Contract
What is “attorney review”?
Even after you sign the Contract prepared by the realtor it is still not a binding contract, as Contracts prepared by a realtor for 1-4 family residential homes in New Jersey must provide a three-day attorney review period. During attorney review, either party may review the proposed Contract with their respective attorney who has the right to propose changes to the Contract or cancel it altogether. Please note the law does not allow you to make changes or cancel the contract on your own, as you may only do this through your attorney. It is in your interest to discuss the Contract with your attorney during the three-day review period so that your attorney may more effectively represent your particular concerns. If you choose to hire me, you should have the Contract faxed or emailed to my office immediately after it is fully signed so that we can begin the process.
When is attorney review over?
If neither party decides to consult with an attorney or if after consulting with an attorney neither party decided to make any changes to the contract then attorney review will automatically end at the end of the three day period. You count three days from the day attorney review begins and you do not count the day it begins. You do not count Saturday, Sunday or any Legal Holiday. However, in most cases, at least one party’s attorney will write an attorney review letter which disapproves the contract and requests changes. In this case, once the disapproval letter is sent the contract is no longer binding on the parties until both parties agree on the new terms in the attorney review letter. Most of the time, both parties’ attorneys will send an attorney review letter with proposed changes for the added protection of each party and until the parties agree to each other’s terms or reach some compromise, there is no Contract. This process could be resolved within the first day or it could take a week or longer. Remember that until attorney review is over you do not have a binding contract.
Can I continue to show the home and accept another offer?
Until attorney review is concluded, you can continue to show the home and consider new offers. However, you should not “accept” another offer by signing a new Contract until your attorney confirms your current Contract is cancelled.
Inspection
What does the inspection contingency mean?
Although every Seller intends to sell their home “as is” and the Contract describes the sale “as is,” the Buyer has the right to conduct numerous kinds of inspections nonetheless. The kinds of inspections of the property include structural, termite, radon, septic (if applicable), and a sweep for an underground oil tank. Most of the time, the Buyer will request certain repairs be made after he has conducted his inspections and you will have to decide whether you are willing to fix everything, fix some of the items and not others, or refuse to fix anything. If you do not want to arrange for the repairs yourself but want to accommodate the Buyer’s requests, you can try offering a monetary credit to the Buyer. The inspection negotiations are somewhat of a gambling game for a Seller, as you do not know the Buyer’s intentions and if you refuse to address any legitimate defect, the Buyer may cancel. It may be that the Buyer has no intention of cancelling in which case your refusal to address any defects would not cause you to lose the deal but you simply do not know what the Buyer’s intentions are. Often times, it is helpful to speak with your realtor during the inspection negotiations as they have a better “feel” for the value of what each party is getting in the deal and who has more to lose.
What are my responsibilities with regard to the condition of the Property?
Certain towns require a homeowner obtain a Certificate of Occupancy before selling the home. Townships vary in their standards as to the issuance of this Certificate but it always requires some kind of inspection by the township. In addition, all towns require the issuance of a certificate showing the smoke and carbon monoxide detectors are operating in the proper locations of your home. You should be sure to contact the township at least a few weeks prior to closing to apply for these certificates. You should also test your detectors before the town inspection to avoid having to reschedule the inspection.
In addition to the township requirements, the State requires that if your property is serviced by well water, then you must have the well tested and provide the Buyer with the results of the testing.
Lastly, the Contract requires that at the time of closing, the property be left in broom swept condition free of any debris and personal property not included in the sale. The Contract also requires that you maintain the property up until closing, including keeping the driveway and walkways clear of any snow, ice, or leaves and maintaining the lawn if it is the spring or summer. To avoid issues at closing, you should leave the home in a condition you would want it to be in as a Buyer. You should vacuum the home and make sure it’s clear of all garbage. You should not leave anything behind other than what was agreed in writing between you and the Buyer.
Closing
Will I close on the Closing Date in the Contract?
Probably not. The date of the closing on the contract is an estimated closing date and should be used as a rough guideline. Please do not plan on closing on this particular date, as that is not always possible. Lenders take longer to process loans nowadays so there is a good chance your closing will be after the date on the Contract, especially if the Buyer needs to obtain a mortgage.
The estimated closing date can be extended by either you or the Buyer without cause for up to fourteen days to accommodate delays, contingencies, and lender issues which are all common to any transaction. As soon as the Buyer’s lender is ready to close, they will notify your attorney at which point the closing date can be scheduled.
How much will my closing costs be?
As a Seller, the following are typical items that must be paid from the proceeds of the Seller at closing:
Open Mortgages/Lines of Credit: Any open mortgages or lines of credit will have to be paid from your proceeds at the closing in addition to any fees charges by the County to release a mortgage from the land records. (Usually, any mortgage payment that is not paid within the first 15 days of the month will be subject to a late fee and possible credit notation so you should make arrangements with your lender before the first day of your anticipated closing month to ensure your payment is credited on time)
Realtor’s Commission: The realtor’s commissions will be dispersed from your proceeds at closing.
Taxes/Sewer: Depending on when the closing occurs, you may be required to pay a per diem amount of taxes and sewer charges for all days preceding the closing, representing the days you were the owner of the property.
Realty Transfer Fee: The State of New Jersey requires all Sellers to pay this fee in order for the deed to be recorded. The amount of this fee is based on the purchase price. See this link to calculate what your fee will be: https://www.vested.com/tax_calculator1.html. If you are disabled, blind, or at least 62 years of age, you may be entitled to a discount on this fee so you should ask your attorney about qualifying for a discount.
Liens/Judgments: If the Buyer’s title company discovers there are any outstanding liens or judgments against you or the property, you may be required to pay these at or before closing. When the Buyer’s title company provides the results of the title searches to your attorney, you will be notified about any potential issues regarding past liens or judgments.
Attorney Fee: Your attorney’s fee will be included in the costs collected at closing.