Why Hire A New Jersey Lawyer For Your Real Estate Transaction?
Every year, there are tens of thousands of people in New Jersey who attempt to navigate or even circumvent the legal system without any help from a lawyer or an attorney. Usually, they do this because they are of the opinion that hiring a law firm will be a great expense. Most overestimate the cost based on the cost of the transaction or purchase itself. However, the complicated landscape of buying or selling a residential property should rarely be done without the guidance and advice of a lawyer. Lawyers can assist you not only through the negotiation stage but can also save you from difficult lawsuits by finding and solving issues early thereby saving unnecessary drama and costs expended in the future.
Whether you are buying or selling real estate, it is important to have a real estate lawyer for the closing of the title. A professional attorney ensures that everyone understands the complex legal process that real estate closings are and that everything is being handled appropriately. Here are some reasons for hiring a real estate attorney when you first step into a transaction and close your deal.
- Negotiate Terms – price, dates, inspections
- Ensure Protection – review for mistakes through the entire process, start to finish
- Look For Issues/Problems – liens, searches, coverages
- Proper Cancelation – if necessary
We Help With Buying And Selling Real Estate
What Is The Contract Of Sale?
Buying a home is an exciting but complicated process. A lawyer will help guide you from contract to closing. Once a buyer puts an offer in writing which is accepted, the signed acceptance needs to become a contract. A contract of sale is an agreement for the purchase and sale of real estate. Attorneys are the only ones qualified and permitted to advise you regarding contracts, which are legal documents. Sometimes contracts may be prepared by a real estate professional and if so, it would be the standard form from the State of New Jersey. An attorney will review the same and make appropriate revisions to protect your interests.
What Is Attorney-Review?
Following the signing of the initial contract of sale by both parties, there are three business days given to have the contract reviewed by an attorney. During this time period, your attorney will review the contract and may prepare what is called a rider or letter addendum to the contract. Or the contract can be rejected outright. The rider creates additional provisions to the contract, addressing any issues that have not been already addressed by the initial contract or where changes are sought. In representing buyers, an attorney may seek to extend deadlines for mortgage commitment and/or the inspection report, as well as giving advice on flexibility to void a transaction. This may be advised if an inspection shows unfavorable results or if a loan is not able to be secured. In the case of condominiums, co-ops or a townhouse, a provision should be included requesting copies of important documents, such as the Master Deed, Bylaws and the Rules and Regulations of the Condo Association, in addition to the financial documents, including a budget, and/or financial statements, which will show the financial stability of the association.
What Disclosures Are Needed?
In general, the Seller has an obligation to disclose potential problems and material defects that could affect the value of the property and that are known. In addition, it is considered illegal in New Jersey to deliberately conceal major defects on your property. The Seller will need to fill out and sign a Seller’s Property Disclosure Document; this also limits your future liability. The buyer fully reviews and accepts this document as part of the contract.
What About Inspections?
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, home heating oil tank, and/or lead paint. This is usually an out-of-pocket expense that you pay directly to the inspector. You generally have 14 days to complete inspections and then submit results. If it shows any defects, a discussion may be had by the attorneys to resolve any issues. Often, the result will be a credit at closing or an arrangement to repair any defects or remediate any conditions.
What Are The Tax Implications?
Selling a home can have a major impact on your federal and state tax returns. You should check with your accountant or tax consultant on the factors that may affect taxes resulting from the sale of your home. A real estate lawyer will make sure you ask the right questions: Did you purchase the home or was it acquired by gift or inheritance? Have you used your home partly for business or rental? Any additional costs associated with selling your home? Are there any ancillary home improvements or additions, which may help to offset capital gains? In some cases, the sale of your house may generate “capital gains” as defined by the IRS which is normally taxable. However, since the Taxpayer Relief Act of 1997, individuals can exclude up to $250,000 in capital gains for individuals, and married couples can exclude up to $500,000 in capital gains.
Who Oversees Coordination?
The real estate closing attorney also coordinates all the parties involved in the transaction. This means that the attorney must communicate with the buyer, seller, and lender, and any additional players as necessary, such as brokers, surveyors, the homeowner’s insurance company, home inspectors, contractors, homeowners’ associations, and more. The closing attorney must coordinate all parties in order to ensure that the closing occurs in a timely fashion. Through the entire process, the closing attorney is necessary for communication but is especially crucial when preparing the closing disclosure and when confirming the amount of money needed for closing.
Is Title Insurance, Title Searches And Survey Needed?
While Title insurance is not mandatory, it is always advised. It will be mandatory where a mortgage is involved. An attorney will order the title insurance from a licensed title agency. That company will do a search to show the chain of past ownership of the property and will also find any judgments or liens against the parties or the property itself, including mortgages for the Seller or tax liens. The title insurance company will then warrant against any future claims by issuing an insurance policy to cover your ownership interest and the mortgage interest of your lender. Title insurance costs are state-regulated. A mortgage company will generally require you to have a survey done for the property, which we will also order for you. Title insurance, title searches and the survey costs are paid at closing.
What About Mortgage Costs And Expenses?
Mortgage costs vary by the lender. You are advised to speak to your lender, banker or mortgage broker about their specific costs and fees. Some companies collect fees upfront and others are paid at closing. It is wise to contact multiple mortgage companies to compare rates.
What About Homeowner’s Insurance?
While Homeowner’s Insurance is not mandatory, it is always advised. If you are borrowing money, the lender will require the purchase of homeowner’s insurance and require you to provide a paid receipt at settlement.
Are There Condominium Or Association Fees?
Many 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.
What About Real Estate Property Taxes?
Property Taxes in New Jersey are paid quarterly and are due on the first day of the middle month of the quarter (February, May, August and November). The same is allocated at the time of closing between the Buyer and Seller. The new Buyer will usually pay the taxes for the upcoming quarter at the time of the closing of title.
Final Review Of Documents!
On the day of closing, the real estate closing attorney must be present to go over the various documents with you. The closing attorney can offer explanations for any confusing documents, including the closing disclosure statement and loan documentation.
What Are The Common Closing Costs?
Pay off of any existing mortgages if you are a seller or the mortgage/loan down payment if you are a buyer
Title Insurance and other title-related services that are purchased and paid by the buyer. Sellers usually pay a settlement fee and notary fees.
Sellers will be required to pay New Jersey Realty Transfer Fee/Tax at closing, although in some cases, such as for new construction, the buyer may be required to pay this. This fee is imposed upon the recording of a deed, evidencing the transfer of title to real property in the State.
Any open or soon-to-be due property taxes along with water and sewer charges from the municipality and/or the county (along with Association dues if there is one) will be adjusted at closing for both buyer and seller.
If the sale of the property involved the services of a Realtor, the commission is due at closing. Contact us to learn more about how we protect Sellers in a real estate transaction.