New Jersey real estate transactions customarily proceed upon the following timeline:
Real estate agents for buyers and sellers have a boilerplate, form contract which they have buyer and seller sign either at the time of showing or following the showing. This is done on the spot or at the office of the real estate agent.
The parties sign boilerplate form contracts. These contracts have a provision in them which contains an attorney review clause. The clause gives the parties 3 days to have an attorney review the contract. If an attorney reviews the contract within those 3 days and sends out a rejection letter, which is customary, then review remains open until the parties agree upon final terms. I can provide you with my form review letters for a sale and purchase. They are basic and are tailored to the facts and circumstances of each particular transaction.
Short sale transactions have their own boilerplate riders that I can also send you – they are similar and, again, are tailored to the facts and circumstances of each particular transaction.
What I normally do is contact the attorney for the other side and introduce myself. I will then have my paralegal send out (by way of email) a rejection letter stating that I reject the terms of the contract but will accept them “subject to” the terms of my letter. This is customary for every attorney to do at the outset of a transaction, whether they represent a seller or a buyer.
If the terms of the other attorney’s letter are accepotable, either I or my clients will sign off on the other attorney’s letter. The other attorney and/or his/her clients will do the same, thus concluding attorney review.
I like to get contracts out of review very quickly and that is something that the parties and real estate agents prefer. The issue in New Jersey is that attorneys are not very responsive and they do not get into and out of review quickly. Sometimes on a Friday I will get a contract and they want to get out of review by the end of Friday because they do not want the house being shown over the weekend. This is a main concern of real estate agents. That is the driving force behind why I am on top of my files so that they are in and out of review seamlessly.
Once review is concluded, the buyer will perform their home inspection. Typically they have 5-7 business days, but sometimes it is 10 days or so. If there are structural issues, we will address them or cancel. If there are upgrades or cosmetic repairs, typically it depends on the motivation of the seller to get them done or to reject them. Parties mostly come to an agreement on a price reduction or repairs as long as everyone is reasonable. The seller’s motivation often comes into play at this stage of the transaction.
Once we resolve inspection issues, I will order title from the title company. Sometimes I will order it at the outset, but the safesest bet is to have inspection issues resolved so that time and resources are not wasted since some deals die in the inspection phase of the transaction.
During all of the above, I am working directly and diligently with my client and their lender (if I have the buyer). The lender needs to have all of the required paperwork in hand before ordering the appraisal, which is vital to the transaction. We need the appraisal to be ordered as soon as possible and the clients must be coached and prodded constantly to get their lender the information requested in a timely fashion. This is imperative.
Sometimes a lender will require a survey. If so, I will order a survey from Morgan engineering (in NJ) if it is required. You should always ask the client’s lender if a survey is required. If the seller has an existing survey we can make use of that if it is less than 10 years old. The seller will sign an affidavit of no change that the buyer can rely upon. However, it is always my advice to get a new survey since you never know how truthful a seller is.
Typically, it is the responsibility of the seller to apply for the CO (certificate of occupancy) from the township. This comes with the payment of a fee for the township inspector to come to the property and evaluate whether the home passes or fails. Each township normally has a checklist you should request so that a seller has a list to be guided by prior to inspection. Sometimes the buyer will need to get the CO prior to closing. In either case, the CO inspection should be ordered 2 weeks prior to closing. This is the responsibility of the realtor so this is one thing you should focus on specifically.
It is around this time that the mortgage commitment is issued. Once we have that in hand, we exchange it with the attorney for the seller.
Once the loan is “clear to close”, we will schedule the closing.
The title company performs what is called “settlement” in New Jersey. They do the work of a bank attorney basically in that they obtain a copy of the bank documents to be signed at closing by the buyer, send a closer to the closing, prepare the settlement statement, make the copies, returen the documents to the lender, etc. The title company also obtains the wire from the lender and uses that wire to pay all the fees on the settlement statement on the date of closing.
My job as the attorney for the buyer at closing is to ensure that the mortgage documents are properly executed and that the lender receives the documents required for funding to be approved. This means that the required lender documents have been executed to their satisfaction and the checks can be distributed,. I will typically get their funding package from the closer once it is signed by the buyers and immediately fax or email it to the funder so that we get funded by the time the package is signed. The sellers rarely attend closings in New Jersey. About 90% of the time we do a “mail away” closing. The sellers will sign all the closing documents in advance. You can advise any seller they do not need to attend and everything will be done by way of email and/or federal express.
Basically, the sellers need to provide payoffs on all open mortgages and deliver the home in broom clean and vacant condition on the date of closing. If there are any liens or judgments in title, they will have to clear them. The sellers also will have to order a final water meter reading about 2 weeks prior to closing.
I have a Spanish speaking title closer (if your clients require a Spanish-speaking closer) who will close my deals on the day of closing and explain all of the mortgage documents to the clients at the table. Her name is Jennifer Saavadera & she is very good.
The aforementioned is a basic outline of a typical, garden variety NJ real estate transaction. Of course, each file has its own twists and turns that will make them unique unto themselves. Having the right support system in place (attorney, title & mortgage) is vital to a successful closing – do not underestimate the power of your professional colleagues!