Many people don’t know that when you buy a house in NC, an attorney is involved. The Buyer chooses which attorney to close with, but what should the Seller do? Should a Seller get a completely different attorney to represent them in the transaction? Thankfully, real estate closings usually aren’t adversarial, and the Buyer’s attorney (aka the Closing Attorney or Escrow Agent) can provide the Seller with the necessary documentation they will need to sell their home. To put it simply, the Buyer’s attorney can do document preparation for Sellers without violating any duty they have to the Buyer, their client.
It is very common for the Closing Attorney to draft the Seller Documents, which is normally as much help from an attorney that a Seller needs. Our firm does this for a large majority of the transactions we close as it makes everything more seamless. Seller Documents include, but are not limited to, the following: the Deed, a FIRPTA Affidavit, Personal Information Affidavit, Lien Waiver, and Proceeds Directive.
The Deed is the legal document that transfers the property rights to the Buyer. The Personal Information Affidavit has the Seller acknowledging responsibility for all liens on the property and reporting their personal information, such as a forwarding address. The Non-Foreign Affidavit is the Seller attesting to the fact that they are not a foreign entity or resident, and there should not be any FIRPTA withholding pursuant to Section 1445(b)(2) of the IRS Code. If a Seller is does not meet the non-withholding requirements of FIRPTA, then they do not have to sign this affidavit and a portion of their proceeds will be sent to the IRS upon disbursement. A Lien Waiver is the Seller attesting to whether or not there has been any recent or current construction work on the home. If there has been, there may be a lien on the property that needs to be taken care of at closing. The Proceeds Directive, arguably the most important document to a Seller, states how they would like to receive their money after closing.
Most Seller Documents need to be notarized and originals must be in hand at the Closing Attorney’s office before closing in order for everything to go smoothly. If you are signing with a notary that is outside of the United States, be sure to check in with the Closing Attorney prior to notarization to make sure that the notary meets the NC requirements for notarization. The reason most Closing Attorneys like to draft the Seller Documents is that they can guarantee they are created in line with what is required to properly close.
There are however situations where the Seller will want to hire a completely separate attorney. This could be when there is a conflict regarding the contract, such as one party claims the other has violated their duties under the Offer to Purchase, or if there is curative work that must be done prior to closing that is extensive. An example of this would be a title issue that arose from the prior transaction that makes it impossible for the Seller to currently convey clear title. This could be a material error in the recorded deed or questionable title to a portion of the land. Other issues that would prompt a Seller to get representation are when the following are at play: estates, foreclosures or bankruptcies. In these situations, it is always best for the Seller to have their own representation so that their interests are protected. This is because the Buyer’s Attorney is under a duty to represent their client and cannot be a zealous advocate for the Buyer and the Seller at the same time if there is some type of conflict.
To sum it up, if there is not any bone of contention or need for specific legal advice on a tricky issue, Sellers do not need to hire an outside attorney and can use the Closing Attorney to draft the Seller Documents.
With this knowledge, now you can rest easy!