Do You Need an Attorney for Real Estate Closing in South Carolina?

Buying a home is often the single most significant financial transaction of a person’s life. For families in Greenville and throughout South Carolina, the process involves a mix of excitement and anxiety. You are not just purchasing a building; you are securing a future, a neighborhood, and a place to call home. Amidst the flurry of inspections, mortgage applications, and packing boxes, many buyers and sellers find themselves asking a fundamental question about the legal requirements of the process.

The Legal Requirement in South Carolina

The short answer to the question is yes. In South Carolina, you must have an attorney to handle a real estate closing. This is not merely a suggestion or a best practice; it is the law. The South Carolina Supreme Court has issued rulings affirming that real estate closings constitute the “practice of law.” This means that only a licensed attorney can oversee the critical aspects of the transaction.

State law mandates that an attorney must be present to supervise the closing, explain the legal documents to the parties involved, and oversee the disbursement of funds. While title abstractors may gather data and paralegals may assist with document preparation, the final responsibility and the actual conduct of the closing ceremony must rest with a lawyer. This requirement safeguards buyers and sellers, ensuring that a qualified legal professional reviews the transaction to prevent fraud, correct errors, and ensure that the title to the property is valid.

Why Closings Are Considered the Practice of Law

To the untrained eye, a closing might look like a simple exchange of money for keys, accompanied by a stack of paperwork. However, from a legal perspective, it is a complex transfer of rights and liabilities. The South Carolina Supreme Court determined that the closing process involves multiple steps that require legal judgment.

When you purchase real estate, you are not just buying the land. You are acquiring a “bundle of rights” subject to various limitations, such as zoning laws, easements, and restrictive covenants. Interpreting these rights and limitations requires legal training. Furthermore, the preparation of deeds, mortgages, and other transfer documents affects legal relationships and property interests. If these documents are drafted or recorded incorrectly, it can result in a “cloud on title,” rendering the property difficult to sell or finance in the future. By mandating attorney involvement, the state ensures that someone with a fiduciary duty to the client is accountable for the transaction’s integrity.

The Title Search and Opinion

One of the primary functions of the closing attorney is ensuring that the seller actually has the right to sell the property and that the buyer will receive “marketable title.” This process begins with a title search. The attorney or their staff examines public records at the county Register of Deeds—such as those in Greenville County or Spartanburg County—going back typically 40 to 60 years.

The goal is to construct a “chain of title,” verifying the history of ownership. The attorney looks for several potential issues that could threaten your ownership:

• Outstanding Liens: These could be unpaid mortgages, tax liens, or mechanics’ liens from contractors who performed work on the house but were never paid.
• Judgments: Court judgments against a previous owner that attach to the property.
• Easements: Rights granted to utility companies or neighbors to use a portion of the property, which could limit where you can build a fence or a pool.
• Heirs’ Property Issues: Common in South Carolina, this occurs when property is passed down through generations without a will, resulting in numerous fragmented owners.

Once the search is complete, the attorney provides a “title opinion.” This is a legal determination stating that, based on the records, the seller has a good title to convey, subject to specific exceptions.

The Role of Title Insurance

Based on the title opinion, the attorney will typically procure title insurance for the buyer and the lender. While the title search is exhaustive, it cannot catch “hidden” risks. These might include forged deeds in the distant past, mental incompetence of a prior grantor, or undisclosed heirs who suddenly appear to claim ownership.

There are two distinct types of policies involved in most transactions:

• Lender’s Policy: Almost all mortgage lenders require the borrower to purchase a policy that protects the bank’s investment up to the amount of the loan. This does not protect the homeowner’s equity.
• Owner’s Policy: This is an optional but highly recommended policy that protects the buyer. If a valid claim against the property arises after closing, the title insurance company covers the legal fees to defend the title and pays for valid losses up to the policy limit.

The closing attorney is often a licensed title insurance agent. They facilitate the issuance of these policies at the closing table, ensuring there are no gaps in coverage between the time of the search and the recording of the deed.

Contract Review and Due Diligence

While real estate agents often assist buyers and sellers in filling out the standard “Agreement to Buy and Sell Real Estate,” this document is a binding legal contract. Once signed, the parties are obligated to its terms. An attorney should review this contract, ideally before it is signed, but certainly during the process, to ensure the client’s interests are protected.

Important aspects of the contract that an attorney reviews include:

• Repair Procedures: The contract usually dictates how repair requests are handled following a home inspection. Missteps here can lead to lost earnest money or forced purchases of defective homes.
• Contingencies: Clauses that allow a buyer to walk away if financing fails or if the home does not appraise for the purchase price.
• Clarity of Terms: Ensuring that fixtures (like chandeliers or specialized appliances) are explicitly included or excluded to avoid disputes at the closing table.

During the “due diligence” period, the attorney acts as an advisor. If the inspection reveals significant structural issues, the attorney can advise on the legal options for negotiating repairs or terminating the contract without penalty.

Managing the Closing Funds

A real estate closing involves the movement of substantial sums of money. In South Carolina, the closing attorney acts as the “escrow agent.” This is a position of immense trust and responsibility. The attorney receives funds from the buyer (usually the down payment and closing costs) and the lender (the mortgage proceeds). These funds are deposited into a dedicated Trust Account, often referred to as an IOLTA (Interest on Lawyers’ Trust Accounts).

The attorney is strictly regulated on how these funds are handled. They must ensure that:

• All funds are “good funds” (typically wire transfers or certified checks) before disbursement.
• The seller’s existing mortgage is paid off in full so that the lien can be released.
• Real estate agents are paid their commissions.
• County taxes and recording fees are paid to the government.
• The seller receives their net proceeds.

If an error occurs in the calculation or disbursement, the attorney is responsible for correcting it. This financial oversight prevents scenarios where a seller receives money, but the old mortgage remains on the property, leaving the new buyer with a significant debt they did not incur.

The Closing Disclosure and Settlement Statement

Federal law imposes strict transparency requirements on residential real estate transactions involving mortgages. The “Closing Disclosure” (CD) is a standardized form that details the financial specifics of the transaction. Lenders are required to provide this document to the borrower at least three business days before the closing.

The closing attorney collaborates with the lender to balance this ledger. They verify that the loan terms, interest rate, and monthly payments match what the borrower was promised. At the closing, the attorney reviews the settlement statement line by line with the buyer and seller. This review includes explaining:

• Prorations: How property taxes and HOA dues are split between the buyer and seller based on the day of closing.
• Escrow Setup: The funds are collected upfront to pay for future taxes and insurance.
• Origination Charges: Fees charged by the lender for processing the loan.

This explanation ensures that the buyer knows exactly where every penny is going and that there are no hidden junk fees added at the last minute.

The Closing Ceremony and Document Execution

The “closing” itself is the meeting where the final documents are signed. In South Carolina, this must be conducted by the attorney. The stack of documents can be intimidating, often exceeding one hundred pages for a standard mortgage closing.

The attorney’s role is to explain the legal significance of each document. Key documents include:

• The Deed: The document that actually transfers ownership from seller to buyer.
• The Promissory Note: The borrower’s personal promise to repay the debt to the lender.
• The Mortgage: The security instrument that gives the lender the right to foreclose on the property if the note is not paid.
• Affidavits: Sworn statements by the seller regarding residency, the absence of liens, and other matters affecting the title.

The attorney ensures that these documents are executed properly, notarized where required, and witnessed according to South Carolina law. A failure to witness a deed properly can render the transfer invalid, so this procedural oversight is vital.

Recordation and Post-Closing Duties

The legal work does not end when the parties shake hands and exchange keys. The closing attorney has immediate post-closing duties that are essential for perfecting the buyer’s title. The most urgent task is recording the documents at the county courthouse.

South Carolina is a “race-notice” jurisdiction. This broadly means that the priority of ownership and liens is determined by who records their documents first. If a buyer closes on a home, but the deed is not recorded immediately, and a creditor obtains a judgment against the seller the next day, that judgment could attach to the house. The attorney ensures the deed and mortgage are recorded promptly to cut off any subsequent claims. Following recordation, the attorney distributes the final title insurance policies and ensures the recorded deed is returned to the new owner.

Residential vs. Commercial Closings

While the requirement for an attorney remains consistent, the nature of commercial real estate closings differs significantly from residential ones. Commercial transactions often involve corporate entities (LLCs or corporations) rather than individuals.

In commercial closings, the attorney conducts more extensive due diligence, which may include:

• Zoning Analysis: Verifying that the property is zoned for the intended business use.
• Environmental Reviews: Examining Phase I environmental reports to ensure the land is not contaminated.
• Lease Reviews: If the property has existing tenants, the attorney must review “estoppel certificates” to confirm the terms of the leases.
• UCC Searches: Checking for liens on business equipment or fixtures, not just the land.

The DeBruin Law Firm handles both residential and commercial transactions, adapting the scope of legal services to the complexity of the asset and the goals of the client.

Who Does the Closing Attorney Represent?

This is a common source of confusion. In a typical residential closing where a mortgage is involved, the closing attorney is usually selected by the buyer but represents the lender in ensuring the loan is secured by a valid mortgage. However, the attorney also owes duties to the buyer to ensure they receive a marketable title.

In many cases, the attorney can represent both the buyer and the lender because their interests are aligned: both want a clean title and a valid transfer. The seller may choose to hire their own separate counsel to review the deed and settlement statement, although in many standard transactions, the closing attorney prepares the deed for the seller as an accommodation. If a dispute arises between the buyer and seller—for example, over a failed repair or a delay in vacating the property—the closing attorney cannot take sides and may have to withdraw, requiring both parties to find new, separate counsel.

Common Issues Resolved by Attorneys

The value of a closing attorney is most apparent when problems arise. Experienced real estate attorneys frequently solve issues that would otherwise derail a sale.

• Boundary Disputes: A survey might reveal that a neighbor’s shed encroaches on the property. The attorney can draft an encroachment agreement to resolve the issue.
• Unreleased Mortgages: Sometimes a title search shows an old mortgage from 20 years ago that was paid off but never formally satisfied in the public record. The attorney tracks down the lender to obtain the necessary lien release.
• Probate Issues: If the seller inherited the property, the attorney verifies that the estate was properly probated and that the seller has the full authority to sign the deed.
• Tax Sales: Properties bought at tax sales have complex redemption periods and title issues. An attorney can navigate the “quiet title” actions often needed to make these properties insurable.

The Cost of Legal Services

Legal fees for real estate closings are generally a small fraction of the total transaction cost. These fees are typically paid at closing as part of the overall settlement charges. When compared to the real estate agent commissions or the loan origination fees, the attorney’s fee is often one of the more modest expenses on the settlement statement.

Given the magnitude of the investment and the risks involved in property transfer, this fee represents a necessary investment in the security of the asset. It provides the assurance that the transfer is valid, the funds are secure, and the new owner’s rights are protected against future claims.

Secure Your Property Investment in Greenville

The process of buying or selling real estate involves moving parts, strict deadlines, and significant financial consequences. While the goal is to reach the closing table and exchange keys, the path requires careful legal navigation to ensure that the ownership you secure is absolute and unencumbered. At the DeBruin Law Firm, we are dedicated to helping clients in Greenville and across South Carolina navigate their real estate transactions with confidence. Whether you are a first-time homebuyer, a seasoned investor, or a business owner expanding your footprint, our team is prepared to oversee your closing with the attention and diligence your investment deserves.

If you are preparing to buy or sell property, please contact us at (864) 982-5930 or send a message online to schedule a consultation.