Understanding the Role of a Real Estate Attorney in a New Jersey Closing
The process of buying or selling a residential or commercial property in New Jersey is complicated and involves coordination amongst numerous parties, including:
- The buyer
- The seller
- Real estate agents
- Home inspectors
- Title agencies
- Loan officers
- Homeowners’ associations
- Management companies
At the Law Office of Craig Rothenberg, we pride ourselves on our communication skills, and our ability to keep the parties on the same page and ensure that the transaction moves efficiently at your desired pace. We understand that a real estate transaction can be very stressful for all parties involved and we make it our mission to reduce or eliminate that stress by getting out in front of any anticipated problems and keeping all channels of communication open.
Set forth below is a brief explanation of the role of a real estate attorney in the residential real estate transaction process.
Ordinarily, a buyer or seller contacts our office once he or she has signed a Contract for Sale. Unlike other contracts, a residential real estate contract is revocable without penalty for up to 3 days after signature (unless shortened or extended) in order to provide the parties with time to retain counsel and review the contract. This period is known as “Attorney Review.”
During Attorney Review, the buyer and seller can mutually agree to amend the contract to include additional terms (i.e., certain property to be included in the sale, “as is” inspection language, use and occupancy allowing the seller to stay at the property after closing, etc.).
Most importantly, during Attorney Review, either party can withdraw from the deal without penalty so we will do our best to meet your needs whatever they may be. If you are a buyer and you absolutely love the house, we will try to get you out of Attorney Review ASAP. But if you are a seller and you are expecting other offers, we may try to prolong the process a little bit to give you time to field those offers. We work for you.
After Attorney Review is complete, the buyer will have a predetermined amount of time to conduct certain inspections of the property, including but not limited to:
- Home inspections
- Radon testing
- Tank sweeps
- Pool inspections
- Wood destroying insect inspections
Once the inspection reports come in, the first question that any buyer needs to decide is whether he or she wants to proceed with the transaction based on the information disclosed in the reports. The inspection phase may be the last opportunity that a buyer has to terminate the Contract without penalty.
If the buyer wishes to proceed, then the attorneys will try to negotiate terms to satisfy the home inspection contingency. Although the real estate attorney can assist with pointing out serious issues in the inspection reports, ultimately the responsibility falls on the buyer to decide what he or she wants the seller to address in order to move forward with the deal.
With the client’s assistance, we will prepare an Action Letter requesting that the seller address certain items. Sometimes, the buyer will ask that the seller perform certain repairs. Sometimes, the buyer will ask for a monetary credit or reduction in purchase price to offset the cost of a future repair. Sometimes, the buyer will ask for both. Each transaction is unique and requires the attention of a skilled negotiator. Again, as your real estate attorney, we work for you.
Prior to entering into a Contract for Sale, a prospective buyer is usually pre-qualified for a loan. That loan contains a proposed interest rate and a date when that rate expires. We will do our best to ensure that closing takes place prior to the rate-lock expiration date, however, the client is mainly responsible for coordinating with the loan officer and the appraiser, and providing all requested documents.
In some cases, the mortgage cannot be approved because the property under-appraises for less than the purchase price. If the parties wish to proceed with the transaction, they will either need to agree to a reduced purchase price or the buyer will have to make up the difference at closing. We will assist with that negotiation and, if necessary, prepare an addendum to the Contract setting forth the newly agreed-upon purchase price.
Once the inspection and mortgage contingencies are satisfied, we will order a title commitment from a reputable licensed title company in the State of New Jersey. As part of the order, we will request that a property survey be completed. The title binder and survey will disclose any issues such as:
- Chain of title
- Judgments against the buyers or sellers that need to be satisfied at closing
- Flood zones
- Outstanding taxes, liens or assessments, easements, encroachments, etc.
You will receive original copies of your title insurance policy and property surveys at or after closing.
On the day of the closing, the real estate agents usually schedule a final walk-through of the property so the buyer can ensure that the property is left in broom-clean condition (or any other standard as agreed upon in the Contract), that the seller has remedied all issues agreed upon during the home inspection phase, and that there are no additional damages to the property since the buyer’s home inspection. If there are issues that arise last minute, we will negotiate to resolve them prior to closing.
Traditionally, all parties including the buyer, seller, real estate attorney and agents are present at closing to sign the conveyance documents, turn over all keys, provide funding, and effectuate the transfer. Today, it is fairly common for the seller to not even attend the closing. Instead, the seller will mail the signed conveyance documents and keys in advance to be held in escrow pending the closing. In some instances, our representation as your real estate attorney will extend beyond the closing date in the event that escrows are being held to pay off certain bills or if the parties agree to a use and occupancy beyond the closing date.