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What To Know About Purchasing A Home

As a potential home-buyer, especially if doing so for the first time, the buying process can quickly become overwhelming and leave you with more questions than answers. Get the answers and guidance you need from a skilled legal team.

At Mariano & Coiro, P.C., our team has nearly 40 years of valuable experience helping individuals and real estate professionals alike navigate the typical real estate “waters”.  To help you make better informed decisions in your real estate purchase, we have answered some of the more common questions here. Read on to learn more.

Should I sign the contract that my realtor drew up before I show it to my lawyer?

New Jersey has a three-day review period for any real estate purchase or sale contract presented by a licensed realtor. Hence, under New Jersey law, all parties sign the realtor prepared contract FIRST—then the contract goes to the attorneys for review and modification. If your real estate transaction does not involve a realtor, you should NEVER sign any document without having your attorney review it first, as there is no automatic three day attorney review protection.

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Will my closing occur on the date stipulated in my contract?

The date listed in your contract is merely an estimated or “target” closing date. To coordinate lender schedules and other closing efforts, the buyer or seller typically has the right to extend the target closing date up to 14 days. In few instances, a contract will stipulate a “time of essence” closing, which is a mandatory closing date. Time-of-essence closings, though, are very rare.

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What is an attorney review period? When does it start and end?

Once the realtor prepared sale contract has been executed by and delivered to all parties, the three-day attorney review period officially begins. The three-day period only takes place on business days. For example, if the contract is executed on a Friday evening, your attorney will have a three-day period beginning Monday to review it.

If no action is taken by either attorney during the three day review period, the contract will become binding as signed. However, once either attorney submits a “review letter” to the other attorney during the three day period, the review period then remains “open” until it is closed by agreement of both attorneys. Hence, the review period, once initiated by either attorney, can be less than three days or extend beyond it, depending upon the agreement of the attorneys.

It is also critical to note that under the law, either party has the right to cancel the contract without incurring any penalty, provided the cancellation occurs during the three day attorney review period or before the review period is deemed concluded by the attorneys.

While the review period is in progress, you can continue to market and show your home to prospective buyers, provided you make it clear that you are in attorney review with another party, and that you may only accept any new offer as a “backup offer”. If you receive a better offer during the review period, notify your attorney immediately. You cannot sign another contract with a different buyer until your lawyer formally cancels/terminates the existing/prior contract.

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What are the major types of inspections? When is the deadline for an inspection?

Inspections fall into five general categories:

  • Structural and/or mechanical
  • Radon and/or environmental
  • Termite and other wood-destroying insects
  • Septic (if applicable to the property)
  • Well water (if applicable to the property)

Inspections typically must take place within two weeks after attorney review is concluded.

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Should I have my lawyer obtain title insurance?

As a general rule, you should not let your lender, realtor, or seller obtain title insurance on your behalf. These parties are not independent; they all have a vested interest in the property in question. Instead, you should have a completely independent party such as a skilled attorney secure an equally independent title insurance company for you. As all title insurance rates are State regulated, your insurance premiums will be the same, irrespective of the title company used. All other things being equal, it is probably best not to have a title company that is affiliated with any other party in the transaction, simply to avoid any potential conflicts.

Title insurance protects both purchasers and lenders from undetected title defects or liens. When you have title insurance, you do not have to pay to clear your property’s title; the insurer will pay it for you.

What is my premium?

The New Jersey Department of Banking and Insurance standardizes title insurance rates based on factors such as the purchase price, down payment and amount of the mortgage. This means that all insurance companies should offer you the same premium rate. You will pay for the Title insurance company’s searches and insurance premiums at closing, as part of your closing costs.

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Do I really need to have a survey?

In short—YES, YES AND YES!!! Some lenders do not require a new survey. However, we recommend that you obtain one anyway. With a new survey, you can determine the improvements with respect to the perimeter of the property boundaries. Without a survey, it is impossible to determine if any encroachments or easements exist, which will affect your property rights forever. More importantly, your title company will NOT insure your property boundaries without a new survey clearly showing them. The cost of a survey is a one-time expense and is fairly small compared to the cost that it may save you in the future in the case of an encroachment or other dispute. It is true peace of mind for as long as you own the property. A survey is typically NOT required if you are buying a condominium or townhouse.

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Homeowner’s insurance: do I really need it?

Lenders require anyone purchasing a single-family home to buy homeowner’s insurance for the  full replacement value of the property in the event of a fire or natural disaster. Before you can close on the home, you must prove that you have purchase homeowner’s insurance satisfactory to your lender by providing a paid receipt to your lender. Your lender will not permit you to close without the insurance policy in place.

Purchasing a condo or townhouse is different. Most associations have a master insurance policy covering the major elements of the property. However, it is still prudent to obtain insurance which covers the interior of your unit, including your furnishings and other personal possessions, which will not be covered by your association’s policy.

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What should I know about closing day?

Most closings take less than one hour to complete. Before closing day, you will receive the total amount that you need to bring to closing to complete your purchase. You must bring the required funds in the form of a cashier’s check, banker’s check or certified check – not a personal check. Your lender must give you a good-faith estimate of your closing costs, though you will probably not receive the exact final figure until 24 hours before the closing date.

Congratulations – once you close, you own the property. Your Deed. Mortgage and other conveyancing documents will be submitted to the county clerk for recording. Once recorded, you will receive your recorded Deed to complete your file.

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Guidance You Can Count On

If you have more questions or are ready to benefit from our real estate guidance, contact us today. Call us at 732-860-7620 or email us here to schedule your initial consultation today.