terms of the original note, mortgage, guaranties and other loan documents with the bank and the original attorney.  Negotiations were tough but fair, and the bank agreed to many of our requests to change standard bank provisions as well as numerous business terms.

The bank’s new attorney for the relatively small future advance ($425,000) did not have this history and it appeared as if he did not read the original loan documents. Clearly, he was not familiar with them because the first draft of the future advance loan documents did not include any of the terms that had been previously negotiated.  The drafts were very much the bank’s original form documents with the new terms of the future advance filled in.   All of the standard objectionable terms that we had negotiated out in the original loan had been re-imposed.  Special provisions that we had negotiated in, were omitted.  In addition, I was not satisfied with the way the attorney proposed to document the new provisions that the bank required for the future advance.  Frankly, he was not documenting the loan as a future advance and loan modification.  As I began to explain my requests, he summarily rejected them as out of hand without discussing them with his client, the bank.

The deal froze in its tracks. The attorney insisted that he was right because the credit approval made no mention of the revisions we had made to the original loan and therefore, he was supposed to amend and restate the loan documents and re-impose the original language.  I was astonished that he would not discuss this interpretation with his client.

By taking this position, he increased the interest rate of the original loan which was not the deal. The future advance interest rate was about 100 basis points higher than the original loan interest rate.  There was no intent on the bank or my client’s part to increase the rate of the original loan.  In addition, each loan was to have a 5 year prepayment penalty, with the penalty decreasing each year.  By amending and restating the loans, the original loan’s prepayment penalty period restarted.  Again, not intended.  Again, the attorney would not listen.  To me, these weren’t even items to negotiate.

To save the deal, I had to have my client intervene directly with the loan officer. Ultimately, the bank accepted every request that I made except one and that one was modified, I believe to appease the attorney.

I am fine when someone makes a mistake as this attorney obviously did. I’m not ok when they refuse to admit it or refuse to go back to the client to see if they did.  This guy, either through arrogance or ignorance decided it was his place to tell me no to every point that I raised.  What’s worse was that he asked me why I was so hostile about everything going on in the deal!  I flat out had to tell him that he was unprepared and that he refused to ask his client about anything I raised.  You can imagine how that went over.  Let’s just say that 4 weeks after closing he is still trying to find “mistakes” that our office made only to find that he remains unprepared and unfamiliar with the language in his own documents.

Attorneys who try to act as the client by making decisions for them and without being thorough and careful, do so at the risk of the deal for their client.

Back in the 90’s, there was a commercial where a famous actor, I can’t remember who, was pitching a product. His opening line was “I’m not a doctor, but I play one on TV”.  This was supposed to give him some credibility about the medicine he was endorsing.  In my line of work as an attorney, I often feel like some of the people I come across in a transaction live by the same credo – “I am not an attorney, but I play one in this transaction”.  Whether intentionally or unintentionally, the different players in a real estate deal find ways to play the role of attorney, going so far as to draw legal conclusions that can be harmful to the client.  The worst part is that sometimes, when I try to correct the offender, my efforts are not well received.  Two recent examples.

I represented a couple purchasing property in the Florida Keys. They had signed the contract prior to forwarding it to me to handle the closing.  The property is on the Gulf so it is rather pricey.  Both brokers were involved in the preparation of the contract, which was a FAR/BAR form.  The parties had agreed that the Buyer would pay all of the Seller’s closing costs.  One of the brokers had made a handwritten change that simply said “real estate taxes” under the list of Seller expenses.  The contract was signed electronically via Docusign.  Nobody changed the tax proration paragraph.  When we prepared the closing statement, we put all of the Seller expenses except the broker commission on the Buyer’s side and we prorated the taxes.  The Seller’s broker objected, claiming that the Buyer was to pay real estate taxes.  I did not read the contract that way, because in Florida, 2017 taxes aren’t due, and there were no back taxes due, notwithstanding the handwritten change.  Further, the taxes were to be prorated and no changes were made to the proration paragraph.  I checked with my client and he said he was unaware that he was to cover the Seller’s share of the 2017 taxes.  No one had explained that to him.

The Brokers insisted that the changes to the contract were correct when a simple change, deletion of the proration paragraph would have done the job. The Brokers, both experienced, were very upset that my client was changing the deal and that I was giving him the power to do so.  But the fact was, at best, the Brokers created an ambiguity in the contract because they did not consider all of the terms in the contract and attempted to modify the pre-printed terms and took a short cut.  In essence, they played attorney, and did not do so very well.

On another deal, a client purchased a large tract of land in Orlando last year. The property was legally described as 5 separate lots.  As part of the development of the property, we re-platted and legally described it as 2 separate lots.  During this process, the client entered into a contract to sell a portion of the smaller of the son to be platted lots.  The closing occurred days after the plat was recorded.  We knew at the time that this might cause some confusion down the road for those searching the deed and therefore, we used both the old legal description and the new platted legal description when we recorded the deed.

Recently, we learned that the Orange County property appraiser had listed nearly two thirds of the overall property as owned by the buyer of the property the client sold. This was an obvious mistake.  So, after a couple phone calls, the inquiry made its way to the chief mapper in Orange County.  He revisited the deed and concluded that our deed was not correct and “directed” us to record a corrective deed.  This is a legal conclusion that the mapper is not qualified to make.  But before I called back, I circled back with my title underwriter and surveyor just to make sure that I hadn’t missed anything.  I didn’t.  While this matter has not yet been resolved, I had to advise the mapper that if he could not agree with our surveyor, we would not accept his conclusions nor would we act on his directive.  Therefore, we would only deal with the property appraiser’s general counsel.

I could probably write pages of stories like this. Clients can be the worst offenders.  Sometimes, the best strategy is to grin and bear it.  But, the line in the sand is that no decision can hurt your client or your client’s cause.  And then, please listen to your lawyer.  We don’t just play one on TV!

Close-up of silver pen on contract. Selective focus on top of pen.

        I was recently browsing through an in-box full of blogs and articles and came across a great article on Inman.com by Cara Ameer, a Coldwell broker-associate in Ponte Vedra Beach, Florida, 10 Reasons You Never Buy or Sell Without an Agent. Cara is right; you should absolutely use an agent when buying or selling a home. Her 10 reasons just scratch the surface. But considering that I just posted Is Your Real Estate Agent On Your Side? last week, I had to respond to Cara. Many agents, at least here in South Florida, encourage or “suggest” to their clients that there is no need to get an attorney involved in a house closing. Attorneys just muck things up. These agents say that the title company can handle every thing.

             Before I give you my 5 reasons, let me tell you a story about a client, a husband and wife, I am currently helping, whose agent told them exactly that. They were purchasing a home in Coral Springs about a year ago. The inspection revealed that the roof, over 20-years old, needed to be replaced. It could not be repaired. The roof was a shingle roof. This is unusual these days as most South Florida roofs are tile. The cost of a new shingle roof would be about $7,500 and the client asked their agent and the seller’s agent if they could still put up a new shingle roof. Without hesitation, both agents assured the client that shingle was permitted and the client’s agent skillfully negotiated a $7,500 credit from the seller for a new roof.

             In addition, the title company, recommended by client’s agent, did a lien and open permit search on the property. The search disclosed that when the roof was put on the house over 20-years ago, the permit was never closed. Both the client and the agent directed the title company to take the necessary steps with the seller to have the permit closed prior to closing.

             Sometime after closing, the client engaged a contractor to install a new shingle roof. The contractor went to pull a permit for the new roof and was denied because 1) there was an open roof permit on the house and 2) shingle roofs are not permitted in this neighborhood in Coral Springs. Only tile roofs are allowed. The agents and the title company clearly dropped the ball. An attorney would not have. A tile roof will cost almost $30,000. Client would not have closed had they known the cost would be so high and had Seller not agreed to pay it. In this case, while agent did a fine job negotiating a roof credit, he did no due diligence to determine what was allowed in the neighborhood. Consequently, the credit was insufficient and his client, my new client, would not have purchased the house. He exasperated the problem by not assuring that the open roof permit was closed prior to closing.

             My top 5 reasons to use an attorney in closings:

 

  1. An attorney always represents you first and foremost. An agent is likely a transaction broker and owes you no fiduciary obligation.

 

  1. An attorney can and will solve problems that arise during the closing process. My case above is an example. Other examples include title issues or issues with the lender. Brokers can’t deal with these issues and title companies are simply closers. They only follow instructions and won’t point out title exceptions that could be harmful to the buyer or might not be relevant and, I illustrated above, won’t always follow up. In Florida, many attorneys act as agents for title companies. But as your legal representative, attorneys actually read the documents and understand the meaning. Attorneys will work to remove exceptions that don’t apply and will work with underwriters on complicated issues.

 

  1. Where negotiations get heated, an attorney has skills to resolve problems. Agents do as well, but an attorney understands and addresses legal implications and can protect your interests. An agent can’t go this far.

 

  1. Attorneys understand and are up to date on TRID, the “Know Before you Owe” Rule. They can help you navigate loan complexities.

 

  1. Attorneys read and understand the fine print. I have to say here that I am often presented with contracts from agents that are on outdated forms. Current forms address current rules, laws and regulations such as TRID. Agents should be aware of this, but some aren’t.

 

            These are just my top 5 reasons to use an attorney; there are many more. Don’t exclude an agent. But a good agent working with a good attorney make a great team for anyone buying or selling a house.

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