Do you need a real estate attorney to close in Arizona?

What does Arizona law require at closing?

No section read here says that a buyer or seller must hire a lawyer, or that a lawyer must attend the closing. What the law does regulate is who may hold the money and who may act as a broker.

Escrow. Arizona defines “escrow” as a transaction in which money, documents or a title are delivered to a third party, to be released when a specified event happens, in connection with the sale or transfer of real or personal property (A.R.S. § 6-801). A person may not carry on the escrow business, or hold themselves out as an escrow agent, without first obtaining a license (§ 6-813(A)). Escrow license applications go to the deputy director of the Department of Insurance and Financial Institutions (§ 6-814; § 6-101 defines the department). Attorneys are exempt if they are licensed to practice law in Arizona and are not actively engaged in conducting an escrow business (§ 6-811(A)(1)).

Brokers. Anyone acting as a real estate broker or salesperson needs a license (§ 32-2122). The licensing article does not apply to an attorney performing the attorney’s duties as an attorney, but that exception does not let the attorney take other actions that require a license (§ 32-2121(A)(3)). Acting as a broker without a license is a class 6 felony (§ 32-2165(A)).

Earnest money. A licensed broker must place money entrusted to the broker in a trust account or deliver it as the parties agreed in writing (§ 32-2151).

Who conducts closings in practice?

The statutes show the roles, not the market share. A licensed escrow agent holds funds and documents. The agents or brokers who represent the parties prepare the sale. A lender sends its own closing documents. An attorney may be involved at the parties’ choice. No Arizona source read here counts how often each happens, so ask your agent or lender who will be your escrow agent, and confirm the agent’s license with the state.

For the federal forms you will receive, see closing costs explained and Arizona closing costs.

What about unauthorized practice of law?

Preparing legal documents for other people is the practice of law. The Arizona Supreme Court’s Certification and Licensing Division says that individuals and businesses preparing legal documents without the supervision of an attorney in good standing with the State Bar of Arizona must be certified under Supreme Court Rule 31 and the Arizona Code of Judicial Administration. That is the court’s rule for legal document preparers.

In practice, two cautions follow:

• A real estate license is not a law license. The statutes read here license brokers to act as brokers; the court’s certification rule is what covers preparing legal documents for others.
• If someone offers to draft a custom contract, deed or trust, ask whether that person is a lawyer or a certified legal document preparer.

What does an attorney cost?

No Arizona source read here sets a fee for real estate attorneys. The cost depends on the lawyer and on what you ask the lawyer to do, so get a quote for the specific task before you hire.

When is an attorney worth it anyway?

Consider a lawyer when:

• The deal is not routine: a sale between family members, a seller-financed purchase or a contract for deed, a trust or an estate sale.
• Title has problems, such as an unpaid lien or a claim from a former owner.
• A trustee’s sale or a deadline is involved. For example, a defense to a trustee’s sale must be raised by a court order obtained by 5:00 p.m. on the last business day before the sale (§ 33-808(C)(8)); see foreclosure in Arizona.
• You are asked to sign something you do not understand, such as an addendum or a waiver.
• You want advice on what the seller disclosed.