Closing your real estate transaction using an attorney or escrow company?

Question

living on the west coast; use an attorney or escrow company to close on a purchase of a single family residence & why? The property is a median priced house.

Answer 1

I'm not sure from your question if you are asking if you should use an Escrow company OR an Attorney, or WHY you need to use an escrow or attorney to close on property.

In the case of escrow OR attorney, it's really a case of chicken or the egg.

An escrow company is typically a title company that starts by ensuring the title is free and marketable. They then employ an attorney to draft the document that transfers the property from one person to another (deed). The escrow company has already set up an escrow account to transfer and hold money and dispense according to written instructions from buyer, seller, mortgage company, etc.

An attorney will do what is required in the sales contract. If title insurance is needed they will contact a title company to complete. They also would have an escrow account to transfer proceeds from the sale back and forth.

The differences are:

Escrow companies are typically seen as a neutral party. They only do what is specificly requested by both the seller and buyer. They also have more experience when it comes to working with difficult situations. I would utilize for any transaction that 1) Was part of an estate where multiple heirs were involved 2) Have to have money left in escrow after the closing such as when repairs are needed etc 3) When utilizing govenment programs for funding. 4) When multiple mortageges are issued on the property.

An attorney I usually utilize when transactions are more straight forward. Such as when the "sale" is more of a paperwork transaction such as a quit claim deed in a divorce or a land contract situation where the current owner is financing. Tyically an attorney is employed by one party of the transaction and thus not neutral.

It's not that an attorney couldn't do the more complicated transactions, but typically attorneys charge by the hour and not the transaction. Most escrow companies charge a flat fee to open and close escrow. In addition, the escrow company has negotiated a rate with an attorney to draft the documents based on the number of documents they have drafted over a a years time which also reduces the cost.

Felicia Randall
www.cherrycapitalhomes.com

Answer 2

In CA a lawyer is not required. As long as the other party is well aware that they are buying or selling from a private party there should be no problems. Most of the Burden will fall on the buyer to make sure that all the appropriate paper work is filled out and recorded properly. It would only NOT be an arm's length transaction if a family member was involved in any of the process, family members selling or quit claiming to other family member,even in acquiring a loan on the property or acting as a notary. A title or escrow company will probably not help you. I would be a good idea to get a real estate agent involved, even as a buyers agent.

Answer 3

An attorney can give you legal advice. An escrow company cannot, and any attorneys in their office will be representing the escrow company's interest, not yours.

An attorney may be a bit more expensive but you are getting value for your money so using an attorney is usually a good idea.

Answer 4

Attorney. They are regulated by the state bar. An attorney has years of education and the bar exam on the line if he/she messes up. Attorneys are easy to track down after the fact too throught the state bar. Attorneys are more regulated for instance they have a code of ethics where they can be subject to discipline for not responding to communications, addressing problems in a timely basis, acting unprofessional, etc. Some title companies go under and you can't find the people.

Answer 5

All escrow companies have a real estate attorney in which the title is certified under. You have the same level of legal protection as if you went to an attorney's office, in regards to the title work.

An attorney or Real Estate paralegal are always available if you close at an escrow or title company.

I prefer title companies because they are more flexible than attorney's offices with regards to times available for closing and resolving last-minute issues.

Answer 6

It really depends on the transaction. Sometimes, the simplest transactions can get quite complicated at the last minute.
Many law offices also to title work. I am a Realtor, and the very first closing I had, something came up at the last minute about title to one of the lots that the house was built on (the house was built on 8 lots). I was very glad that we had an attorney handling the transaction right there on the spot to everybody's satisfaction.

It may be less expensive just to use a title company, but if something comes up at the last minute, there would be added expense and anxiety, or your transaction may not even close on time or not at all! Make sure your title agent has an attorney associated with them who is available to answer questions when things come up.

Answer 7

Some states require that an attorney be employed to do the closing others allow for closing with an attorney, title company or the real estate company. In all cases the closing is governed by RESPA and certain documents must be provided and signed.
Real Estate Settlement Procedures Act (RESPA) [about closing costs & settlement procedures]: http://www.hud.gov/offices/hsg/sfh/res/respa_hm.cfm
Best of luck to you

Answer 8

If a Realtor is not involved and you use an attorney, the transaction is closed at a Title Company. The attorney will accompany you.
Realtors are a helluva lot more expensive than an attorney, and the atty. is committed to protect your interest. Not always true with a realtor.

Answer 9

It is a toss up because both serve the same purpose. A lawyer closing has no advantage because the lawyer is only a representative of the lender, not the seller or the buyer (despite both paying their fees).

Answer 10

doesent matter which you use as long as thay can handel the title paper work it's your choice escrow company are usally less money wise to use and most have an attorney working 4 them