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Recently, I represented a buyer in a closing that lasted over five hours. The primary reason for the long closing was funding from the buyer's lender. I wasn't late for being home from this closing and there is a reason: There is simply no change that should be occurring on the part of the lender that can't be resolved remotely to the title company. The seller or power of attorney should remain, the buyer should remain, but service professionals such as attorneys and realtors should be able to leave.
Here's why:
1) During the first hour of the closing, the buyer signs all of the loan documents, and typically the buyer's attorney reviews, title, deed, related transactional documents.
2) During the top of the second hours, the closer usually has the HUD for review and it is usually approved by all parties by the middle of the second hour.
3) Next the documents are sent to the lender who usually raises any substantial objections before the close of the second hour.
4) The fixing of the lender issues is typically a 15 minute task that is resolved in substance by the end of the second hour.
5) If the attorneys and realtors leave at this point, they will have their check mailed to them along with supporting documentation.
6) The risk: if you are a buyer's attorney, the worst thing that can happen is that the lender forces a change and the HUD is re-signed. Since the lender calls all the shot here and doesn't really allow for any attorney input, this is the point where a simple call to the attorney's mobile phone will confirm whether any changes are undesirable to the buyer going through with the transaction.
7) For the seller's attorney, the risk is more substantial if he or she is power of attorney for the seller and the HUD must be re-signed. Bottom line: seller's attorneys who agree to be powers of attorney should add $200 per seller for additional work and significant risk of additional time at the closing table.
8) For realtors, there is no reason to be at the table after the second hour because their commission is confirmed after the agreement to the first HUD. Only in a short sale should realtors be gravely concerned about having their commission "chopped down" at the last minute. But even in these cases, there isn't much that can be done to bring it up if the lender will not approve the short sale with higher commission than the lender's standards allow.
Why is it important in our profession to set reasonable fees but be firm with regard to staying longer than two hours?
1) It is critically important that we as members of the bar maintain a buyer's ability to afford reasonable cost representation in a real estate closing to ensure that buyers are not taken advantage of and have the opportunity for "good counsel".
2) Staying at the closing for a "reasonable" amount of time ensures adequate profitability to ensure the ability to continue representing a variety of clients from all socioeconomic groups.
3) There is simply no reason to be a martyr and stay at a closing just to say you made it to the end, only to stop taking cases that have the potential to be long closings.
How do I ensure that my fees are reasonable and that I am guaranteed to be paid even when the deal falls through?
The best choice is to use our firm's proposal for a "multi-board" residential attorney client representation agreement. This novel agreement allows for full pre-payment of fees by deposit into the lawyer's client trust account. This allows the attorney to bill the full fee on the HUD and then return the deposit to the client or not bill to the HUD if the lender is objecting. Some attorneys will want to bill the full rate regardless of where the representation terminated; others may choose to charge half when the transaction cancels before closing.
ARE YOU AN ATTORNEY WHO WOULD LIKE TO USE OUR REPRESENTATION AGREEMENT? IT IS FREE TO MEMBERS OF THE ILLINOIS BAR WITH PERMISSION.
The challenge for residential real estate attorneys in the next decade is to:
1) Not set fees too low
2) Not spend excessive time at the the closing table
3) Bill up-front for fees
4) No longer view real estate work as "contingency" work
5) Turn away "low-ball" business that has no future in providing referrals or subsequent business.
There is also benefit to realtors. It has often been said that realtors are the keys to the car, and that you won't have real estate closings unless you cave-in to the demands of the realtors who refer the business. This may be true. But why work for free or for excessively low fees - leave the residential real estate business and take on cases at the Daley Center and make twice the money. Many people believe Illinois Realtors have been waiting for this day with bated breath. I disagree - without good Illinois Residential Real Estate lawyers, the percentage of transactions that make it to closing will fail; more abuses will occur against clients leading to more regulation of the industry; and ultimately, even less real estate transactions will close.
ARE YOU A REALTOR? CLICK HERE TO SPEAK WITH DAVID NELSON TO START A NEW REALTOR/ATTORNEY BUSINESS RELATIONSHIP
Bottom line: residential real estate is and will always be a team sport. The team: Realtors to take the client to the property; Inspectors to make sure it is right; Lenders to provide the ability to pay; title companies to do the banking; and Attorneys to make sure that what was agreed upon actually occurs.
Recently, I represented a buyer in a closing that lasted over five hours. The primary reason for the long closing was funding from the buyer's lender. I wasn't late for being home from this closing and there is a reason: There is simply no change that should be occurring on the part of the lender that can't be resolved remotely to the title company. The seller or power of attorney should remain, the buyer should remain, but service professionals such as attorneys and realtors should be able to leave.
Here's why:
1) During the first hour of the closing, the buyer signs all of the loan documents, and typically the buyer's attorney reviews, title, deed, related transactional documents.
2) During the top of the second hours, the closer usually has the HUD for review and it is usually approved by all parties by the middle of the second hour.
3) Next the documents are sent to the lender who usually raises any substantial objections before the close of the second hour.
4) The fixing of the lender issues is typically a 15 minute task that is resolved in substance by the end of the second hour.
5) If the attorneys and realtors leave at this point, they will have their check mailed to them along with supporting documentation.
6) The risk: if you are a buyer's attorney, the worst thing that can happen is that the lender forces a change and the HUD is re-signed. Since the lender calls all the shot here and doesn't really allow for any attorney input, this is the point where a simple call to the attorney's mobile phone will confirm whether any changes are undesirable to the buyer going through with the transaction.
7) For the seller's attorney, the risk is more substantial if he or she is power of attorney for the seller and the HUD must be re-signed. Bottom line: seller's attorneys who agree to be powers of attorney should add $200 per seller for additional work and significant risk of additional time at the closing table.
8) For realtors, there is no reason to be at the table after the second hour because their commission is confirmed after the agreement to the first HUD. Only in a short sale should realtors be gravely concerned about having their commission "chopped down" at the last minute. But even in these cases, there isn't much that can be done to bring it up if the lender will not approve the short sale with higher commission than the lender's standards allow.
Why is it important in our profession to set reasonable fees but be firm with regard to staying longer than two hours?
1) It is critically important that we as members of the bar maintain a buyer's ability to afford reasonable cost representation in a real estate closing to ensure that buyers are not taken advantage of and have the opportunity for "good counsel".
2) Staying at the closing for a "reasonable" amount of time ensures adequate profitability to ensure the ability to continue representing a variety of clients from all socioeconomic groups.
3) There is simply no reason to be a martyr and stay at a closing just to say you made it to the end, only to stop taking cases that have the potential to be long closings.
How do I ensure that my fees are reasonable and that I am guaranteed to be paid even when the deal falls through?
The best choice is to use our firm's proposal for a "multi-board" residential attorney client representation agreement. This novel agreement allows for full pre-payment of fees by deposit into the lawyer's client trust account. This allows the attorney to bill the full fee on the HUD and then return the deposit to the client or not bill to the HUD if the lender is objecting. Some attorneys will want to bill the full rate regardless of where the representation terminated; others may choose to charge half when the transaction cancels before closing.
ARE YOU AN ATTORNEY WHO WOULD LIKE TO USE OUR REPRESENTATION AGREEMENT? IT IS FREE TO MEMBERS OF THE ILLINOIS BAR WITH PERMISSION.
The challenge for residential real estate attorneys in the next decade is to:
1) Not set fees too low
2) Not spend excessive time at the the closing table
3) Bill up-front for fees
4) No longer view real estate work as "contingency" work
5) Turn away "low-ball" business that has no future in providing referrals or subsequent business.
There is also benefit to realtors. It has often been said that realtors are the keys to the car, and that you won't have real estate closings unless you cave-in to the demands of the realtors who refer the business. This may be true. But why work for free or for excessively low fees - leave the residential real estate business and take on cases at the Daley Center and make twice the money. Many people believe Illinois Realtors have been waiting for this day with bated breath. I disagree - without good Illinois Residential Real Estate lawyers, the percentage of transactions that make it to closing will fail; more abuses will occur against clients leading to more regulation of the industry; and ultimately, even less real estate transactions will close.
ARE YOU A REALTOR? CLICK HERE TO SPEAK WITH DAVID NELSON TO START A NEW REALTOR/ATTORNEY BUSINESS RELATIONSHIP
Bottom line: residential real estate is and will always be a team sport. The team: Realtors to take the client to the property; Inspectors to make sure it is right; Lenders to provide the ability to pay; title companies to do the banking; and Attorneys to make sure that what was agreed upon actually occurs.
From your part, everything was ok., sometime circumstances create problem when they didn't get proper attention before taking any action.
ReplyDeletePower of Attorney forms
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