Although many other states require the use of an attorney during a real estate transaction, buyers and sellers of real estate in Minnesota have the choice of using either a title company or an attorney to handle the closing on their real estate transaction. More often now, we are also seeing that many real estate brokerage companies are steering their customers to their in-house title companies. This leaves many parties wondering whether they should use a title company or a law firm to handle their real estate closing.
In this post, we will share four of the advantages to choosing a law firm to close your real estate transaction instead of a title company.
1. A title company does not necessarily work for you. A title company often acts as a "facilitator" of the transaction by preparing basic documents and is not always looking out for your best interests. Real estate attorneys, instead, work on the behalf of and advocate for the best interests of the person who hires them. For example, if during the course of title examination the attorney discovers that there are restrictive covenants for the property that would conflict with your intended use of the property, a real estate attorney will make sure you know about it and give you advice about what to do about it. With a title company, you might never actually hear from them until the actual day of closing and they may not be pointing out some crucial information.
2. Title company agents do not have law degrees and cannot provide legal advice or draft legal documents. Every state, including Minnesota, prohibits the unauthorized practice of law. This means that a title company cannot give you legal advice (including on the tax and legal ramifications of a contract for deed or purchase agreement). This also means that if they do give you advice that turns out to be bad, you have not have a remedy to sue for malpractice. Realtors, lenders, as well as the buyers and sellers, benefit from working with a real estate attorney since only an attorney can answer legal questions during contract negotiation, drafting, and interpretation; title companies cannot.
3. If any issues arise, the title company will need to refer you to an attorney anyways. As mentioned above, title company agents cannot give legal advice and are not a substitute for real estate lawyers. So, when problems do arise and you need help, the title company will refer you out to a real estate attorney for advice anyways. By working with an attorney from the beginning, you eliminate the delay of finding a real estate attorney and minimize the additional expense of hiring both a title company and a real estate attorney.
4. Title company fees and attorney closing fees are comparable. Many closing costs, such as title insurance premiums, recording costs, deed tax, and the like are the same no matter who you close with! In a lot of cases , using an attorney can actually save you money when the attorney can act as both the attorney and title agent.
The attorneys at Ward & Oehler work with buyers and sellers of real estate every day by drafting purchase agreements, conducting title examinations, negotiating transactions, and providing closing services. We also have licensed title insurance providers and can serve as both your title agent and attorney, bringing you convenience and value to one of the most critical financial decisions you will make during your life. For more information, call us at (507) 288-5567. To send a request for title services, email our Closing Coordinator at firstname.lastname@example.org.
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