You’re about to make the largest purchase of your life, and that process can be overwhelming. This process is exclusive to New Jersey because it does vary state to state.
Attorney Review
Attorney review is required in every real estate contract in New Jersey; it is written into the contract that there is a three-day period from the time the seller accepts the offer. That three-day period is weekdays; Saturdays, Sundays, and national holidays don’t count.
The attorney review period is the period during which each party has an opportunity to request changes or terminate the contract without penalty. Once the attorneys agree on a final version of the contract, the property is under contract, and the contract timelines start ticking.
Title Search & Closing Process in NJ
The Home Inspection
You should always get a home inspection, a tank sweep, and at least a wood-destroying insect infestation inspection. The most common reasons deals fall apart are a tank, an underground storage tank that is abandoned; water penetration; asbestos; and mold. Those four things are the primary reasons why contracts get terminated.
If a licensed inspector tells you that you have these issues and the seller doesn’t want to address them, you can get out of the contract. All purchases except new construction in New Jersey are as-is; as-is means the seller doesn’t have to make any repairs.
The Title Search and Clear Title
Title clearance is extremely important for the buyer. If the seller sells you something with a bad title, he’s done, unless there was a material misrepresentation. Typically, every contract has language that the title has to be clear, marketable and insurable.
Order a title search once you have a mortgage commitment, because title searches cost money and somebody eats those costs. With a mortgage commitment, you can order the title searches and the survey. The bank is also going to need a clear title in order to clear the file to close.
The title search process goes back in time to a chain of titles to make sure that the owner selling you the property is, in fact, the rightful owner, has the right to sell it to you, and there’s no break in the title. The lenders are going to require that you do this title work and purchase title insurance, so if anything does go wrong, you’re insured against that.
Getting a Survey
The best practice is to get your own survey. A survey protects you against a lot of things. It tells you where your boundary lines are and where the structure is in relation to the boundary lines.
Sometimes there are minor encroachments, and there are some situations where there’s a greater encroachment that cannot be overlooked. If you get a survey, it could save you a lot of headaches.
The Closing Disclosure and Cash to Close
The closing disclosure statement is provided by the lender three days in advance, and you must demonstrate that you reviewed it by signing off on it. It generally includes all of your expenses as a buyer for the closing, outlined expense by expense.
There’s a line close to the bottom of the first page, cash to close; that’s the amount of money that you need in order to close the transaction. There are situations where the buyer didn’t budget properly and might end up short at closing, and that’s a hard problem to fix.
The timeline from the day your offer is accepted to the day you close is usually between 45 and 60 days.
The Final Walkthrough
What happens immediately before the closing is important. The walkthrough happens as close to the closing as possible, preferably on the morning of the closing. It is basically to make sure that the sellers aren’t leaving anything inappropriate and that nothing bad has happened, that the place hasn’t burned down.
Make sure that the property is in a similar condition to when you saw it last at the home inspection. If there are any issues, tell your attorney right away, and take photos and videos. If there is a legitimate issue, you could put off the closing until it’s resolved, or hold some of the seller’s money in escrow.
What Happens at Closing
The day of the closing, you’re going to sign the final closing disclosure statement, the note, the mortgage, and a whole bunch of other documents required by the lender. The note is the document that says you owe this amount of money at this interest rate payable over this period of time.
The mortgage is the document that says if you don’t pay what you owe under the note, the mortgage gives the lender the right to foreclose. By the time you get to the closing table, you usually have no right to walk away from the transaction. At that point, you’ll get keys, and you’re a homeowner.
Frequently Asked Questions
What is an attorney review in New Jersey?
The attorney review period is the period during which each party has an opportunity to request changes or terminate the contract without penalty
What does “as is” mean in a New Jersey contract?
As is means the seller doesn’t have to make any repairs
What kind of title does the buyer need?
Typically, every contract has language in it that the title has to be clear, marketable, and insurable
What is cash to close?
Cash to close: that’s the amount of money that you need to close the transaction
What does a survey tell you?
A survey protects you against a lot of things. It tells you where your boundary lines are; it tells you where the structure is in relation to the boundary lines
Conclusion
This process, which seems so stressful in the early moments, is worth it once you go through it. Remember, this is exclusive to New Jersey; it does vary by state.
