The purchase of a home is one of the most important financial decisions you will make. A competent and experienced real estate attorney will protect your interests and ease your anxiety throughout this important transaction. Witt Law represents purchasers and sellers of real estate, providing advice and counsel, explaining the process, and protecting our clients' interests.
I. Offer and Contract Review
If you are working with a licensed realtor, your realtor will likely assist you in making an offer to purchase. Contracts prepared by a realtor provide a three-day attorney review period, during which either party may review the proposed contract with their attorney. During the attorney review period, the contract may be approved, disapproved or approved with changes. It is in your interest to discuss the contract with your attorney during the three-day review period to determine whether any revisions to the realtor's standard form of agreement are in your interest, and to assist you in evaluating and responding to any proposed revisions made by the Seller's attorney.
Question: The realtor is telling us to sign the Contract before it is reviewed by an attorney. Is this proper?
Answer: If this is a deal brought about by a licensed realtor (as opposed to a home which was For Sale By Owner), then it is normal and acceptable for you to sign the Contract first. However, you must make sure that the fully signed Contract is immediately delivered or faxed to your attorney. The three-day attorney review period runs whether or not the Contract has been delivered to your attorney.
II. Mortgage Application
In most residential real estate purchases, the Buyer agrees to immediately, efficiently and aggressively pursue the mortgage financing necessary to complete the purchase. The Buyer's application for mortgage financing must be completed immediately following the conclusion of the attorney review period, if not before. In most cases, the Buyer should have the mortgage lender chosen prior to making the initial offer.
A typical agreement will include a mortgage contingency clause, which will give the Buyer a period of between 30 and 60 days to receive a firm commitment for a mortgage loan to complete the purchase.
We will advise and assist you during the mortgage process as requested, however, IT IS THE BUYER'S RESPONSIBILITY TO KEEP IN CONTACT WITH THE MORTGAGE COMPANY TO ENSURE COMPLETION OF THE MORTGAGE APPLICATION AND TO ENSURE THAT ALL CONDITIONS IMPOSED BY THE MORTGAGE COMPANY ARE MET.
The mortgage commitment is an important document. Prior to signing it, you must carefully read and understand what the Lender will require of you in order for the Lender to provide the money needed to close.
III. Home Inspection
Residential real estate contracts permit the Buyer, at his own expense, to conduct an inspection of the premises in order to determine the existence of any structural, mechanical or non-apparent deficiencies. The inspections are for the Buyer's protection. Upon closing of the purchase, the Buyer owns the home, and Seller has no responsibility for the condition of the home.
IT IS THE BUYER'S OBLIGATION TO ARRANGE FOR THESE INSPECTIONS. Often, if you are working with a realtor, the realtor will assist you, if requested, in scheduling inspections. It is important that the Buyer keep our office informed of the status of all inspections.
The contract will establish a time period during which these inspections must be completed, typically 10 to 14 days after completion of the attorney review period. Please arrange to have the inspection company forward copies of its written report to our office within the required time period. Upon your receipt of the results of these inspections, contact our office to discuss any problems revealed by the inspections. We will assist you in negotiating with the Seller to resolve any such deficiencies.
Question: What inspections should be ordered?
Answer: In most cases, the Buyer should order a general structural home inspection, a radon inspection, and a wood boring insect inspection. The Buyer may also consider inspections that pertain to asbestos, mold, stucco, overhead wires, swimming pools, septic tanks. The Buyer may also consider ordering an underground oil tank sweep to determine if there are underground oil tanks on the property.
Question: What if there is a well and/or septic system on the property?
Answer: A septic system should be inspected. There are a few different types of septic inspections available, which should be discussed with a home inspector. A well must be inspected. In the sale of a property on which there is a well, the parties will have to comply with New Jersey's Private Well Testing Act, N.J.S.A. 58: 12a-26 to 37. This law requires testing, but it does not state who pays for those tests. Often the Seller pays for the cost of the well testing. At closing both parties are required to sign a certificate reflecting that they have both received and reviewed the well test results.
IV. Title Insurance, Survey & Appraisal
When obtaining mortgage financing it is required that a title search and a title insurance policy be obtained in at least the amount of your mortgage. Most lenders require a new survey of the premises at the time of closing. In some cases, the lender will accept an existing survey if it is not too old and if the Seller will provide an affidavit stating that no changes have been made to the property since the survey was made. The Buyer must notify our office if there is an existing survey that the Buyer wishes to rely on.
An appraisal of the property is ordered by the lender and sets forth the market value of the property. Generally the buyer is charged a fee (paid at the time of closing) by the lender for the appraisal. The appraisal is not provided to our office in advance, and usually is not available at the closing. Most lenders require that the borrower send a written request within 90 days after the closing in order to receive a copy of the written appraisal.
Question: Who orders the title search and what is title?
Answer: Our office will order the title search and the survey. When title is received, it is reviewed by our office for defects, and then submitted to your lender. Your lender needs to approve the title before it will fund the loan. Title is ordered from an independent title company, and we charge you the amount that is charged to us by the title company. Title insurance is regulated by law, so that the cost of title insurance does not change from company to company.
V. Preparation for Closing
Once you have received your mortgage commitment and this office has received the title search and survey, we will submit documents to the lender, in accordance with the lender's instructions, for its review prior to closing. After the lender's review of the documentation, it will allow us to schedule a closing.
Typically, the Buyer will do a "walkthrough" of the property the morning of the closing to ensure that the Seller has removed all personal property, left the property "broom clean", and complied with all repair obligations.
Question: Do I need homeowner's insurance?
Answer: Yes. You should make arrangements to obtain an original homeowner's insurance policy (hazard insurance). Typically, a Buyer will be required to have pre-paid for the first year of the policy, and present and declaration page at closing.
VI. Closing of Title
The date of the closing set forth in the contract is only an estimated closing date. The actual date will be scheduled by our office in consultation with the Buyer and the Seller's attorney.
Typically, on the afternoon immediately prior to the closing, we will prepare the final figures in consultation with the mortgage company and the Seller's attorney. Once this calculation has been completed, our office will contact you with the exact amount of money you should bring to the closing to cover the remaining down payment and any closing costs attendant to the closing.
Question: What must I bring to the closing?
Answer: A certified check, bank check, or cashier's check in the amount provided by our office. Unless instructed otherwise, the check should be payable as follows: "Jared M. Witt Attorney Trust Account". Alternatively, funds may be wired directly to our attorney trust account. Please contact our office and we will provide you with wiring instructions. All wires must be placed at least one day prior to closing to ensure receipt on the day of closing. In addition, you should bring proof of homeowner's insurance (declaration page and one year paid receipt). It is also a good idea to bring a few personal checks in the unlikely event minor adjustments need to made between the parties at closing. If you are married, bring your spouse, or if you purchased the home with a partner, you must both be present at the closing.