Representation in Residential Real Estate Transactions

Buying or selling a home can more complicated than people think. Additionally, clients vary widely in what they want and expect from a lawyer in a real estate transaction. It is important to clearly and specifically communicate, at the beginning, the extent and scope of what the attorney is being asked to do. Our clear preference is to represent the client through the entire transaction, from contract through closing, rather than being involved with only parts of the transaction.

General Comments on Residential Real Estate Representation

Online Process. This process may now be 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. However, a consultation is not an indefinite process. Three days after delivering our advice or comments, the consultation or review/comment automatically concludes and any documents we prepare are considered final.

Scope and Extent of Representation. 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 a specific limited task – please specify the level of service being requested. Due to professional liability risk, 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. Much 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 or full representation that commences in the middle of a transaction.

Review/Comment on a Contract vs. Representation in the Entire Transaction. Review/comment on a contract or a title commitment (or similar specific and limited service) is a one-time event 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 or continue forward in time. 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 review/comment on the contract would not be the appropriate choice on our fee schedule. Instead, the client should request representation in the entire transaction.

Representation in the Entire Transaction. This is the traditional, time-honored way that attorneys have been engaged to represent clients in a real estate transaction. It is available only if the earnest money contract has not yet been signed. Full representation is the best option for most clients, since it is comprehensive and includes all of the various individual services that are otherwise available on a separate basis. Note that representation in the entire transaction assumes that the client is also represented by an agent or broker.

Fee Quotes. Please let us know now if you are seeking representation in the entire transaction and we will quote a fee based on the guidelines below. Before quoting, we will need to know if you are the buyer or the seller; whether the transaction is residential or commercial; whether you are represented by an agent or broker; and the anticipated purchase/sales price. Hiring this firm for the entire transaction is the only way you may list our name as your attorney of record on the contract.

Realtor Services Not Included in Contract Services. Note please that if we are asked to prepare a contract, or offer review/comment on a contract, our role is limited to just that – contract preparation and/or review/comment. These specific tasks may not be expanded to include negotiations and associated back-and-forth with the other party or their agent. For the most part, we view negotiations as a brokerage function, for which our attorney (who is also a real estate broker) charges accordingly – an advance retainer depending on the sales price against 1% payable at closing.

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 negotiating a contract, then we will charge accordingly (usually a non-refundable advance retainer against 1% payable at closing). Inquire. See TREC’s Information about Brokerage Services at https://www.trec.texas.gov/sites/default/files/pdf-forms/IABS%201-0.pdf. Our combined broker/lawyer compensation may vary somewhat according to the specific case and sales price. Fees for these services discussed herein are guidelines only. Request a no-obligation custom quote. Terms and conditions are finalized in writing prior to our commencing work.

Residential Earnest Money Contract Review/Comment

This option assumes that you have an unsigned TREC earnest money contract that is already prepared and ready to present to us for review and comment upon. We provide our comments and recommendations item by item. Fees are: $350 for a sales price of up to $1M; $450 for a sales price up to $1.5M; $550 for a sales price up to $2.0M; $750 for a sales price in excess of $2.0M.

Adding a Special Provisions Addendum to a Residential Contract

A Special Provisions Addendum is an all-around excellent idea, for either party, but particularly for the seller. Standard contracts, whether TREC or TAR, may be 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 (and in the addendum) 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. Fees are in addition to the above review/comment fee:

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.

The above fees apply in nearly all cases; however, a very heavily customized or negotiated addendum may be subject to additional fees.

Standard Contracts. Flat fees quoted for review/comment apply only to standard TREC, TAR, and/or MLS forms, contracts, and addenda. We assume that you have an unsigned contract of this type that is already fully prepared and ready for us to do a review/comment on.

Review/comment is a strictly limited one-time service that is rendered for a flat fee. It does not include negotiations and back-and-forth communications. It is one pass by our attorney at a proposed contract and does not include multiple reviews of additional versions and revisions as negotiations progress. We are certainly available for more comprehensive representation, but not at the review/comment fee level. If the client needs comprehensive services, then we should be properly retained for the entire transaction.

No agent or broker? Also, if the client does not have an agent or broker, we need to be clear in advance that realtor-type services are not included in contract review/comment or any other legal services that we offer. Finally, if the contract is already signed, our ability to make recommended changes is gone. At that point, we are available only to explain the final signed contract.

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 in this section. We will need to see the proposed contract before we can determine if we will be willing to work with the document involved. If so, then we may then offer a customized quote. Note that we do not offer review/comment on any document that was not professionally prepared by an attorney or a realtor.

Review/Comment is Not a Total Re-Write. If a contract is so flawed, deficient, incomplete, or incompetently written that it must be entirely re-drafted 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.

Full Representation in the Entire Transaction

The traditional, professional role of a real estate lawyer is to provide full representation in an entire transaction from contract through closing. This is our clear preference. However, we may in certain cases, agree to advise on only part of the transaction – for instance, offering review/comment on the earnest money contract (see details on partial representation below). The following are our guidelines for fees for full representation:

1. Fees if You are the SELLER and ARE Represented by an Agent or Broker
Sales Price up to $600,000 – $1,250
Sales Price of $601,000 to $1,100,000 – $1,995
Sales Price of $1,100,000 to $2,999,999 – $2,495
Sales Price of $3,000,000 and up – Inquire

2. Fees if You are the BUYER and ARE Represented by an Agent or Broker
Sales Price up to $600,000 – $1,250
Sales Price of $601,000 to $1,100,000 – $1,995
Sales Price of $1,100,000 to $2,999,999 – $2,495
Sales Price of $3,000,000 and up – Inquire

3. Fees if You are the SELLER and are NOT Represented by an Agent or Broker
Sales Price up to $600,000 – $1,500 in advance, credited against 1% at closing
Sales Price of $601,000 to $1,100,000 – $1,850 in advance, credited against 1% at closing
Sales Price of $1,100,000 to $2,999,999 – $2,150 in advance, credited against 1% at closing
Sales Price of $3,000,000 and up – Inquire

4. Fees if You are the BUYER and ARE NOT Represented by an Agent or Broker
Sales Price up to $600,000 – $750 non-refundable retainer credited against 1% payable by seller at closing
Sales Price of $601,000 to $1,100,000 – $1,000 non-refundable retainer credited against 1% payable by seller at closing
Sales Price of $1,100,000 to $2,999,999 – $1,500 non-refundable retainer credited against 1% payable by seller at closing
Sales Price of $3,000,000 and up – $2,500 non-refundable retainer credited against 1% payable by seller at closing

Initial retainers listed above are due in advance and are non-refundable and non-contingent upon closing. Retainers are, however, credited to our 1% at closing for category 3 and 4 transactions above. In these two categories of transactions, only the percentage fee to be paid at closing is contingent upon the outcome.

Consult Us Before Signing Anything

Note that we are available for full representation in the entire transaction only if the earnest money contract (or sales contract) has not yet been signed. In Texas, the contract substantially controls the transaction, the rights and remedies of the parties, any special requirements for the closing, and the content of the closing documents including the deed. After signing, the opportunity for a real estate attorney to modify the contract to the client’s advantage has likely been lost, a fact which may significantly disadvantage the client for the remainder of the transaction. One should always engage a real estate lawyer before signing anything.
After the contract is signed, the remaining hurdles are usually the title commitment, curing any legal issues that may appear on the title commitment, and review/comment on the closing documents.

Combined Lawyer-Broker Services

Clearly this option is available if you are not already represented by a broker or agent. Total residential real estate commissions are usually 6%, payable by the seller. In our hybrid capacity as broker/lawyer, we may be available to sign on to the transaction for the usual buyer’s broker’s 3% and then rebate 2% of that amount to you (net after taxes) if the transaction closes. Our compensation is thus 1%. This is our discount brokerage option. At this 1% level, our services are strictly limited. We do not offer full-service brokerage services for 1%. In fact, being primarily a law firm, we do not offer full-service brokerage services at all. In other words, we do not show properties; arrange for a survey, inspections, appraisals, or repairs; conduct negotiations; or assist with obtaining financing. If you need this higher level of assistance then you are advised to consult a full-service real estate broker for which the usual 3% will likely be charged. So, as you can see, our combined lawyer-broker services are not for everyone. See also TREC’s Information on Brokerage Services (IABS) at https://lonestarlandlaw.com/wp-content/uploads/2020/04/IABS-1-0.pdf .

Review/Comment on Residential Sales Contract and other Individual Residential Process Items

For those interested in review/comment on only a single item such as the earnest money/sales contract (unsigned contracts only), the title commitment, or the closing documents, fees are: $350 for a sales price of up to $1M; $450 for a sales price up to $1.5M; $550 for a sales price up to $2.0M; $750 for a sales price in excess of $2.0M.

Available online only. Clients will be required to sign a limited representation agreement indemnifying us against any professional liability for portions of the transaction upon which we do not provide legal advice. In any particular transaction, we reserve the right at our discretion to decline partial representation and offer full representation only.

Residential Contract Review/Comment Services – Additional Policies

Standard Contracts. Flat fees quoted for review/comment apply only to standard TREC, TAR, and/or MLS forms, contracts, and addenda. We assume that you have an unsigned contract of this type that is already fully prepared and ready for us to do a review/comment on.

Review/comment is a strictly limited one-time service that is rendered for a flat fee. It does not include negotiations and back-and-forth communications. It is one pass by our attorney at a proposed contract and does not include multiple reviews of additional versions and revisions as negotiations progress. We are certainly available for more comprehensive representation, but not at the review/comment fee level. If the client needs comprehensive services, then we should be properly retained for the entire transaction.

Review/Comment is Not a Total Re-Write. If a contract is so flawed, deficient, incomplete, or incompetently written that it must be entirely re-drafted 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.

Realtor Services Not Included in Contract Services. Note please that if we are asked to prepare a contract, or offer review/comment on a contract, our role is limited to just that – contract preparation and/or review/comment. These specific tasks may not be expanded to include negotiations and associated back-and-forth with the other party or their agent. We view negotiations as a brokerage function, for which our attorney (who is also a real estate broker) charges accordingly – an advance retainer depending on the sales price against 1% payable at closing.

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 in this section. We will need to see the proposed contract before we can determine if we will be willing to work with the document involved. If so, then we may then offer a customized quote. Note that we do not offer review/comment on any document that was not professionally prepared by an attorney or a realtor.

Do you need a consultation before proceeding?

If you are undecided about which action to take, or need to discuss your legal options before proceeding, then a paid consultation with our attorney is likely your best first step. A consultation provides the opportunity to discuss the specific circumstances of your case and review any existing documents that are involved. Our attorney can then make an informed recommendation on what to do next. Consultations may now be handled online, a popular process with clients since the discussion is unrushed and the client has a written email record of the legal advice given. It may supplemented by an optional phone or video call after legal issues are first discussed and analyzed by email, so we will need basic fact information and relevant documents before discussing a case by phone. Our consultation process and fees are described at https://lonestarlandlaw.com/online-consultation/.

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