My agent has asked me to sign a contract of sale, should I?
Yes, in New Jersey it is customary for a real estate broker to prepare a standard form contract. This contract is subject to a three day Attorney Review Process. So make sure that you contact your attorney immediately because Attorney Review starts with the first business day.
What is Attorney Review?
After signing the contract of sale, the parties have three business days to have the contract reviewed by their attorney. During this time period, your attorney will review the contract and prepare what is called a rider or letter addendum to the contract. The Rider will create additional provisions to the contract, both attorneys trying to make the terms most favorable to their client and addressing any issues that have not been already addressed by the initial contract.
Some of the issues that will be addressed during the attorney review are:
- What is included in the sale price, appliances, draperies, etc.
- The amount of the down payment
- Date of settlement and possession date
- Contingencies to the sale–inspections or required improvements
- Whether the transaction is an “As-Is” deal
Once the attorneys and their clients accept each other’s newly added terms, the attorneys will sign off on the final Rider and inform all parties that attorney review is concluded. All time periods (for the mortgage contingency and inspection results) will start from this date (not the date you signed the initial contract with your broker).
What Documents Will I Need?
Following Attorney Review you will be asked to provide a number of documents. The closing process with be much smoother if you have these documents ready.
The Deed – This is the legal document, which transferred title to you when you purchased your home. If verifies that you are the rightful owner of your property, describes the legal bounds of your property, and defines the manner in which you may transfer your property to a third party.
The Survey or Survey Certificate
( if it is a condominium)- This is the map outlining the legal boundaries of your property and how you home is situated on your property. The recital of your property lines should match those contained in your deed.
Certificate of Occupancy (C.O.) – This is the document which verifies that your home met the requirements of your local building code at the time that it was built. Depending upon the age of your home, you should have a C.O. for each permanent structure on your property. This includes any additions or extensions as well as detached garages, in ground pools, cabanas and certain decks and patios. CO’s are handled by the municipalities. Check with your municipality to determine their requirements and to schedule an inspection as soon as possible.
Smoke Detector Certificate, Carbon Monoxide Certificate & Fire Extinguisher Requirements
New Jersey State law requires the issuance of smoke detector and carbon monoxide certificates in the sale of homes. New Jersey law also requires that at least one portable fire extinguisher, rated for residential use and no larger than ten pounds, be mounted within ten feet of the kitchen area and not more than five feet above the floor. You must schedule an appointment with the fire code official to inspect your home to determine that you have the requisite number of smoke and carbon monoxide detectors and that they all work. They will also determine if your home is compliant with the Fire Extinguisher Law. The inspection should be scheduled as soon as possible; delay may lead to the delay of your closing.
Condominium Owners– you will be asked to provide contact information for the Homeowner Association so the Buyer can obtain a copy of the bylaws, financial statements, insurance information and a Closing Statement that will confirm when monthly maintenance is paid through, as well as any move in/out fees.
Mortgage and Note – In a high interest rate environment, a mortgage which may be assumed by a purchaser is a valuable asset. If your mortgage is not assumable, it will have to be satisfied at closing. A copy of your last mortgage statement will assist your attorney to obtain payoff figures to satisfy any outstanding mortgages or other obligations.
Tax / Utility Bills – Although these are not critical, an informed buyer may ask about the real estate taxes and fuel charges.
What are my expected closing costs?
- Payoff existing mortgage.
- Real estate commission for the services of the real estate broker
- Attorney’s fees.
- Realty Transfer Fee: NJ requires that the seller pay a realty transfer fee when property is sold in NJ. The amount is based on numerical formula. The expected realty transfer fee on a $500,000 home is approximately $4,175.
- Gross Income Tax- In addition, if you are a Nonresident of New Jersey you are required to pay an estimated gross income tax. If you may be considered a Nonresident of New Jersey you should inform your attorney and discuss the tax implications with you accountant.