MICHAEL R. KADOCH PA.
MK REAL ESTATE & CORPORATE LAW FIRM
If you plan to buy or sell real estate assets anywhere in the Florida, we suggest that you take the time to read this article carefully and even more so if you are a foreign buyer or seller. Call Us Today For A FREE Consultation.
PREMIER LAW FIRM
We mirror our clients’ focus on their business and family by servicing their legal needs in the areas of real estate, land development, transactions and business succession planning.
Why Choose An Attorney Vs Title Company/Agent
Who should you use : A common misunderstood issue for the purchaser, seller or owner of a property is should I use a title company or an attorney for my purchase, sale or refinance? Many clients have the misconception that an attorney will cost more than a title company. Often times real estate brokers have a financial connection to a title company and casually suggest or require their agents to refer their clients to a specific title company for the simple fact that the company makes an additional fee from the settlement on your property. Here are some facts to help you make an informed decision.
In Florida, both, attorneys and title companies may issue title insurance. In contrast, in some states, like Delaware, only attorneys may issue title insurance. The title insurance rates are promulgated by the Department of Insurance so title insurance obtained through an attorney is priced the same as from a title company. In addition, closing costs charged by an attorney acting as a closing agent are comparable to those charged by a title company. With that said, what is the difference using an attorney rather than a title company for closing? The answer is by using an attorney you are receiving true legal representation to protect your interests in the transaction for a comparable price to a title company. Why settle for less when you can get an experienced attorney on your team!
1. What Are Title Companies?
Title companies are basically an insurance agent, acting as a broker between you and the underwriter. Their focus is to provide you and your lender with the title insurance policy which the underwriter issues. In either case, a title company’s role is solely limited to clearing title and preparing the documents necessary to issue a title insurance policy at the closing.
A title company is not allowed provide legal advice, input, or guidance even when they are owned by an attorney. so by choosing a title company, you are restricting your ability to obtain answers to your legal questions concerning the settlement. Employees of a title company, including an attorney employed by a title company, are not allowed by law to give you legal advice.
2. Why Use An Attorney
When using an attorney as the closing agent, the client has legal representation throughout the transaction, from contract negotiations through closing. In contrast, a title company’s role is solely limited to preparing basic form documents necessary to issue a title insurance policy in connection with the closing. A title company cannot provide legal advice, input, or guidance even when they have an in-house attorney or are owned by aan attorney. So why would title companies have an in-house attorney? Simply put to protect their interest, not yours.
SERVICES: By choosing a title company, you are restricting your ability to obtain answers to your legal questions concerning the settlement. Employees of a title company, including an attorney employed by a title company, are not allowed by law to give you legal advice.
What kind of legal advice do I need you may ask? Well there is a host of legal issues to be addressed when purchasing a property and if you are buying your home it is most likely the biggest investment of your family. Wouldn’t you like to know how should you hold title? What is your legal obligation to your lender? What happens if there is a foreclosure? What are restrictive covenants and which are enforceable? What is part of the real estate and what is not? What does the survey mean and are there any encroachments? Will transferring your property to a corporation, LLC, or trust leave you with no title insurance? What effect do restrictive covenants have on additions and improvements to real property? These and many more other questions are asked before, during, and after settlement. Wouldn’t you like to get the answers from a professional and experienced real estate attorney who deals with these issues day in and day? Do you really think a clerk at the title company who spent a few days at a title insurance seminar is as knowledgeable as a practicing attorney?
Title companies are basically an insurance agent, a broker between you and the underwriter. Their focus is on one thing… to provide you with the title insurance you need nothing beyond that .. So to pay the same amount of money or less for this title insurance and settlement service and get the benefit of having an experienced lawyer following the process, looking for your best interests or just letting a title agent clip a commission coupon without any added value whatsoever ….. to me the choice is obvious.
3. Service Areas Besides Title Insurance
What kind of legal advice do I need you may ask? Well there are a host of legal issues to be addressed when purchasing property. We strongly believe that you should know the answers before rather than after the closing. when you are buying your home or commercial property it is most likely a substantial investment of your family and or company.
You most certainly would like to have a legal opinion and know the answer to questions such as:
• How should you hold title?
• Are there rental restrictions in the community?
• What is your legal obligation to your lender?
• What are restrictive covenants and which are enforceable?
• What is part of the real estate and what is not?
• What does the survey mean and what are encroachments?
• Will transferring your property to a company, LLC, or trust leave you with no title insurance?
• What effect do restrictive covenants have on additions and improvements to real property?
4. Changes in Contract
Although real estate contract forms and other closing documents are in many cases preprinted forms, knowing which boxes to check in those forms can drastically change the terms of the transaction. In addition, the need for contract addenda, nonstandard documents, or changes to standard documents frequently arises to address specific issues with respect to the property, the parties, title requirements, or the transaction in general. An attorney is qualified to prepare or review such documents, whereas the title company in many instances cannot (or should not).
5. Realtors Benefit
Realtors working with attorneys rather than title companies benefit too since the attorney can assist the realtor with the contract preparation (generally at no additional charge), answering the client’s legal questions during the contract negotiations and preparing contract addendums and other relevant documents as needed (again generally at no additional charge). If nothing else, the attorney is another set of eyes to ensure there are not pitfalls which can harm the Realtors client(s). A title company cannot do so.
6. Closing Preparation
In preparing for closing, if the title search or survey reveals a potential issue, the attorney can provide legal advice as to the best and fastest way to cure the issue and prepare the necessary corrective documents so the parties can close quickly (generally at no additional charge). In contrast, title companies cannot generally prepare many curative documents, and can never provide legal advice or guidance when or as an issue arises. Indeed, when a title company is the closing agent, the parties many times must scramble to then go hire an attorney (at significant additional expense) to address issues that could cause closing delays or otherwise provide legal advice and guidance to address them. In many instances, title companies may put exceptions to the title policy or ask the Buyers to sign a hold harmless agreement at closing, and the Buyers are unaware of the consequences of doing so.
7. Purchasing Real Estate
When purchasing real estate, one of the most important decisions the Buyer has to make is how to take title to the property. An attorney can discuss the options available to the Buyer and the legal aspects and tax advantages concerning same. A title company cannot provide this important legal advice.
8. Title Examinations
The complexity of title examination and the variety of issues that can arise is beyond explanation unless this is your expertise. In a normal title examination, it seems easy to trace the ownership of a property from Mr. Berger to Mrs. Dona to Davis to Mr. Brown. What happens if Berger dies leaving title to heirs or beneficiaries under a will; Dona could go bankrupt and the title could pass to a Trustee and be controlled by the intricate provisions of the bankruptcy code; Davis could be involved in a lawsuit with business partners that may or may not affect his title; and Brown could have federal tax liens placed against him and have the property foreclosed leaving an issue as to whether it was properly done
These are some of the obstacles which can pop up when examining title. This is also where the difference between lawyer vs. title agent is surfacing and becoming clearer. At a title company someone without any legal authority who may or may not be knowledgeable will examine your title, you have no idea. In contrast, our title searches are reviewed by our professional and experienced real estate lawyers. More often than not we find errors in the titles we examine. Most of these errors are correctable but a few are not and we are able to prevent our clients from proceeding with the transaction. Unfortunately It is quite common to come across settlement agents who prepare deeds improperly, record deeds and releases in the wrong jurisdictions, miss and/or fail to release paid off liens. The problem is that usually you will not know about these problems until you attempt to sell or refinance your property.
Given that Attorneys in general are held to a higher standard and carry a greater liability, the likelihood of them and their staff to make such reckless mistakes is remote.
9. Other Legal Matters
At some point, you may need a will, complex asset protection, a trial attorney, a divorce attorney, a bankruptcy attorney or a personal injury attorney. By having Michael R. Kadoch, P.A. handle your settlement, you will have an experienced team that can assist with these matters and if needed can use their years of experience to refer you to one or more attorneys who are not only the best in their field but charge reasonable prices for their services and give you proper representation.
In summary, both, title companies and attorneys strive to assure all parties involved in the transaction a smooth closing process from contract to a successful closing. However, as noted above, there is a major benefit in having Michael R. Kadoch, P.A. as your closing agent and on your closing team.
In summary, both, title companies and attorneys, strive to assure all parties involved in the transaction a smooth closing process from contract to a successful closing. However, as noted above, there is a major benefit in having an attorney as your closing agent and on your closing team.