Real Estate Attorneys Fees

So it is settled, oh wait.

Definitely not settled. Just some insight on the range to expect. I think the following statement pretty much covers it:

"Most law firms charge between $2,000 and $5,000 for a closing, our experts say. For a typical purchase, expect to pay on the lower end of that range; for anything unique or more involved, you'll be paying on the higher end."

At the end of the day, its always best to interview a few attorneys, assess their involvement in the matter, and go with whoever makes you feel most comfortable.

As for that range, it really depends on specifics of the transaction.

I don't know why people would want a recommendation from the broker. You should probably have someone "independent" representing their best interest.

When I bought and apartment 10 years ago, my real estate lawyer, a really thorough astute old guy, had just died. So I took a lawyer recommended by the broker. He was okay and did a decent job on the "due diligence" and negotiations.

When I bought recently, I had a friend who is a lawyer recommend someone who was top notch because I needed very detailed "due diligence". After all, this lawyer just bought an apartment himself. What a mistake!

The new lawyer took double the time he should have every step of the way. The due diligence turned out to be a 3 page piece of garbage in font 36 because they didn't read the prospectus, only gathering info from a survey sent to the managing agent. The managing agent wanted a fee for preparing the information I wanted, so the lawyer spun his wheels for a week trying to get coerce the guy to give him the info for free. If the lawyer had read the board minutes or prospectus, he wouldn't have had to bother the managing agent for this info. My lawyer couldn't even tell me whether the coop owned the garage and laundry room and how they were handling damages from Hurricane Sandy. To boot, I didn't know until my mortgage company stepped into the picture, that this lawyer also represented mortgage companies. They were always busy because they were attending tons of closings for the mortgage companies, besides their own private buyers and sellers.

I would have switched back to the previous lawyer if it hadn't been for the time constraints I was under. Fortunately, I was able to gather my own "due diligence" and there were no problems.

Moral of the story: I trusted my lawyer friend's recommendation too much to do a thorough interview.

The only good thing was that they charged only $2,500 ... I paid that amount for the previous lawyer 10 years back.

When it comes to due diligence, the problem is usually that the lawyer relies too heavily on support staff and is spread too thin. They send paralegals to review board minutes and don't actually have the time to give the offering plan a thorough reading. By the time all of this information gets to the lawyer's desk, it is no longer the primary source but rather a summary supplied by a paralegal or legal assistant. I know this because prior to becoming an attorney myself, I supported a fairly prominent real estate attorney in the city and conducted all of his due diligence. I had no legal experience back then. Now that I have been in practice for some time, I make it a point to personally cover every aspect of the transaction. It makes me feel better at the end of the day.

Perhaps you should confirm (during your "interview") that an associate or the attorney you hired will review the due diligence.

Please note: when you "give the offering plan a thorough reading" the attorney can be reviewing 100-1000s of pages. This adds up.

Definitely confirm the attorney's full role.

Also, an attorney who knows how to properly conduct their due diligence knows exactly what to look for in an offering plan. No need to read 95% of it since it doesn't apply to the transaction at hand.

Where did you get your percentage (95%)? Is it from reading many offering plans and concluding this by yourself?

Honestly, an experienced knows what to do.

Correct. The last offering plan that I reviewed was for 99 John and it was over 1600 pages and divided into two volumes. This doesn't even include the amendments. Five percent of 1600 would be 80 pages. Look, I'm not saying that 95% is the precise figure. I was just trying to make a point and state that if you know what to look for, you will not have to sift through 1000+ pages. Much of it is boiler plate anyway. Any attorney that attempts to charge a higher fee than necessary and justifies it with time spent reading the full offering plan is just doing a disservice to the client.

I don’t agree with your percentage at all. I don’t think you have done enough transactions to even get an idea about what percentage of the offering plan you “need” to read.

With all that said…Let’s assume 5% is correct and the offering plan has 1600 pages.

So you find an attorney that knows what to look for, how does that attorney know what to look for? Years of experience, 100s of transactions and trial and error.

What comes with years of experience, 100s of transaction and trial and error? Probably an increased hourly rate/fee because they believe they have earned it.

I get the point you are trying to make, everyone needs to be careful and should really understand what is going on when you hire an attorney.

This due diligence is just a part of the transaction too.

Not agreeing with my percentage and doubting my experience are two very different things. That's fine. You are entitled to your opinion and assumptions, despite being incorrect, and I'm not here to defend myself or advertise my services. I'm simply engaging in a discussion on a forum that is relevant to my interests.

With proper training and supervision, one does not need years of experience to know what to look for in an offering plan. I learned a lot of it when I was working under another attorney. Upon hanging a shingle, I used the same skill set that I already had and just continued to polish it. With that said, most real estate attorneys have not changed their fees in ages. Jelj13's anecdote clearly supports this.

And yes, due diligence is just a part of the transaction. There is a lot more that goes into it. If you don't mind me asking, what is your role in the field?

I will answer your last question first.

My name is Tom H, I have a special practice. I handle one client. If you interfere you'll have to appear before a judge in the morning and show cause. When I am not working for my client I frequent the streeteasy discussion boards.

Here is my point, I think it is a disservice to give percentages out as if they mean something (i.e. 5% of a OP is relevant).

I think it is one thing to help people learn about legal fees and what is involved in a real estate transaction. I think that is important.

I think it is another to give people the notion that the attorney is wasting time because they review more than your stated “relevant percentage.” Once they have this notion that the attorney shouldn’t be doing more than 5% review of one specific document, they make take this and it apply it to non-due diligence items (i.e. contract negotiations, reviewing title reports, surveys, loan documents etc. etc.). The client doesn’t understand, hence they hire an attorney. The client may believe any additional time is a waste of resources. I am just saying be careful in saying 5%.

As for experience, it is kind of learned over years. I believe the “10,000hr rule is a definite key in success…Practice isn't the thing you do once you're good. It's the thing you do that makes you good.”

I guess we will agree to disagree. I have to get back to work. It's part of the wedding.

Fair enough. I did mention that 95% (and thereby 5%) is not a precise figure in one of my previous posts. In addition, I stated that approximately 5% of the offering plan is actually relevant to the transaction with the intent to state that reviewing all 1000 pages of a plan is not the most efficient use of time. That is just my opinion. In any case, I do agree that percentages are deceiving and give clients the wrong impression.

Enjoyed our back and forth.

Consigliere: Can you get me off the hook, Tom? For old times' sake?

As for legal fees, the ranges discussed here are about right. Clearly, a buyer considering the purchase of a land-lease condop who wants a lot of hand-holding should expect to pay more.

Can't do it, Sally.