Real Estate Law

Buying Or Selling A Home

Whether you are buying a first home, second home or a vacation home, a purchase of any home is a large investment and therefore, you should consult with and retain an attorney to represent your interests in buying or selling any real estate. I have included some frequently asked questions below, regarding the purchase and sale of real estate - however, I invite you to contact me in the event that you are in need of any legal services or have any real estate questions.

Q: After the Buyer and Seller agree on a price for the purchase/sale of real estate, what is the next step?

A: Normally, the next step is to enter into a contract or an Agreement of Sale. This document is extremely important because it fixes each of the parties' fundamental rights and obligations from the time it is signed through the closing of the Title. Unfortunately, many purchasers and sellers of residents or real estate, sign contracts without the advice of an attorney.

Q: Who prepares the contracts?

A: It has become the standard practice, especially if the sale of the property involves a real estate broker, to have a broker present the parties with a "standard real estate contract". What you should realize is that a real estate broker is not an attorney and therefore, cannot practice law. In addition, there is no obligation that you sign the "standard real estate agreement". Don't buy into the representations of anyone that it doesn't make any difference what contract you sign because the broker-prepared contract is a "standard contract". When it comes to the purchase or sale or real estate, nothing should be considered as "standard". The sale or purchase of each, individual real estate transaction may be as different as the styles and color selections of houses that you have looked at.

Q: Should I have an attorney prepare a contract?

A: The answer in most cases is "yes", but more importantly, you should meet with an attorney to discuss your needs and requirements and have the attorney either prepare a Real Estate Agreement of Sale/Contract or amend the standard contract which best fits your needs.

Q: What happens if I sign a broker-prepared contract - is this binding?

A: That depends on the time frame. Under New Jersey law, if the contract is prepared by a broker, each of the parties are given a three (3) day attorney review period or "cooling off" period, wherein and whereby an attorney can cancel the whole contract or accept the contract, subject to certain changes.

Q: What happens if I sign a contract for a real estate deal where there are no brokers who are present?

A: Technically, if all the parties have signed the contract, the contract may be binding. The three (3) day attorney review clause only applies to broker-prepared contracts and does not apply to contracts which are privately prepared or prepared by an attorney.

Q: What are some important provisions that should be considered to be included in a Agreement of Sale?

A: A few examples of provisions which should be considered to be included in the Agreement of Sale are:

• Date of Contract - This may be obvious but it is very important because in the Contract, deadlines and contingencies may be measured from the date of the Contract.
• The identity of the parties - The Buyers and Sellers to the Contract should be identified, including their address and marital status.
• Description of the property - A description of the property should be included and set forth as accurately as possible. The preferred method is a metes and bounds description which can be referenced to an attached survey of the property. At a minimum, there should be a reference to an address and a Lot and Block number which should be compared to an existing survey or compared to a survey that will be performed on behalf of the Buyers.
• Price and method of payment - the contract should specifically state the full purchase price, the requirements of any deposits and the method of payment, i.e. mortgage, kick-back mortgage, assumption of mortgage or cash.
• Deposits - The Agreement may specify that a deposit is to be held in escrow by a third party until the closing of Title or until either party exercises a permitted right of cancellation of the Real Estate Contract. The deposit or escrow clause should also state whether or not the deposit monies are to be held in an interest-bearing or non-interest bearing account.
• Mortgage Contingency - This clause is very important to the Buyers in the event that the Buyers are going to purchase this property through a mortgage. Care should be taken with regard to drafting the mortgage contingency clause and provide for remedies in the event that interest rates increase or decrease, and more importantly, if you are a Buyer, the contract should provide that the agreement is not binding unless the Buyers can actually obtain a mortgage.
• Closing date and place - The closing place is normally held at the Title Company selected by the Buyer or an attorney's office. The parties should decide whether there is a target date or a specific date that closing must take place by. If there is a specific date that the closing must take place on or before a certain date, this is referred to as "time of the essence" which means that the closing of the property must take place on or before a stated time and date. The problems that may arise include a mortgage commitment expiration date, obtaining title insurance and any other factors that must occur before the closing.
• Type of Deed - The normal Deed required is referred to as a "bargain and sale Deed" with covenant as to Grantor's Acts. The Deed is normally prepared by the Sellers' attorney or the Title Company.
• Other contingencies - Other contingencies such as a home inspection report, a Radon testing clause and a termite inspection report should also be considered and utilized in an Agreement of Sale. Again, it is extremely important to consult with an attorney with regard to the purchase and sale and preparation and execution of any real estate documents.

Q: What is Radon?

A: Radon is an odorless and colorless radioactive gas which is released by natural decomposition or decay of Uranium, which is commonly found in soil and rock. Normally, Radon is naturally occurring but may also be a bi-product of industrial processing. According to the United States Environmental Protection Agency (USEPA) and the New Jersey Department of Environmental Protection (NJDEP), Radon has been linked and may cause lung damage and lung cancer over a period of years to those who are exposed to Radon.

Q: Are there any laws governing Radon disclosure or testing?

A: Yes. The Radon Act of New Jersey (N.J.S.A. 26:2d-70 et. seq.) was enacted to establish a program to regulate the testing for and mitigation of Radon. No person may be paid to perform testing for or mitigation of Radon unless certified by the New Jersey Department of Environmental Protection. Testing for Radon and/or the test results are referred to in terms of picocuries per liter (pCi/1). A picocurie per liter is a standard measure of the concentration of radioactivity in the air. Normally, test results that exceed four (4) pCi/1 should require remedial action. According to the U.S. Environmental Protection Agency, no level of Radon is considered totally safe. There are health risks at even low levels. The USEPA estimates that the risk of dying from lung cancer as a result of seventy (70) years exposure to a level of 4.0 pCi/1 of Radon for 75% of the time is equivalent to the risk of smoking 10 cigarettes a day or having 200 x-rays a year.

Q: How is Radon mitigated in houses?

A: Normally, levels of Radon can be mitigated in residents through the use of an exhaust or blower system which, if installed, should be installed by a professional. Although there is no law which establishes the acceptable level of Radon, the common custom to use is 4.0 pCi/1. If a Radon contingency is utilized in any real estate contract, the actionable level should be specifically identified, i.e. the level that the Seller or Buyer can cancel the contract or take remedial action.

Q: What is Title insurance and do I need it?

A: Title insurance is basically referred to as indemnity insurance under which the insurer agrees to indemnify the insured against losses through defects of title or liens or encumbrances upon the property. In most cases, mortgage companies require Buyers to have title insurance on the property, as mortgage companies have a financial interest to make sure that the property they are financing is free and clear of any title defects, liens or judgments.

Q: What is a Title Search?

A: A Title Search is essentially a review of the history of the purchase and sale of the subject property. The Title Search also determines whether or not the Seller is, in fact, the appropriate owner of the property. The Title Search may also reveal the right of others that are in possession of the property other than the owner, whether any easements or right of ways on the property exist and whether there are any liens or encumbrances or judgments on the property.

Q: What is closing?

A: The real estate closing occurs when the parties come together to finalize the real estate transaction. For the Seller, it is an opportunity to present an Affidavit of Title and a Deed to the Buyer, to review any and all closing costs to satisfy any existing mortgages and to receive any excess monies. For the Buyer, closing enables the Buyer to take title or ownership of the property and to satisfy the financial obligations to purchase the property.

Q: What does the Seller need to bring to closing?

A: The Seller's or Seller's attorney normally needs to bring the following to a real estate closing:

• The Deed.
• An Affidavit of Title.
• A Certificate of Occupancy or C.O.
• Smoke Detector Certification if required by the Township of the residence.
• Keys to the property.
• Garage door openers, if any.

Q: What should the Buyers bring to closing?

• Money to cover any closing costs;
• If you are purchasing a property with the assistance of a mortgage company, the mortgage company should be notified of the date and time of settlement in order to make sure that the mortgage documentation will be ready and available for you to sign at the real estate closing. The mortgage documentation, also referred to as the "mortgage package" is normally delivered directly to the title company or to the attorney for the Buyer.
• Any other documentation required by any of the parties, the title company or mortgage company, including but not limited to, proof of homeowners insurance, proof of marriage and termite inspection certificates.

The above list of questions are frequently asked questions and is not entitle to be an exhaustive list to all questions or issues raised during a real estate transaction. Consultation with an attorney in any real estate transaction is highly suggested. For further information or if you have any other questions, please contact this office for a FREE INITIAL TELEPHONE CONSULTATION.

For more information, please contact Blair C. Lane, Sr., at 856-354-7700. Initial consultations are free.