CAN I SIGN THE CONTRACT PRIOR TO MY ATTORNEY REVIEWING IT?
Contracts of Sale that are presented through a New Jersey Realtor or a New Construction Contract have an automatic 3 Day Attorney Review Period that permits you to sign in advance of your attorney’s review of the Contract. The Contract should be presented to your attorney immediately after signing to permit the review to be completed within the 3 day period.
CAN I BE SURE THAT CLOSING WILL OCCUR ON THE DATE WRITTEN INTO THE CONTRACT?
No. The date listed in your contract is an estimated target date for closing. This date can be extended by either the purchaser or seller without cause for up to fourteen days to permit coordination of transactions, delays and contingencies, or lender scheduling. When the closing date listed in the contract is preceded with the wording “Time of the Essence”, this becomes a mandatory closing date and may not be extended without the opposing party’s consent.
WHEN DOES THE THREE DAY ATTORNEY REVIEW START AND WHEN DOES IT END?
The three date attorney review starts when the “Contract of Sale” is a fully executed and delivered to the purchaser or his or her council. Each day is interpreted as a “business day”, not a calendar day. If a contract is signed on the weekend, the first day of attorney review would be the next business day, unless Monday is a legal holiday. Once a review letter is submitted during the review period, the review period remains open indefinitely until the parties have mutually agreed to approve the contract, thereby concluding the review period.
WHAT TYPE OF INSPECTIONS CAN BE ANTICIPATED AND WHEN MUST THEY BE COMPLETED?
There are five types of inspections that are generally available to purchasers depending on specifications of the home being sold. They are structural; termite; radon; well water (if applicable); and septic (if applicable) inspections. Mortgage lenders typically require termite, well water, and septic inspections. All inspection time periods will run from either the date of the contract or conclusion of the attorney review. Most often the inspections must be completed within ten or fourteen days. If the home is serviced by a private well, the seller is responsible by law for ordering and obtaining a clear well water certification prior to closing. Ask your real estate professional for the names of private well testing facilities.
HOW DO I OBTAIN TITLE INSURANCE AND HOW IS THE PREMIUM DETERMINED?
We recommend that only your attorney order your title searches and insurance on your behalf. Never agree to allow sellers to order your title insurance. Title insurance is ordinarily ordered by your legal counsel as part of the closing services. Title insurance rates are governed by the New Jersey Department of Banking and are predicated by using a formula that determines the premium based upon the purchase price and mortgage amount.
WHY DO I NEED A SURVEY?
A survey shows the placement of all improvements relative to the perimeter of the property. In addition to showing the exact dimensions of the property, it insures that there are no overlaps or encroachments of the dwelling or improvements either on or off the property. Do not confuse a survey with the lender’s appraisal. An appraisal is ordered by your lender to verify the market value of the property by utilizing comparable home sales data.
WHAT DO I NEED TO BRING THE DAY OF CLOSING AND HOW LONG WILL CLOSING TAKE?
You will be provided with an exact amount of money that represents the total funds necessary to complete the closing. Funds should be in the form of a certified check, cashier’s check or bank check. Personal checks cannot be accepted or deposited into an attorney’s trust account. You also need to bring a copy of the declaration page of your homeowners insurance policy along with a one year paid receipt.
Closings rarely take longer than one hour from start to finish. You will be permitted to move into the home immediately after closing.
WHAT ARE MY EXPECTED CLOSING COSTS?
There are several things you are responsible for between attorney review and closing:
Inspection
A structural home inspection is not required but is generally recommended if you are purchasing a home. It will provide you the opportunity to accompany the inspector around the property and learn recommended maintenance for your new home. Depending on the age and condition of your building, you may choose to get inspections in the following areas: termite, radon, septic, well water, home heating oil tank, and/or lead paint. A structural inspection generally runs about $300-$500 for a one family home or condominium. This is an out of pocket expense that you pay directly to the inspector. You will work with your real estate broker and the seller to coordinate this.
You will generally have 10 to 14 days to complete the inspection and submit the results to the Seller’s attorney. You should schedule an appointment with an inspector immediately following attorney review. Any defects will be submitted by your attorney to the Seller’s attorney for the Seller to address, usually with a credit at closing or an arrangement to repair of the defect. Our firm or your Realtor can provide you with names of licensed home inspectors.
Title Insurance, Title Searches and Survey
You will be required to purchase title insurance for your property. This is an insurance policy that covers your ownership interest and the mortgage interest of your lender. Title insurance prices are state regulated and vary in price depending on the purchase price of your home. Your attorney should order the insurance in conjunction with the title searches from a licensed title agency. This will show any judgments or liens against the parties or on the property itself, including mortgages for the Seller or tax liens.
Your mortgage company will generally require you to have a survey done for the property, which will be ordered by the title company. A survey for a one family house costs between $600 – $750 and a survey certificate for a condo costs approximately $225. Title insurance, title searches and the survey costs are paid at closing.
Mortgage costs
Mortgage closings costs vary by the mortgage company. You are advised to speak to your mortgage broker about their specific costs/fees. Some companies collect fees upfront and others are paid at closing. It is wise to contact multiple mortgage companies to compare rates, fees and terms. Our firm can provide you with contacts at reputable mortgage companies.
Insurance
If you are purchasing a one or two family home, your mortgage company will require you to purchase a one year policy for homeowner’s insurance and provide a paid receipt. This must be paid prior to closing.
Condominium Association fees
Most condominium associations require a non-refundable three month capital contribution to be paid at closing to the Association as well as the first month’s maintenance.
Taxes
You will usually have to pay the property taxes for the upcoming quarter at closing.
Attorney’s Fees
Attorney’s fees are paid at closing. Our professional real estate representation includes contract evaluation, Attorney Review and Approval, home inspection and repair negotiation, mortgage contingency, short sales, escrow agreements, occupancy agreements, settlement, closing and post-closing services.