$3,500 for a flat fee attorney for a multi-family deal: Fair?

21 Replies

Hello! I'm in the process of signing a contract for a multi-family in Houston. The property has 24 unit. I've been given 2 quotes from solid lawyers. 

1) $3,500 flat-fee: Includes review of PSA, title and survey work, final closing etc 

2) $250 per hour: The lawyer anticipates about $2,500 for the initial contract. 

Question: What are the range of attorney costs one can expect for closing a multi-family deal? 

It really depends on what you want done. I've done commercial PSAs where a client just wants another pair of eyes on the contract. If that's all you want, then $2,500 seems kind of high to me. But if the lawyer is drafting from scratch, that's a reasonable number I guess. I'm also not sure why you would have an attorney doing title and survey work for a multi-family deal—generally the title company would perform those tasks. Or, did you want an attorney specifically to do the title work? Again, it all depends, but $250 per hour is a reasonable rate for a solid lawyer. 

Sounds fair to me as I would expect ~$3000 in the Balt/DC corridor.

Always go with a flat fee if you can negotiate a fair one up front... the other party's attorney may turn what should be a fairly straightforward transaction into an epic negotiation of every single issue, thereby inflating an hourly bill.

No , never buy prepaid professional services; accounting, legal, or medical. It incentives them to do the most expedient job possible whether it is good or not.

If it's a straightforward job, and not an ongoing concern, or ambiguous in duration or workload, I would then agree with the other posters.

There's also the option to not spend money on an attorney in the first place.   It seems overkill to me i guess.   If you are going through a reputable brokerage firm to buy the apartment,  they are going to have a reputable "standard" PSA.   And technically be on your side.   So in a way,  i kind of trust the PSA of a reputable larger brokerage firm thats being used with dozens of other clients,  and is likely updated constantly to keep current and protected with industry standards - more than I might trust an attorney's.  A reputable brokerage firm doesn't  want to be screwing over dozens of clients with a bad PSA.      

 Versus having an attorney draft one up from scratch who may not be as in tune with things,  and may also put in clauses that won't see the light of day anyway and will slow down closing.   And they might be basing their "from scratch" PSA on the industry standard  version that all the brokerage firms are using anyway.    Yet charge you as if it was created from thin air.     

 I might also add that you should be able to read every word of the PSA yourself and understand the legal language enough to know the essence of what each clause is saying.   (Kind of like having some basic understanding and of plumbing before you hire a plumber to understand things for you).      

And as far as the rest of the documentation, it's title stuff, and lender stuff.   The lender stuff is 80% of the pages you sign at closing,  and good luck changing any of it.   If it's a recourse loan, they'll make you sign your life away and you can take it or leave it.    

And for the title stuff,  the hopefully "non biased" title company and their in house attorneys should take care of things.   You are indirectly already hiring the title company's attorney.      

Maybe I'm too trusting,  but paying an attorney to even look over docs that are fairly standardized to the industry and likely can't be changed  much anyway,   isn't necessary.   

However, if you are buying or selling something and the other party's attorney is drawing up the PSA.........then definitely hire an attorney.    

The hourly rate is not out of line for a solid attorney. 

I think for a 24 unit, I would keep with the $3500 flat fee.

My RE attorney has been worth his weight in GOLD!!  If you have a good one in the area you are investing, he or she will know all the ins and outs of that market.  Of course, it has to be a good one!! Mine has saved me over $40,000 and counting.  Too many owners cheap out here. 

Not advisable!!

Swanny

Originally posted by @Michael Swan :

My RE attorney has been worth his weight in GOLD!!  If you have a good one in the area you are investing, he or she will know all the ins and outs of that market.  Of course, it has to be a good one!! Mine has saved me over $40,000 and counting.  Too many owners cheap out here. 

Not advisable!!

Swanny

To hear people talk as if you should just use a template PSA is downright laughable. These are the same people who will be MIA when OP posts "Help: contract problem -- now lawsuit -- what does this clause mean" in the forums in a few months. 

I have a really good one if anyone wants his contact info, go to my profile and reach out to me.  Especially beneficial if you buy true Multifamily in the Ohio area.  The ones I did not use an attorney came back to bite me.  

To be forwarned is to be forarmed!!!

Swanny

@Todd Dexheimer ,

I am surprised you have not used an attorney and just have an attorney review.  When I have done that, my attorney makes numerous changes and would have rather had us use his PSA to protect us as the seller or a buyer.

By the way, I loved your podcast and currently have 109 front doors in 7 apartment complexes and 7 single family too.  We have communicated before.  My biggest complex right now is 24 units in Akron and a 21 unit in Painesville, OH.

We really need to talk more!!

Swanny

Originally posted by @Michael Swan :

@Todd Dexheimer,

I am surprised you have not used an attorney and just have an attorney review.  When I have done that, my attorney makes numerous changes and would have rather had us use his PSA to protect us as the seller or a buyer.

By the way, I loved your podcast and currently have 109 front doors in 7 apartment complexes and 7 single family too.  We have communicated before.  My biggest complex right now is 24 units in Akron and a 21 unit in Painesville, OH.

We really need to talk more!!

Swanny

 I have done both. It really depends on the broker as well. On my two current deals I have going on right now one was written by my attorney and the other one was reviewed by my attorney.  My attorney has not expressed any preference  

Originally posted by @Tom Gimer :
Originally posted by @Michael Swan:

My RE attorney has been worth his weight in GOLD!!  If you have a good one in the area you are investing, he or she will know all the ins and outs of that market.  Of course, it has to be a good one!! Mine has saved me over $40,000 and counting.  Too many owners cheap out here. 

Not advisable!!

Swanny

To hear people talk as if you should just use a template PSA is downright laughable. These are the same people who will be MIA when OP posts "Help: contract problem -- now lawsuit -- what does this clause mean" in the forums in a few months. 

 You do realize that the boilerplate agreements have been written by attorneys in that state, right?  I'm not advising anyone to just go with what the broker says, and not have attorney review everything, but that they can potentially save a few bucks if they do choose to go that route.  Even if someone uses an attorney from the start the other party should have a different attorney review those documents. The nice thing with the boiler plate is that they're very neutral. Often times when a buyer or seller has their attorney write the agreement it is one sided and needs to have a lot of changes made. 

Hire one on this deal and the other atty on the next... that way you can see which one performs.

Originally posted by @Todd Dexheimer :
Originally posted by @Tom Gimer:
Originally posted by @Michael Swan:

My RE attorney has been worth his weight in GOLD!!  If you have a good one in the area you are investing, he or she will know all the ins and outs of that market.  Of course, it has to be a good one!! Mine has saved me over $40,000 and counting.  Too many owners cheap out here. 

Not advisable!!

Swanny

To hear people talk as if you should just use a template PSA is downright laughable. These are the same people who will be MIA when OP posts "Help: contract problem -- now lawsuit -- what does this clause mean" in the forums in a few months. 

 You do realize that the boilerplate agreements have been written by attorneys in that state, right?  I'm not advising anyone to just go with what the broker says, and not have attorney review everything, but that they can potentially save a few bucks if they do choose to go that route.  Even if someone uses an attorney from the start the other party should have a different attorney review those documents. The nice thing with the boiler plate is that they're very neutral. Often times when a buyer or seller has their attorney write the agreement it is one sided and needs to have a lot of changes made. 

The original post asked a question about going with either: (1) an attorney offering a flat-fee; or (2) an attorney offering an hourly rate.

She received replies such as "you don't need an attorney, just use a template".

Non-responsive and not helpful. 

The thing about "the boilerplate agreements were written by attorneys" misses the fact completely that those attorneys were not representing either party. If the end result you seek is a neutral agreement... sure, go with a template. But read and understand fully how every last provision applies to the transaction you are entering into beforehand. 

I would prefer any contract I enter to be on terms written with my best interests in mind.

@Tom Gimer I would never buy a building from you or allow you to buy one of mine with that type of attitude. "If the end result you seek is a neutral agreement... sure, go with a template." Yes in the end I seek a positive out come for both parties and I am not looking out for just my best interests. There are people out there that want to take advantage of others, but that is not my style, so yes, neutral is good for me. 

By the way, only 1 person in this post said not to use an attorney and it wasn't me. I'm not sure where you pulled your quote from

Originally posted by @Todd Dexheimer :

@Tom Gimer I would never buy a building from you or allow you to buy one of mine with that type of attitude. "If the end result you seek is a neutral agreement... sure, go with a template." Yes in the end I seek a positive out come for both parties and I am not looking out for just my best interests. There are people out there that want to take advantage of others, but that is not my style, so yes, neutral is good for me. 

By the way, only 1 person in this post said not to use an attorney and it wasn't me. I'm not sure where you pulled your quote from

So you equate the concept of one protecting their own interests with taking advantage of others.

LOL

I paraphrased JEFF D.'s comment.

Hi again guys,

Just because my attorney ultimately has my best interests in mind, there is a give and take ultimately in the end.    I was referring to strategies that I did not even know about in Ohio that they use to save you tons of money on RE taxes etc...

Don't cheap out!!  Hire a RE attorney.  Plus, only take investing advice from people that have already gone down the road you are traveling down.  Don't take financial advice from people that make a lot less than you do.

Feel free to reach out to me and go to my profile to get my contact info.

Swanny

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