Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: v. 17, no. 432: June 24, 1876

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Real Estate Record AND BUILDERS' GUIDE. Vol. XVII. NEW YOEK, SATURDAY, JUNE 24, 1876. No. 432. Published Weekly by THE REAL ESTATE RECORD ASSOCIATION. ' C. W. SWEET...............Pbesident and Tbeasubeb PRESTON L SWEET...........Seceetabv. j L. ISRAELS.........................Business Ma.»jageb i TERMS. I OIVE YEAR, in advance___$10 00. i Commtinications should be addressed to i C. ^iV, STVEJET, I Nos. 345 AND 347 Broadway LEGAL FEES. The members of the legal profession, from the necessities of the case, are the natural custodians of real estate interests. Few transactions are con¬ summated without their aid or supervision. When the services oi lawyers are ignored or waived trouble is the almost inevitable consequence. Men imagine that they buy and sell land, when, in fact, they deal merely with the titles to the land. If the title is good it conveys, at the best, but a qualified enjoyment of the land, subject to the taxes, or interest, or ground-rent, or cove¬ nants more or less exacting. If the title is bad, the land would be hardly leas available to the purchaser if waUed about as high as heaven. These titles are matters of history and law—or rather of historical record—and require a knowl¬ edge of the intricate principles of law. The methods of conveyance are antiquated, cumber¬ some and puzzling to the ordinary man of busi¬ ness, hence the high function of the legal pro¬ fession. This subject of legal fees in connection with real eatate matters deserves more extended and serious treatment tban we can here afford to give it. Practically lawyers stand as the great toll- gatherers over every transaction, great or smaU. It is safe to say that the immoderate exactions practiced by a strong and influential miaority of them, have tended to disgust the public with real estate transactions, and have laid burdens upon this important interest altogether too heavy to be borne. As indispensable and valu¬ able as these legal services are, it is well known that they constitute the least honored, though most lucrative, branch of the profession— a branch at all events usually devolving upon the subordinate members of a legal firm, or else attended to by the managing clerk of the office. So far as the exam¬ ination of titles is concerned, the work is to a great extent mechanical. The various official searches ftimish the necessary data for investigation. With few exceptions the titles to New York property have been so often examined and re-examined that a clear beaten track is discernible through most of them. We have known a lawyer, in an important convey¬ ance, to adopt the seller's abstract, without any pains of verification, and to accept convey¬ ance under the same, without misgiving or Bpruple, charging'therefor a round fee. A. Free¬ masonry may be said to exist among the differ¬ ent law offices, so that the work of one office is frequently appropriated and made use of in an¬ other. The hieroglyphics and cabalistic signs of one managing clerk are clearly intelligible to another: thus, the labor of original resetirch is saved, though clients are mulcted in the same fee as if such labor was performed. With the lawyers rest the all-important ques¬ tion of the validity of the title. Any flaw or de¬ fect, real or imaginary, constitutes a cloud upon the title which interferes seriously with any dis¬ position of it. It is easy to see that with such an arbitrary control or monopoly of the ques¬ tion of titles, a great power is concentrated in the legal profession. The ability to produce ft clean bill of health, or a passport to negotia¬ bility, is a vitally important matter to the owner and seller of property. This constitutes the basis of immoderate charges; not for services actu¬ ally rendered, or pecuniary responsibility as¬ sumed, but—solely the necessities of clients. The abuses practiced by lawyers are chiefly in connection with mortgage loans, where the parties on the one side are needy and urgent borrowers, and on the other side wealthy corporations or individuals. The tariff of charges heretofore exacted, in many of these cases has been simply ruinous and pro¬ hibitory, partaking of the nature of an excessive discount from the sum borrowed. Even in the case of the purchase and sale of property the fees charged for the examination of titles consti¬ tute a considerable item to be added to the pur¬ chase price. We can state our case more clearly by examples. A distinguished jurist once said in our hearing, that in his early professional life he had occasion to examine the title of what is now known as the Brandreth House—a property that even in those primitive times was worth some fraction of a million dollars. For thi? service he received a fee of seventy-five dollars. In con¬ trast to this we would place the remark of anoth¬ er distingushed coimsel, who recently said that for an examination of any title, however simple, he considered a fee of one thousand dollars barely adequate. These cases present the extremes of moderation and extravagance, but it cannot be denied that the average fee for the examina¬ tion of titles is somewhere midway between these two amounts, in the case of mortgage loans the absurd rule of charging one per cent, being almost universally enforced, while in the matter of purchase and sale the same rule serves as an approximate standard. The true basis for legal charges" should be the actual amount of labor performed and intelli¬ gence displayed. The record of titles is easily accessible, and the-principles of law involved in a great majority of them are well settled and established by familiar decisions aad usages. There are lawyers of high standing who dis¬ card the percentage principle altogether, as un¬ becoming to the profession, and calculated to place it upon the plane of brokerage and otber non-professional employments. The hardship of counsel bills is felt not only in the round sum exacted as a fee, and which the counsel appro¬ priates entirely to his own use, but an abuse is also experienced in the matter of search fees. We have known a case where loans were pro¬ cured on a block of buildings, the title to which was one and undivided, involving but one set of searches; yet tbese searches were multiplied to coirespond to the number of buildings, and the total cost of the searches assessed upon each building, heavily increasing the expense of the examination. Besides the fee and the searches, borrowars are frequently amazed at the prices charged for the various papers required in real estate transactions, i'or instance, for tbe preparation of deeds and bonds and mortgages we have known a fee of twelve or fifteen dollars to be charged, and have rarely known less than ten dollars to be charged for either of these in¬ struments. When it is considered that this class of work consists merely in the filling out of a blank form famished by the stationer, a task performed by the scrivener of the law office, we can perceive the monstrous disproportion of the charge. The profit to be derived from pre¬ paring such papers at the rate of five dollars each would constitute a handsome income for an average law-office. Other written instru¬ ments—such as party-wall agreements and spe¬ cial covenants—are charged for in the same pro¬ portion, and go to swell the unwelcome total of the oounael's biU. We are aware that we are dealing with a deU¬ cate subject in thus assailing the stronghold of the law. But in these times of retrenchment and reform we feel it due to the special interest that we represent to call attention to these glar¬ ing abuses. This whole subject of legal charges requires investigation and reconstruction, before we-can expect the dawning again of that sorely-missed activity and prosperity in real estate affairs. Lawyers have been gorged and surfeited, during the halcyon days of real estate and railroad spec- ulatior, with colossal fees and emoluments. They have grown wealthy, as is too plainly evi¬ denced in the sumptuous style of office and fam¬ ily life enjoyed by the leaders of the profession. Alas! some few have fallen the sad victims of intense devotion to greed. While capital and labor have been riven to their very centres by the shock of disaster, and are stiU reehng under the weight of accumulated losseg, it behooves the gentlemen of this grand profession to con¬ sider the goose and the golden egg; if that fable lacks appositeness. then the spider and the fly. At all events reduce your rates, learned gentle¬ men, not in small percentages, but a good round fifty per cent., tuad when your lately impover¬ ished client seeks to bargain with you as to your