Real Estate

 Buying or Selling Your Home

What happens when you buy or sell your home?

First, there is a contract of sale. Often it is drawn up by a realtor without a lawyer. In New Jersey, there is a three day attorney review period if the contract is signed after being prepared by a realtor. If your attorney disapproves of the contract for any reason, she may cancel it within three days. Frequently, the attorney approves the contract provided changes are made to satisfy any legal objections she may have, to provide for an inspection of the house or to make something clear. The contract controls the sale and it is important that it describes your deal. REMEMBER, SIMPLY BECAUSE THE CONTRACT IS A PREPRINTED FORM DOES NOT MEAN THAT IT SAYS WHAT YOU THINK IT SAYS OR THAT IT PROTECTS YOUR INTERESTS. A PREPRINTED FORM CAN BE DANGEROUS TO YOUR LEGAL RIGHTS. The best policy still remains: do not sign a contract until it is approved by your own lawyer.

Second, if provided for in the contract, the physical condition of the house is determined by a professional inspector who provides a written report. Usually, there is something "wrong" with almost every house. Sometimes the purchaser will cancel the sale because the inspection was not acceptable IF he is permitted to do so under the terms of the contract. Sometimes the purchaser and seller can fine tune the contract by adjusting the purchase price, making repairs or simply agreeing that the house be sold "as is." What happens depends upon what the contract of sale says will happen if the inspection reveals something "wrong" with the house. If the contract says nothing about an inspection, then the purchaser must buy the house regardless of condition.

Third, the purchaser usually applies for a mortgage for a portion of the purchase price with the assistance of the realtor. Usually the contract provides that if the purchaser does not obtain a mortgage commitment by an agreed date, the sale falls through, the contract is cancelled, the purchaser receives his deposit money back, and the seller places the house on the market.

If purchaser and seller agree on what the condition of the property will be at closing and if purchaser obtains a mortgage commitment, then the closing should take place provided title is good.

The fourth step is that title is searched and a survey is made. If there are no title or survey problems, then a closing can take place.

In New Jersey, purchaser and seller and their attorneys attend the closing. The mortgage company provides some of the money for the closing and the purchasers provide the balance.

The purchaser usually pays the cost of the title search and insurance, the cost of the survey, his attorney's fees, the points, fees and charges required by the mortgage company, advance taxes, interest, and insurance.

The seller usually pays his attorney's fees, the broker's commission, the realty transfer tax, any costs of "clearing" title, and cancellation fees for his own mortgage.

The purchaser and seller divide taxes and other municipal liens between them. Sometimes the purchaser has to reimburse the seller for taxes already paid by the seller. Sometimes the seller has to pay the purchaser for taxes which are unpaid.

The majority of closings take place without difficulty, although occasionally there can be problems which can delay or prevent a closing. Therefore, it is in the best interest of both purchaser and seller that each have their own attorney to protect them.

Please remember, this page is only a very general description of what happens when a home is sold. It is offered for entertainment and educational purposes. Every real estate transaction is different. You should always have an attorney represent you in any real estate transaction. 

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