What to Expect When Buying or Selling a Home in New Jersey
Whether you are buying or selling a home,or just refinancing, start right! Start with the East Brunswick, NJ Law Offices of Todd B. Eder, P.C. at (732) 937-9100.
Q. Do I really need a lawyer to represent me?
A. You are about to be involved in probably the largest transaction of your life. Hundreds of thousands of dollars are involved. There is no more important of a time than from the start of the transaction to hire a lawyer. The contract, which determines your rights, risks and obligations, needs to be reviewed and amended to protect your rights and reduce your risks; title searches need to be conducted to ensure that the seller has the proper authority to sell and no judgments or liens (such as mortgages or unpaid taxes) have encumbered the property; title issues must be cleared for your lending institution; closing documents must be prepared; and you need to be advised as to the legal effect of the documents you will be signing at closing. Why put your life's hard earned assets at risk--Hire a lawyer! Call Attorney Todd B. Eder at (732) 937-9100.
Q. What is the "Attorney Review"?
A. New Jersey law requires that all real estate broker contracts contain a 3 day "attorney review" period during which the lawyer for each party may cancel the contract (perhaps you have had second thoughts) or request modifications to the contract. (WARNING: There usually is no attorney review period for non real estate brokered contracts. The contract is binding upon the signing of the contract by all parties. Non real estate broker contracts should not be signed until a lawyer has reviewed and made any necessary changes to the contract!) The 3 day attorney review period, which excludes weekends and legal holidays, begins when the contract, signed by all parties, is delivered to you. It is essential to hire a lawyer to review the contract as early as possible.
During the attorney review period, your attorney will address items both you and he/she deem necessary to protect your rights and reduce your risks. For the buyer, essential items may include the mortgage contingency provision, or the nature of inspections and the right to require repairs or to cancel the purchase if structural or mechanical defects, termites, or hazardous conditions such as radon, lead, toxic substances or oil tank leaks exist on the property. For the seller, important items may include the buyer providing a mortgage pre-qualification letter; limitations on performing repairs, the closing date, or a simultaneous closing on seller's purchase of a new home. Each purchase and sale is different, and there may be other issues unique to your transaction which must be addressed during the attorney review.
Q. Are home inspections necessary?
A. Yes. Know what you are buying! Often decisions to buy a home are made only after a quick walk through the property. Although you may be buying the home "as is," the seller may be responsible to repair conditions that affect the habitability of the property. There may be structural or mechanical defects, termite, or hazardous conditions such as lead (which is extremely harmful to young children), radon, asbestos,or oil tank leaks,which a buyer would not ordinarily be aware of or have the ability to detect. A home inspection should include, at the very least, structural, mechanical, radon and termite inspections. Other inspections may include septic and water systems, or other conditions as may be revealed during the initial home inspection. Your realtor or attorney can provide you with the names of reputable licensed home inspectors. The inspections must be completed within the time set forth in the contract, typically 10-14 days after completion of attorney review. You should be present during all inspections so that you or the inspector can point out items of concern. The inspector should provide a report to you and your lawyer who will address any major problems or your concerns with the seller's attorney.
Q. What do I need to know about mortgages?
A. Like most buyers, you are probably buying your new home with financing from a lending institution. The mortgage contingency provision in real estate contracts typically require that you obtain a written mortgage commitment (offer to provide financing) from a lending institution within 30 to 60 days from the completion of attorney review. It is important that you start your application process as soon as possible. Some lenders will permit a mortgage application even prior to contract. Mortgages are available from banks and mortgage lenders. Above all else, it is of utmost importance that you shop around for mortgage terms and a rate that fit your financial situation.
Q. Are title searches, survey and title insurance necessary?
A. Whether you are financing your purchase or buying your home without outside financing, one needs to know if the seller has the authority to sell the property and that the property is not encumbered with judgments or liens. Your lawyer will hire a title review company to conduct various types of searches to determine chain of ownership, the existence of any mortgages or other liens on the property, tax and assessment liabilities, and judgments against the buyer and seller. These searches are compiled into a title binder which is sent to your lawyer, the lender and seller's attorney. Your lawyer will review the title binder to determine that no title defects are reported, that the seller is the proper owner, what mortgages and liens are on the property and if there are any judgments against either party. It is important to advise your lawyer as soon as possible of any judgments, motor vehicle surcharges or child support orders against you because these items must be cleared prior to closing.
In connection with the title work, your lawyer will order a survey (or a survey certification in the case of a condominium) at your expense.
Upon closing, the title review company will issue title insurance policies, one for the owner and another for the lender. Title insurance protects the owner and lender in the unlikely event it is later determined that there was a defect in the chain of title, and the seller therefore did not have the authority to sell the property. Title searches and insurance (and typically a survey) are required by all lenders. The costs for the title insurance (which is regulated by the State of New Jersey), title searches and the survey (certificate) are the responsibility of the buyer and are usually paid at closing.
Q. What should I expect at the closing?
A. Lots of signing! Since you will be signing affidavits and other documents which must be notarized, you should bring valid state issued photo identification ( i.e. drivers license, passport). If you are the buyer you will be required to sign many documents prepared by the lender, including a promissory note, whereby you promise to pay the lender the amount borrowed plus interest; a mortgage which is recorded in the County Clerk's Office and establishes a lien on the property; affidavits, a HUD-1 Statement, your typed application and other documents required by your lender and governmental agencies. If you are the seller, you will sign a deed prepared by your lawyer, an affidavit of title stating that you are the owner of the property, a HUD-1Statement, an IRS 1099-S reporting form, and other documents required in connection with the closing.
The buyer's attorney will provide both the buyer and seller with a HUD-1 (RESPA) Statement which itemizes each and every cost of the transaction. One side of the HUD-1 lists the seller's figures and the other side lists the buyer's numbers. This document must be signed by all parties, and a copy of the HUD-1 should be kept for purposes of tax reporting, if necessary.
Q. What costs should I anticipate at closing?
A. As a buyer,you will have to pay for the lender's charges which may include points, origination fees, an appraisal fee, credit report charge, tax service fee (so that your lender's tax service can pay your quarterly taxes), flood search fee, PMI premium, interest on the loan from the date of closing to the last day of the month in which you close, and homeowner insurance, tax and PMI escrows; title review company fees, survey fee, homeowner association or condominium fees, if applicable; filing fees for the deed and mortgage, your lawyer's fees and any other miscellaneous charges. Although your lender will provide you with an estimate of closing costs, closing costs may exceed the "estimate." Your lawyer will advise you as to the exact sum of money you will need to bring to closing. Any amounts need above the loan funds will need to be paid at or before closing by certified bank, cashier's check or through wired funds.
As to the seller, the seller will be responsible at closing to pay the real estate commission, seller's lawyer's fee, fees for cancellation of mortgages, mortgage payoffs and other liens, and realty transfer fee required by NJ law when real property is conveyed. If the seller is a senior citizen, blind or disabled, be sure to advise your lawyer since the realty transfer fees are reduced for those individuals.
Q. Why hire the Law Offices of Todd B. Eder, P.C.?
A. We encourage you to hire a competent lawyer to handle your legal matters. There is no substitute for professional assistance, especially when this may be the largest transaction of your life. Start with the East Brunswick, NJ Law Offices of Todd B. Eder, P.C.! We know the law and how to protect your rights! Call us at (732) 937-9100 or check us out online at www. foryourlegalneeds.com.
DISCLAIMER: This guide is informational only and should not be considered or relied upon as legal advice as each matter is unique,and this information does not establish an attorney-client relationship.