Options for Legal Advice and Counsel
in Residential Real Estate Transactions

Topics Covered

Initial Consultation

Review/Comment on Real Estate Contracts

Legal vs. Brokerage Services

Hourly Retainers for Real Estate Transactions

Flat-Fee Retainers for Real Estate Transaction

Client Expectations.  Clients vary widely when it comes to the type and scope of legal services being sought in a real estate transaction. Is the client seeking review/comment on a contract and nothing more? Or comprehensive representation in the entire transaction? Every client and every transaction is different.

Consultation May be Required. Until we have the opportunity to thoroughly understand and evaluate a real estate transaction by means of a paid consultation, and expressly accept the representation, we may decline to become involved on any basis other than our $450 hourly rate. At our discretion, we may require an initial consultation (and payment of a non-refundable consult fee) before committing to any legal service.

Available Representation Options. We offer several options and approaches to real estate representation. Quotes are given on a custom basis and may require an initial paid consultation before we can provide one.

Review/Comment on a TREC Contract or other document. Fees begin at $250.

Contract Preparation. Fees begin at $350.

Special Provisions Addendum to the TREC or TAR contract with custom provisions.. Begins at $350 (general template available for $250).

Closing Document Preparation (e.g., the warranty deed, the note, and deed of trust).

Representation

Representation in the entire transaction: Hourly ($450) or Flat-Fee Retainers ($2,500 and up)

Initial General Consultation. This is the best way to discuss an overview of a real estate transaction and to plan strategy and documentation. We may require that the process commence with a paid consultation in order to discuss the transaction before a quote for further legal services can be given.

Lawyers are Not Brokers. Consulting or retaining a real estate attorney is NOT a substitute for engaging the services of a licensed real estate agent or broker.
Residential Transactions Only. Any fees quoted in this section relate to residential transactions only. Commercial transactions are entirely case-by-case, so an initial consultation is required.

Representing “Both Sides.” We can only advise one side in a real estate transaction. Our office must be designated as representing either buyer or seller. The other party must be advised to seek its own legal counsel.

REVIEW/COMMENT ON REAL ESTATE CONTRACTS

Review/Comment Consultation. Review/comment on a specific document is available for unsigned residential TREC and TXR contracts and addenda as well as title commitments, surveys, closing documents, and other items. Our method is to go through the document and make comments and recommendations item-by-item. Note that review/comment on a contract is not full representation in the entire transaction. After one hour of attorney time or after three business days (whichever comes first), the review/comment process automatically concludes and services cease.

Consult Us BEFORE Both Parties Sign the Contract. In Texas, the earnest money contract substantially controls a real estate transaction, the rights and remedies of the parties, special requirements for closing, and the content of closing documents. After the contract has been signed, the opportunity to affect these factors and modify the contract to the client’s advantage may have been lost. We may at our discretion decline to accept cases where the contract has already been signed.

Review/Comment on Contracts Not a Total Re-Write. The flat-fee review and attorney comment process offers exactly that. 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.

Legal Provisions Versus Business Terms. Review/comment on a real estate contract is limited to legal terms and not business terms (e.g., sales price) since we do not have knowledge of specific areas, markets, pricing, and prevailing local trends. Consult your agent or broker on these items.

Limited Liability in Real Estate Consultations. In the case of limited services (e.g., a consultation but not full representation in the entire transaction) the client agrees that our law firm shall have NO professional liability whatsoever for portions of the transaction that were not handled or advised upon by us. We do not stand behind any part of the transaction that a client handles DIY.

No Review of DIY, Internet, or Junk Documents. We offer review/comment only on TREC and TXR real estate contracts and addenda so long as they are unsigned and complete. As to other legal documents, review/comment services are available so long as the document was prepared by an attorney or real estate broker.

Existing Homes Only. We do not review new construction contracts. These are usually non-negotiable by the builders except for price and other deal points. Attempting to negotiate legal terms is usually futile. We may, however, be available for a commission rebate arrangement.

Format of Contracts We Prepare. Format of any residential contract we prepare for a client is the TREC 1-4 contract reproduced (keyed in) in Word so that the client can easily modify it if needed. Our version is the same contract (same provisions), just not on the standard printed form. Use of any other format requires prior agreement.

Adding a Special Provisions Addendum. Standard contracts, whether TREC or TAR, are good contracts but are very limited in the way they can be customized to the client’s advantage. Adding a custom Special Provisions Addendum can significantly improve the client’s legal position beyond the TREC or TXR form (e.g., “as is” clauses for sellers, property condition disclosure clauses for buyers).

Using a Letter of Intent. If you have not yet reached full agreement on the transaction terms, a non-binding letter of intent (LOI) is a good start. These are more often used in commercial transactions, but they can also be a useful in residential transactions, particularly if a creative approach is being used (e.g., a wraparound, owner finance, subject to, etc.).

Fees are Per Transaction. Unless otherwise expressly agreed in writing, our fees for real estate services are flat fees per property and per transaction (i.e., payment of a single fee does not carry over to cover multiple offers, properties, or transactions into the future).

Limited Liability in Real Estate Matters. In the case of limited services (e.g., a consultation but not full representation in the entire transaction) the client agrees that our law firm shall have NO professional liability whatsoever for portions of the transaction that were not handled or advised upon by us. We do not stand behind any part of the transaction that a client handles DIY. We are not responsible for correcting a client’s DIY mistakes.

Fees for Earnest Money Contract Preparation:

Sales Price up to $600,000 – $550

Sales Price of $601,000 to $1,100,000 – $525

Sales Price of $1,100,000 to $5,000,000 – $750

Special Fees for Special Provisions Addendum Modifying TREC or TAR Contract:

For sales price up to $600,000 – $350; sales price of $601,000 to $1,100,000 – $375; sales price of $1,100,000 to $2,999,999 – $450; sales price of $3,000,000 to $4,999,999 – $525. These fees apply in 90% of cases; however, a very heavily customized or negotiated addendum would be handled at our discretion on an hourly basis ($375, two-hour minimum).

LEGAL VERSUS BROKERAGE SERVICES

Are you represented by an agent or broker? In advising on a real estate transaction, we assume the client has secured or will secure 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. The functions and services of brokers and agents are NOT included in our legal services unless specifically provided otherwise in advance by means of a signed written agreement.

A Lawyer Does NOT Replace a Realtor. Although this law firm offers real estate contract and document-related legal services, it is important to understand that we do not substitute for a real estate agent or broker and all the various services and ongoing support that these persons typically provide. Requesting a contract review from a lawyer does NOT substitute for the broader services of a real estate agent or broker.

Hiring a Lawyer instead of a Broker. There is a new idea that hiring a real estate attorney instead of a real estate broker is a way to get the same services by paying only a low flat fee instead of a brokerage commission. This is false for at least two reasons: (1) legal and brokerage services are not the same; and (2) if many hours of hard work need to be done then someone must be paid for that time, whether that person is a broker or a lawyer. There is no free lunch in life or business. Hiring a lawyer is NOT a way to obtain full brokerage services without paying a real estate commission. One cannot get these same services by paying a low flat fee to a real estate lawyer.

Our Attorney Also has a Real Estate Broker’s License. Our attorney is a licensed Texas real estate broker. However, this office is primarily a law firm and the services we provide are legal in nature. Any brokerage representation by us requires a signed written agreement in advance. We entirely disclaim any suggestion that our attorney is acting as a real estate broker for anyone unless that person has a signed written agreement with us to that effect.

Information on Brokerage Services (IABS). TREC rules require us to direct you to TREC’s Information about Brokerage Services located on the TREC webpage at https://lonestarlandlaw.com/wp-content/uploads/2020/04/IABS-1-0.pdf.

Brokers’ Commissions. Compensating the buyer’s representative is now an optional and negotiable choice on the part of the seller. A seller is no longer required to pay the buyer’s agent’s commission. It is a matter of agreement and contract between the parties.

Possible Commission Rebate. Because our attorney has a broker’s license, a partial commission rebate (net after taxes) may be available to buyers at closing but only if you use our firm for the entire transaction and you are not already represented by an agent or broker. In such cases, our fee guideline is 1/3 of the total subject to a 1% minimum. A post-closing check is written to the client (net after taxes). The gross commission is assumed to be the customary 3% per side. These are guidelines and may be varied at our discretion. Make no assumptions in this area. We will need to discuss, review, and approve the specifics before committing to any particular arrangement.

RETAINER ARRANGEMENTS

What is a retainer? Although most of our fees fall into the category of flat fees per item, individual flat fees per service are not suitable for every situation or every client, particularly those with more complex legal issues anticipated to persist over a period of weeks or months. Retainers are intended to be a longer-term option.

Retainers Distinguished from Consultation Fees. Consultations and document preparation tasks are designed to be short-term. Legal services begin and promptly end in such matters. By contrast, retainers are intended to be a longer-term option.

When in a retainer appropriate? Retainers are appropriate in: (1) complicated transactions, entity structuring, business disputes, or other situations where it may be difficult to establish exact fees and costs in advance; (2) where the need for legal services is anticipated to extend significantly beyond the time allotted for a consultation; (3) when a client wishes to have us available as their law firm – if, as, and when needed.

Consultation May Be Required. At our discretion, an initial paid consultation may be required before a retainer is accepted.

HOURLY RETAINERS FOR REAL ESTATE TRANSACTIONS

Hourly Billing. In hourly billing, the client agrees to pay for the accrued time it takes a qualified lawyer to do what the client has asked him to do. Our hourly rate is $450. There is no partial-hour accounting for the first hour. The first hour is entirely non-refundable. Billing is in quarter-hour increments thereafter.

Additional Retainer Deposits. Additional retainer installments may be required in advance moving forward since we do not send bills (hourly or otherwise) after the fact. Retainers must be kept current with sufficient money in reserve, the amount at our discretion. Retainer balances may not reach zero unless the matter is concluding. If a client’s retainer balance reaches zero or goes negative, legal services automatically cease.

FLAT-FEE RETAINERS FOR REAL ESTATE TRANSACTIONS

Flat-Fee Retainers – Real Estate Transactions. Flat-fee retainers in real estate transactions are limited to 40 days or final closing of the transaction, whichever occurs first. Retainers apply to one property or transaction only and may not be carried over to other transactions. Guidelines for flat-fee retainers in real estate transactions are as follows: sales price up to $1M: $2,500; sales price $1M to $2M: $3,500; sales price over $2M: Inquire.

Legal Services Only – Brokerage Functions Not Included. Our attorney is a licensed Texas real estate broker. However, this office is primarily a law firm and the services we provide are always legal in nature unless otherwise agreed in writing in advance. Retaining this firm for a real estate transaction does NOT include the traditional non-legal functions of a real estate broker. We do not offer full brokerage services at all. We are not available to provide full brokerage services for a low flat fee as a means of not paying a real estate commission. Consulting a real estate attorney is NOT a substitute for engaging the services of a licensed real estate broker.

A Lawyer Does NOT Replace a Realtor. Although this law firm offers real estate contract and document-related legal services, it is important to understand that we do not substitute for a real estate agent or broker and all the various services and ongoing support that these persons typically provide. Requesting advice from a lawyer does NOT substitute for the broader services of a real estate agent or broker.

Real Estate Retainers are Per Transaction. Flat fees quoted are per property and per transaction (i.e., a single retainer does not cover or carry over to multiple offers, properties, or transactions).

Legal Provisions Versus Business Terms. Advice on a real estate matters is limited to legal terms and not business terms (e.g., sales price) since we do not have knowledge of specific areas, markets, pricing, and prevailing local trends. Consult your agent or broker on these items.

Representing “Both Sides.” We can only advise one side in a real estate transaction. Our office must be designated as representing either buyer or seller. The other party must be advised to seek its own legal counsel.

Possible Commission Rebate. Because our attorney has a broker’s license, a partial commission rebate (net after taxes) may be available to buyers at closing but only if you use our firm for the entire transaction and you are not already represented by an agent or broker. In such cases, our fee guideline is 1/3 of the total subject to a 1% minimum. A post-closing check is written to the client (net after taxes). The gross commission is assumed to be the customary 3% per side. These are guidelines and may be varied at our discretion. Make no assumptions in this area. We will need to discuss, review, and approve the specifics before committing to any particular arrangement.

Limited Liability in Real Estate Matters. In the case of limited services in a real estate transaction i.e., something less than full representation in the entire transaction) the client agrees that our law firm shall have NO professional liability whatsoever for portions of the transaction that were not handled or advised upon by us. We do not stand behind any part of the transaction that a client handles DIY or without our assistance.

Our Attorney Also has a Real Estate Broker’s License. Our attorney is a licensed Texas real estate broker. However, this office is primarily a law firm and the services we provide are legal in nature. Any brokerage representation by us requires a signed written agreement in advance. We entirely disclaim any suggestion that our attorney is acting as a real estate broker for anyone unless that person has a signed written agreement with us to that effect.

Information on Brokerage Services (IABS). TREC rules require us to direct you to TREC’s Information about Brokerage Services located on the TREC webpage at https://lonestarlandlaw.com/wp-content/uploads/2020/04/IABS-1-0.pdf.

ADDITIONAL POLICIES ON RETAINERS

Flat-Fee Retainers are Not Subject to Hourly Billing or Accounting. Retainers are stipulated to be current payment for legal services rendered or to be rendered. No exceptions. Flat-fee retainers are NOT subject to hourly billing or accounting. Accordingly, there is no refund of any alleged “unused” portion of a flat-fee retainer. No exceptions.

Flat-Fee Retainers are Earned when Paid. The entire flat-fee retainer is stipulated to be a current non-refundable payment for legal services rendered or to be rendered. It is non-refundable. Funds belong to the attorney as soon as they are paid and may be immediately deposited directly into this firm’s operating account. No trust account is required to be used. No exceptions. Please do not ask us to finance the retainer.

Retainer Term. Retainers are not open-ended. After the specified retainer term, the retainer automatically expires and must be renewed (if at all) by express agreement in writing between the parties. There is no automatic renewal of a retainer. There is no assumed or implied renewal. At the end of the retainer term, the retainer automatically expires without notice to the client and legal services automatically cease. The term or duration of the retainer is made clear at the outset. Expiration is automatic. No additional notice to the client is required to confirm that a retainer term is about to expire or has expired; nor is client consent required. Renewal of a retainer (if at all) is only by express written agreement and additional payment of fees.

Retainers Do Not Include Litigation. Unless expressly agreed in writing, our retainers do NOT include our participation in any pending or threatened litigation. It is contemplated that the client will have his or her own litigation attorney. Our task is to separately advise on real estate, asset protection, and/or entity-structuring matters during the term of the retainer without being directly involved in pending or threatened litigation. Thus we do not file pleadings, appear at hearings, communicate with opposing counsel, or respond to discovery. All of these functions are among the duties of the client’s litigation attorney. In all matters in which we are advising a client who is in litigation, it is assumed (and required) that the client will have a litigation attorney of record.

Responsiveness to Our Retainer Clients. Although we may be on an active retainer, our obligation to our retainer clients does not extend to after hours, weekends, holidays, or our attorney’s personal vacation time. We take business hours seriously (M-F 8 to 5 CST).

After-Hours Communications. After-hours, weekend, and holiday calls and emails are discouraged and we have absolutely no obligation to respond to same during off hours. Such emails are viewed by us as being received on the next regular traditional business day.

No Guarantees. No guarantees are ever made as to the outcome of any matter on which this firm is retained.

Our Other Terms of Service Also Apply to Retainer Clients. Please read our firm’s complete policies at the Fees & Policies page of our website. All of these terms of service apply without exception to all clients. By proceeding with a retainer arrangement you agree to all of our fees and policies.