Home Buyers What is an Attorney Review and Why Does it Matter?
Why an Attorney Review is Important
When buying a home, both the seller and buyer enter into a contract with time-sensitive contingencies and conditions. These terms must be completed by a specific deadline to finalize a sale, and the seller and buyer must sign the contract. So, before signing the dotted line, it's important to have an attorney review the documents to ensure you receive the best deal. But, what exactly is an attorney review? How long does it last and do you need one? Read on to learn more about attorney reviews and why it's an important step in the closing process.
What is an Attorney Review?
Both the seller and buyer have the right to consult with an attorney to review the contract, make changes, or terminate the agreement. The attorney review period begins when both parties receive a copy of the signed contract of sale and lasts three days. An attorney review is beneficial for both parties as each attorney will represent them. If the parties cannot agree at the end of three business days, the contract is null and void.
Most importantly, signing does not mean the contract is fully bound; full binding occurs when both parties have signed and the review period is over. Both parties can back out of the contract at any point, as long as they have not signed and it is within the 3-day period.
Tip: Weekend days and holidays do not count as part of the review period.
What Can Happen During an Attorney Review?
Both the buyer and seller can make amendments to the real estate contract. The attorney can draft an addendum with separate conditions not included in a standard contract.
The buyer's attorney may seek the following protections:
- An appraisal contingency, which allows for price negotiation if the property appraises for lower than expected.
- The right to cancel the contract if a lender pulls out of an issued mortgage.
- Receipts of documents, including permits, warranties, tenant leases, HOA records, and back title.
The seller's attorney may seek the following protections:
- Representation that the buyer is in possession of the down payment.
- Limits on the buyer's inspection rights to functional defects, as opposed to cosmetic issues or systems that work but are considered "beyond their life."
- Changes to the closing date, earnest money, or inspection terms.
Why Should I Have an Attorney Review?
Attorney reviews are important because they inform the buyer and seller about the terms of a contract. In addition, both the buyer's and seller's attorney will have their best interests in mind to protect their client. So, it's important to have an experienced attorney on your side to get the best deal on your home sale/purchase.
How Much Does an Attorney Review Cost?
Though costs vary, a typical hourly rate can range from $100 to $750. So, make sure this cost is included in your closing budget if you live in New Jersey or plan to have an attorney review.
Which States Require an Attorney Review?
New Jersey is the only state that actually requires an attorney review clause. However, states that require an attorney present at closing include Alabama, Connecticut, Delaware, District of Columbia, Florida, Georgia, Kansas, Kentucky, Maine, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New York, North Dakota, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, and West Virginia.
To learn more about the closing process, contact HomeHunt today!