Caveat Emptor in Residential Real Estate

Original release date: 4/9/05
Current as of 4/09/05.

"Caveat Emptor" is a Latin expression meaning "buyer beware."

If you are the buyer of residential real estate, then BEWARE: Many real estate attorneys who quote what sound like low fees actually end up costing you more. Here's how: Attorney X quotes a legal fee that is $200 less than what the Christoffersen Law Firm quoted. But here's what Attorney X neglected to mention: He does not plan to act as "settlement agent." He plans to have the title company act as "settlement agent." That means the title company will do a lot of the work you thought you were hiring Attorney X to do. And what neither Attorney X nor the title company will want to explain is that title companies charge at a minimum an extra $300.00 to act as "settlement agent." To hire Attorney X, therefore, will cost you at least $100 more than if you had hired the Christoffersen Law Firm.

When Attorney David G. Christoffersen asks a title company to act as "settlement agent," the Christoffersen Law Firm, not the client, pays the title company for that service, because it is for the convenience of the attorney. It comes off the top of our fee, not out of the client's pocket.

If you are cold-calling New Jersey law firms to learn what they charge the buyer in a real estate transaction, ask who will act as "settlement agent" - the attorney or the title company. If an attorney tells you his fee will be "$X plus title charges," ask if by "title charges" he means the $300+ the title company will charge to act as "settlement agent." Also ask if the flat fee you are quoted is all-inclusive. There may be hidden extras. Some real estate attorneys now charge extra to review the title binder, or to hold buyer's escrow monies in trust, or to write checks at the closing table.

The Christoffersen Law Firm will offer you a written fee agreement detailing what and how the firm will charge, and the services to be performed.

Attorney David G. Christoffersen handles real estate transactions and disputes in New Jersey and Pennsylvania. He has successfully handled hundreds of real estate closings since 1992. He is also a home owner, a real estate investor, and a landlord.