Real Estate Attorney Fees: Flat Fees, Hourly Rates and Closing Costs

Real estate attorney fees are usually a flat fee for routine work like a home closing or a deed, and an hourly rate for anything that can't be priced up front, such as a title problem or a dispute. On a purchase with a mortgage, the attorney's fee shows up on your Closing Disclosure, so you can check it before you sign. The amount depends on your state, the task and who the attorney represents.

Task	How it's usually billed	What pushes the price up
Buyer's closing on a home	Flat fee	Lender requirements, title issues, a short deadline
Seller's closing	Flat fee	Mortgage payoffs, liens, a deed that needs fixing
Reviewing or drafting a purchase contract	Flat fee or hourly	Custom terms, back-and-forth with the other side
Deed transfer to a trust, a spouse or a child	Flat fee	Tax questions, more than one property
Clearing a title defect, lien or boundary issue	Hourly	How many people and records are involved
Commercial purchase or lease	Hourly or a negotiated flat fee	Size of the deal, financing, zoning
Contract dispute or lawsuit	Hourly with a retainer	Whether it settles or goes to court

None of these are set by law. In some places a lawyer handles almost every closing, and in others a title or escrow company does the work and a lawyer is hired only when something goes wrong. Ask a local attorney what's normal where the property is.

Estimate your bill

Most quotes mix the two methods: a flat fee for the closing and an hourly rate if extra work comes up. Put in the numbers from the engagement letter.

The estimator starts with an example, not a typical price: a $750 flat fee, 3 extra hours at $300 and $150 in costs, for $1,800 in all. Change each field to match the quote you got. If the lawyer gives a range of hours, run it with both ends.

What the engagement letter should say

Each state has its own version of the American Bar Association's Model Rule 1.5. Under Rule 1.5(b), the lawyer has to tell you the scope of the work and the basis of the fee, preferably in writing, before or soon after starting. For a real estate matter, look for:

• whether the fee is flat, hourly or a mix, and what the flat fee covers;
• the hourly rate for work outside the flat fee, and who at the firm bills at which rate;
• which costs are extra, such as recording fees, title searches and courier charges;
• who the lawyer represents. At a closing, the buyer, the seller and the lender can each have their own lawyer, and the one the lender hires doesn't work for you.

Under Rule 1.5(a), every fee has to be reasonable for the time, skill and local market.

Where the fee shows on your Closing Disclosure

If you're getting a mortgage, the lender has to give you a Closing Disclosure at least three business days before closing (12 CFR § 1026.19(f)). It lists every settlement charge, including attorney fees, and who pays each one (12 CFR § 1026.38). Compare it with your engagement letter. A fee you didn't agree to, or one listed in your column that the contract says the seller pays, is worth a question before the closing day.

Cash buyers don't get a Closing Disclosure, but the settlement agent usually prepares a settlement statement with the same kind of list.

Costs that aren't the lawyer's fee

Several charges at closing pass through the attorney's office but go to someone else:

• county recording fees for the deed and the mortgage;
• transfer taxes, where the state or county has them;
• title search and title insurance premiums;
• survey, courier and wire fees.

These can add more than the legal fee itself, so ask for them as a separate list.

Who pays: buyer or seller

Your purchase contract decides who pays which closing costs. Local custom fills the gaps, and it varies a lot from one state or county to the next. Each side usually pays its own lawyer. Read the cost section of the contract before you sign it, since that's when it can still be changed.

Questions to ask before you hire

1. Is your fee flat, hourly or both, and what exactly does the flat fee include?
2. What happens to the fee if the deal falls through before closing?
3. Which costs will I pay on top of your fee?
4. Do you represent me, the lender or the title company?
5. Who will handle my file day to day, and what's that person's rate?