This section covers our review/comment and representation services for commercial transactions.
General Policies and Considerations
Online Process. This process is now efficiently handled entirely online, not in the office. It is not necessary to set a specific appointment day or time. Office visits are not included in the flat fees quoted. Turnaround time is usually two business days from the time we receive all necessary information and payment from the client. Thereafter, you will have the opportunity to make changes and corrections. After three calendar days, the consultation automatically concludes and any documents we prepare are automatically considered final.
Scope and Extent of Representation. Clients vary widely in what they want and expect from a lawyer in a real estate transaction. It is important for us to know what a client’s expectations are prior to quoting a fee. Some want only a contract and title commitment review with comments and suggestions. These are the basics that everyone should do. Others want more comprehensive counsel through closing – from A to Z. If interested in broader representation – representation that is more extensive than the specific tasks listed above – so it is important for an inquirer to specify the level of service being requested. Fees can be expected to increase as the proposed sales price increases.
The Importance of Hiring a Lawyer at the Beginning. This is the best option for some clients, since it includes all of the various individual services that are itemized in this section. However, this option is not available if the earnest money contract has already been signed. At that point, the opportunity for a real estate attorney to modify the contract to the client’s advantage has been lost, a fact which significantly disadvantages the client for the entire remainder of the transaction. The contract controls the transaction, the rights and remedies of the parties, any special requirements, and the content of the closing documents. 90% of what a real estate lawyer can do for a client is forfeited when the lawyer is not engaged at the beginning of the process, before the contract is signed. This creates problems for the client as well as potential professional liability for us (since the client often expects us to “fix” mistakes made in the contract, even though it is too late to do so). So we no longer offer total representation that commences “in the middle” of a transaction.
Representation in the Entire Transaction. This option is available only if the earnest money contract has not yet been signed. It is far and away the best option for some clients, since it includes all of the various individual services that are itemized in this section. Fees are a flat fee based on the sales price and type of transaction. Note that representation in the entire transaction assumes that the client is also represented by an agent or broker. Please let us know now if you are seeking representation in the entire transaction and we will quote a fee (a non-refundable advance retainer against 1% payable at closing). Inquire. Before quoting, we will need to know if you are the buyer or the seller; whether you are represented by an agent or broker; and the anticipated purchase or sales price.
Minimum Retainer for High-Dollar or Very Complex Transactions. In the case of substantial involvement in high-dollar or very complex transactions, we may instead offer our services for a flat fee retainer (usually between $1,500 and $5,500 at our discretion).
Policies Specifically Applicable to Review/Comment on Contracts
What is review/comment? Review/comment by a lawyer on a contract is a systematic number-by-number review and comment on the contents of individual paragraphs in the contract. We may recommend strike-outs, insertions, and deletions at various locations in the contract. We may have comments about the advisability of this clause or that. However, we do not-re-write the contract. Note also that review/comment does not include a Special Provisions Addendum (see below) which is often useful, particularly for sellers, but is a separate billable item. Fees for review/comment assume that you have a TREC or TAR earnest money contract that is already fully prepared and ready to present to us for review and comment.
Review/Comment on the Contract vs. Representation in the Entire Transaction. Review/comment on a contract or a title commitment (or similar service) is a one-time limited service which concludes after the attorney provides comments and answers to client questions during the allowed time. Such services incur a one-time fee and then conclude. They do not go beyond the specific service or encompass other aspects of the transaction. If one needs ongoing advice or documentation, or comments on multiple drafts of a contract as it goes back and forth; or if the client wishes broader representation vs. the other party or the attorney representing the other party; discussions with the client’s broker or the broker for the other party; explanation or cure of exceptions on the title commitment; and so forth, then contract review/comment would not be the appropriate choice on our fee schedule. Instead, the client should request representation in the entire transaction.
Review/Comment is Not a Total Re-Write. Please note that the flat-fee review and attorney comment process offers exactly that. It is important to be clear on this point. If a contract is so flawed, deficient, or incomplete that it must be entirely re-written or replaced, then clearly more attorney time will be involved. In so doing, we move out of the review/comment category and into the category of creating a custom contract, which can be expected to incur higher fees. Our $375 hourly rate with a two-hour minimum will likely apply.
TREC and TAR Standard Contracts. Flat fees quoted for review/comment on existing contracts apply only to standard TREC, TAR, and/or MLS forms, contracts, and addenda.
Review of Custom (Non-Standard) Contracts. We are occasionally asked to review entirely custom contracts, out-of-state forms, investment seminar forms, or documents obtained from the internet in order to determine whether they would be valid in Texas. It is not feasible for us to do this for the flat fees quoted below. However, we may be available on an hourly or flat-fee retainer basis for such tasks – inquire.
Review/Comment on a Contract Does Not Include Negotiation of the Contract. Review/comment is a specific limited service rendered for a flat fee. It does not include negotiations with the other party. Review/comment on the contract is not a broad or open-ended retainer for the transaction generally or any other additional services relating to the transaction. Open-ended representation is certainly available, but not at the review/comment fee level. Inquire about representation in the entire transaction.
Exclusions. An order for review/comment (only) does not include review/comment on the title commitment or review or preparation of closing documents such as the warranty deed. Unless we are retained for the entire transaction, these are separate billable services. Also, in the case of review/comment (only), you are not entitled to use our name in paragraph 24 as your attorney, since review/comment (only) does not involve any on-going legal advice or dealings with the other party.
Limited Representation Agreement. Whenever we are asked to do less than represent the client in the entire transaction, we require that the client sign our Limited Representation Agreement in order to expressly release us from liability for any parts of the transaction in which we are not directly involved.
Are you represented by a real estate broker?
If the Client is Represented by an Agent or Broker. We assume you have secured the services of a qualified real estate agent or broker who will be performing the usual duties of preparing, submitting, and negotiating offers and counter-offers; engaging in back-and-forth with the other party; arranging for the structural and mechanical inspections, the appraisal, environmental testing, the survey, and other specialized third-party services; assisting with loan application and qualification questions; and so forth. These are not customarily a lawyer’s duties and are not included in the flat-fee services we offer. We do our best to offer first-rate legal services and documents. However, consulting an attorney is not a substitute for obtaining the services of a qualified agent or broker who knows the market and provides other services that are not strictly legal in nature. When functioning as a law firm (and not a broker), we do not take on any duties customarily associated with agents and brokers unless we are expressly retained to do so.
If the Client is Not Represented by an Agent or Broker. If we are asked to provide legal advice or documents in a transaction, and the client does not have an agent or broker, we need to be clear in advance that realtor-type services are not included in the legal services that we provide. We do not agree that realtor duties (and professional liability) will be shifted to us in a legal capacity as part of a strategy to avoid paying a real estate commission. It is possible that some fees may increase if the client is not represented by an agent or broker.
Our Attorney is Also a Real Estate Broker. Our attorney is also a licensed Texas real estate broker. If we are asked to perform any functions typical of a broker, including preparing, submitting, and negotiating a contract, then we will charge accordingly (the above-specified up-front non-refundable retainer against 1% payable at closing). Inquire.
Representation Options in Commercial Transactions
Preparation of Commercial Earnest Money Contracts
Sales Price up to $600,000 – $895
Sales Price of $601,000 to $1,100,000 – $1,195
Sales Price of $1,100,000 to $2,999,999 – $1,495
Sales Price of $3,000,000 to $4,999,999 – $1,695
Sales Price of $5,000,000 or more – Inquire
Fees quoted above assume our use of the TAR 1801 or 1802 contract (either the form itself or a word-processed version of it), as appropriate, with a Special Provisions Addendum added to protect the interests of the client.
Commercial Earnest Money Contract Review/Comment
Sales Price up to $600,000 – $595
Sales Price of $601,000 to $1,100,000 – $695
Sales Price of $1,100,000 to $2,999,999 – $995
Sales Price of $3,000,000 to $4,999,999 – $1,495
Sales Price of $5,000,000 or more – Inquire
Special Provisions Addendum (Commercial) to be Added to the Contract. A Special Provisions Addendum is an all-around excellent idea, particularly for the seller. Standard contracts, whether TREC or TAR, are good contracts but are limited in the sorts of clauses and provisions that can be accommodated on a custom basis. Adding a Special Provisions Addendum solves this problem. Doing so leaves the standard form intact and clearly shows what custom variations are being contemplated. In the case of the seller, for example, such a custom variation would include a much more extensive “as is” clause than is found in the standard form, and also provide that this clause be included in deed to the buyer at closing. We also offer our Special Provisions Addendum in template form for our investor clients (see below). Fees (which are in addition to the above review/comment fee) are: for a sales price up to $600,000 – $475; sales price of $601,000 to $1,100,000 – $575; sales price of $1,100,000 to $2,999,999 – $775; sales price of $3,000,000 to $4,999,999 – $975. These fees apply in 90% of cases; however, a very heavily customized or negotiated addendum would be handled on an hourly basis ($375, two-hour minimum).
Commercial Earnest Money Contract Review and Comment – TREC and TAR Standard Contracts. This section assumes that you have an earnest money contract that is already prepared and ready to present to us for review and comment. Also, flat fees quoted in this section apply only to the review of the usual standard forms: TAR form no. 1801 (commercial improved property); TAR form no. 1802 (commercial unimproved property); or TREC form no. 9-13 (unimproved property) with addenda. For purposes of the flat-fee quotes offered in this section, we assume that we will be working with these standard contracts and not custom contracts (see next paragraph).
Review/Comment on a Contract Does Not Include Negotiation of the Contract. Review/comment is a limited service rendered for a flat fee. It is not a broad or open-ended retainer for any other services in the transaction.
Review of Custom (Non-Standard) Contracts. We are occasionally asked to review entirely custom contracts, out-of-state forms, investment seminar forms, or documents obtained from the internet in order to determine whether they would be valid in Texas. These vary widely in length and quality. For these custom contracts, it is not possible for us to offer the flat fees quoted below. However, we may be available on an hourly or flat-fee retainer basis for such tasks – inquire. We will need to see the contract you are working with in order to see what we are up against.
Review/Comment is Not a Total Re-Write. Please note that the flat-fee review and comment process offers exactly that. It is important to be clear on this point, since client expectations can differ. If a contract is so flawed, deficient, or incomplete that it must be entirely re-written or replaced, then clearly more attorney time will be involved. In so doing, we move out of the review/comment category and into the category of creating a custom contract, which can be expected to incur higher fees. Alternatively, we may suggest switching to the appropriate standard form plus utilizing a Special Provisions Addendum to deal with the custom issues (see below for more info on a Special Provisions Addendum.
Legal Provisions vs. Business Terms. Our review/comment on a commercial contract is limited to legal terms and provisions. Commercial real estate brokers are generally very knowledgeable and active in the negotiation of business terms for commercial contracts, and we generally defer to them on business points, in part because they usually have superior knowledge of specific areas, markets, and prevailing local trends.
Commercial Title Commitment Review/Comment:
Sales Price up to $600,000 – $395
Sales Price of $601,000 to $1,100,000 – $525
Sales Price of $1,100,000 to $2,999,999 – $750
Sales Price of $3,000,000 to $4,999,999 – $1,250
Sales Price of $5,000,000 or more – Inquire
Commercial Closing Document Review/Comment:
Sales Price up to $600,000 – $595
Sales Price of $601,000 to $1,100,000 – $695
Sales Price of $1,100,000 to $2,999,999 – $995
Sales Price of $3,000,000 to $4,999,999 – $1,495
Sales Price of $5,000,000 or more – Inquire
Representation in the Entire Transaction:
This is the best and most comprehensive option, since it includes all of the various individual services that are itemized above. However, representation in the entire transaction is available only if the earnest money contract has not yet been signed. It is the best option for some clients, Fees are a flat fee based on the sales price and type of transaction. Please let us know now if you are seeking representation in the entire transaction and we will quote a fee (a non-refundable advance retainer against 1% payable at closing). Inquire. Before quoting, we will need to know if you are the buyer or the seller; whether you are represented by an agent or broker; and the anticipated purchase or sales price. Note that this option assumes that the client is also represented by an agent or broker. We do our best to offer first-rate legal services and documents. However, consulting a real estate attorney, even for the whole transaction, is not a substitute for having the services of a qualified agent or broker who knows the market and offers other services that are not strictly legal in nature. As a law firm, we do not take on any duties customarily associated with agents and brokers.
Fee Guidelines for Representation in the Entire Commercial Transaction
Sales Price up to $600,000 – $895 retainer credited against 1% payable by the seller at closing
Sales Price of $601,000 to $1,100,000 – $1,195 retainer credited against 1% payable by the seller at closing
Sales Price of $1,100,000 to $2,999,999 – $1,495 retainer credited against 1% payable by the seller at closing
Sales Price of $3,000,000 to $4,999,999 – $1,695 retainer credited against 1% payable by the seller at closing
Sales Price of $5,000,000 or more – $1,895 retainer credited against 1% payable by the seller at closing
Total commercial real estate commissions are usually around 5%. We are available to sign on to the transaction for the usual buyer’s broker’s percentage (half the total amount of the commission) and rebate to you any amount in excess of our fee of 1% if the transaction closes.
Retainers listed in this section for commercial transactions are due in advance and are non-refundable and non-contingent upon closing. They are, however, credited to our 1%. Only percentage fees to be paid at closing are contingent upon the outcome.
“Bits and Pieces” Representation. We are occasionally asked to review and comment on a document that is part of a larger transaction – but we are not asked to represent or advise the client during the course of the entire transaction from contract to closing, which is the full and proper way that a lawyer should be involved in a real estate transaction. This limited form of representation is sometimes called “bits and pieces representation” and is usually sought out by clients seeking to minimize attorney’s fees. Accepting such a case is a serious professional liability risk for the attorney, since he is involved in only a slice of the transaction but may be held responsible for all of it. The attorney may not be allowed to see all relevant documents, examine correspondence, evaluate title to the real estate, communicate with the other party or the title company, perform due diligence, or otherwise become involved in the “big picture.” Limited involvement and limited knowledge are problematic for an attorney, both in terms of being able to do his job and in terms of potential professional liability. Clients requesting this sort of service are, in effect, seeking to pay less in the way of attorney’s fees but still seeking to hold the attorney fully liable for the professional and financial consequences of the transaction’s outcome. This is unreasonable. It is like asking an orthopedic surgeon to replace only part of one’s knee because the patient is going to DIY the rest of the operation. Reason? The patient does not want to pay the surgeon his usual fees . . . but, by the way, the patient still intends to hold the surgeon fully responsible for the outcome. No medical professional would agree to this. “Bits and pieces” representation in the legal field is no different. Reputable lawyers avoid it and some will not do it at all. Our firm may consider limited representation but will always require that the client sign in advance a Limited Representation Agreement which fully releases our firm from liability for portions of the transaction upon which we are not consulted or otherwise involved. No LRA, no representation.