I. Drafting of the Contract
The seller and buyer must both sign a Contract. If it is a realtor’s Contract, I have three days to object to the Contract and add or delete any terms I believe necessary to protect your interests. The Buyer will most likely have the need to change certain paragraphs. You must be readily available during that three-day period. I may request an extension of the three-day attorney review period so that we have time to discuss your purchase and fully review the Contract. If an attorney is preparing the Contract, the three-day period does not apply. Do not sign the Contract until I have had the opportunity to review it and advise you. If no realtor is involved, I can write a Contract for you.
II. Home Inspection
Once the attorneys have agreed on the form of Contract, we will be “out of attorney review.” You have certain opportunities at that point in time. First, you will be entitled to inspect the premises for any damage or problems with the structure or land that you are not able to observe prior to signing the contract. You should hire a professional inspector for this purpose who will render a full report regarding the condition of the house. There are timelines regarding the deadlines for inspection. The inspector must provide me a copy of the report in a timely fashion. Most provide the report by e-mail. You will review the report in full and indicate your concerns to me. I will provide the Seller a copy of the report with a letter requesting the seller fix the stated conditions, or provide compensation for such problems. We will negotiate these points and you or the Seller may have an opportunity to reject the Contract if an agreement cannot be reached. You must deal with the issues presented and reach an agreement with the Seller that is acceptable to you. You will not be able to negotiate for a credit for items in the inspection report at the closing.
III. Title Search and Survey
The purchase of new property requires a Title Search and Survey. All purchases in New Jersey require that the title, which reflects the history of ownership of the property, and the history of any claims against the property, be searched by the Buyer to ensure the Seller has proper legal title to sell the property that the Seller claims to own, and to determine if there are liens or debts against the property. The survey determines the exact location and the precise perimeter of the property. To save costs, for you and the title company, we sometimes wait until completion of inspection issues to insure you intend to purchase the home.
IV. Mortgage Application
Subsequent to completion of attorney review, you must advise a Mortgage Company that your Contract is in effect. You should provide me with the name of your Mortgage Company and all relevant contact information. I will be in contact with your Mortgage Company and the Title Company to coordinate the closing date. I can close the loan with you at closing, reviewing and signing all loan documents necessary for closing. You are responsible to fulfill all obligations and requirements as requested by your Mortgage Company so that you can obtain the sums necessary to purchase your home by the closing date. You must carefully review all the terms and conditions of your loan and be sure you are satisfied with the proposal. Remember, the Contract compels you to obtain a mortgage. There is a Mortgage Contingency Date. If you do not obtain a mortgage by that point in time, you have the benefit of canceling your Contract. If you do not cancel the Contract by the Mortgage Contingency Date, you might waive that benefit and you may suffer financial damages if you do not have sums sufficient to purchase your home at the time of sale.
V. Homeowner’s Insurance
Your Mortgage Company will require Homeowner’s Insurance on your property for closing. You must have proof of insurance from an insurance company at least the day prior to the time of closing.
VI. Certificate of Occupancy
Each municipality in the State has requirements regarding the issuance of a Certificate of Occupancy (“CO”). A CO may be required and I must have it at closing in order for the transaction to be finalized. The Seller usually obtains such documents, through the realtor. In some towns, the CO includes a smoke detector certification but in other towns separate documents are required. A well requires a Water Well Certification. Underground oil tanks involve other concerns which we will assist you with.
VII. Wire Transfer of Funds
After I have negotiated a credit, if applicable, for any damage or problems with the home as determined by your inspection report and after your mortgage contingency has been satisfied and you are certain to get a mortgage, we will be able to confirm the date scheduled in the contract for the sale of the property to you. I will receive a wire transfer of your mortgage funds from your Mortgage Company into my attorney trust account the day of or the day prior to the closing.
VIII. Sums payable at Closing
At the closing, I will prepare checks for the purpose of paying all parties, including the Seller, Seller’s attorney, title insurance company, any public entity who may be owed taxes, county clerks, and other payments. If you are required to pay sums at closing by Certified Check, that check will also be deposited in my attorney trust account for the purpose of disbursing all sums at closing. We will be able to advise you the day before or morning of the closing as to the actual costs you will pay at the time of closing, if applicable. If you are required to bring sums to closing to purchase your home, those sums must be in the form of a Certified Check. You cannot bring a personal check to closing. Remember, you will be responsible for your fair share of all monthly expenses paid by the Seller through the end of the month. Accordingly, if your Sale takes place on the 15th day of the month but the Seller has paid, taxes, utilities, water and sewer or other costs through the end of the month, you will be obligated to reimburse the Seller for those payments made for the period of the 15th through the end of the month. We will calculate all sums involved in the purchase. Essentially, if your mortgage and your purchase deposit do not cover the cost of the purchase of the home, be prepared to obtain a Certified Check the morning of the closing to have at closing.
XI. Timing of Closing
We usually do not conduct the actual purchase prior to 11 AM, or on weekends. This is because the bank mortgage lending departments often cannot confirm wire transfers until later in the day, and can’t be reached on weekends. Accordingly, tentatively plan for an afternoon closing.
X. Walk Through
You are entitled to do a “walk through” of the premises the day before or morning of the Sale, to be sure no damage occurred when the Seller moved out and to check for other problems that may have developed subsequent to the inspection. Your realtor should schedule a walk through, and you should contact me from the house as soon as it is completed to advise of any problems or to confirm you are satisfied with the premises. If problems exist I will contact the seller’s attorney prior to closing, if possible, or we will negotiate at the closing. It is preferred that all problems are resolved prior to sitting at the closing table.
XI. Handling of Negotiations
Finally, I advise you to refrain from conversations with the Seller pending completion of your purchase. It is best to communicate with the Seller through my office. There is a risk agreements in subsequent conversations not memorialized by the Contract can causes confusion either prior to or at closing. It is simple enough for me to negotiate on your behalf with the Seller’s attorney and put all changes or agreements into a writing that will serve as an addendum to the Contract. This is the proper way to handle these negotiations. Even if you feel comfortable with the Seller, refrain from discussing the sale directly with the Seller prior to closing.
XII. The Settlement Statement, or HUD
Every residential real estate transaction will require a United States Department of Housing and Urban Development (HUD) Settlement Statement at closing. This is essentially a ledger and balance sheet of the transaction. Costs, expenses and fees are all indicated on the Settlement Statement for both the buyer and seller. The Seller and Buyer will sign the HUD at the closing. Please see our Settlement Statement link to peruse a blank settlement statement.
XIII. The Closing
The closing usually takes place at the office of the Buyer’s attorney. One exception is new construction. First, we will receive all of your loan documents by overnight mail or e- mail. We will turn through the many pages and you will sign all documents as required by your lender. Once that process is complete, you will essentially have the loan. Then you can actually purchase the property. The Seller will arrive and all sale documents will be signed and exchanged, including the HUD. When the process is complete you own the home. Our job, however, is not done. All sums must be distributed to a variety of entities, including realtor fees, filing of the deed and other documents with the County, tax, water and sewer payment, attorney fees and other disbursements. We handle these tasks for you as part of our representation of the Buyer. The County will return a Deed stamped “filed” to our office within three months which we will forward to you. You should save the Deed in a safe location for future use.