Personalized Legal Guidance Regarding Real Estate Transactions
Buying a home or investment property is probably the biggest purchase of your life. It should be treated with the respect that it deserves. At Salomon & Aquino, LLC, we represent lenders, borrowers, buyers and sellers in various residential and commercial transactions.
From the first call, we handle these transactions differently than any other law firm. First, we review the contract with you to ensure that you understand what’s in it. We always welcome the opportunity to personally sit down with you and review the contract at our office, but many of our clients are now opting to do this over the phone and through email. Then, we call the other attorney and both realtors to discuss the transaction and assure them that they will be copied on all critical communications. With those introductions, we have set the foundation for a smooth transaction.
Understanding New Jersey Residential Transactions
Attorney review – In a residential New Jersey transaction, you have three business days from the date that you signed the broker’s contract of sale to retain an attorney. That time period is called “attorney review.” During attorney review, your contract is not binding and either the buyer or seller can cancel the contract and move on. After attorney review, the contract becomes binding and everyone is stuck with what is not always the beneficial terms set forth in the broker’s contract. The goal is to move out of attorney review as speedily as possible with changes to the broker’s contract of sale reflected in riders and amendments to the contract.
At Salomon & Aquino, LLC, we do this fast (you didn’t come to us for delay), but more importantly, we don’t use cookie-cutter forms. On the contrary, each of our riders is custom-tailored to your particular transaction. All of this takes more time than what your “typical” real estate attorney would take, but then again we are not the typical law firm. Frankly, we have an ulterior goal in every real estate transaction that we handle: Make you a client for life. Many families only interact with an attorney when they buy or sell a house. We work tirelessly to make that experience an extremely positive one so you will always turn to us for any future legal needs. OK, so after attorney review ends, then what?
The home inspection – After attorney review, if you are a buyer, you will do your physical inspection of the house. Usually within 10 to 14 days after the conclusion of attorney review. Here are some helpful tips for the physical (also called the “home”) inspection:
What type of home inspection are you going to have? At a minimum, we recommend that you do a structural inspection, a wood-destroying insect inspection and a radon (an odorless gas suspected of causing cancer) inspection. Beyond that, you could do a “tank sweep” to see if there is an abandoned oil storage tank at the property and further studies to see if that tank is contaminated.
You should personally attend the home inspection. If you don’t go to the home inspection you are wasting your money, as the written reports generated may not always detail the defects and issues with the property that should concern you.
Take photographs and only use a home inspector that takes photographs. This is very important for communicating your concerns to the seller’s attorney.
Call us after the home inspection and give us a written list of the items that you want us to address with the seller’s attorney. We will review your list together and make sure it covers items that a seller should address.
The mortgage process – During and after attorney review you will work with your lender to ensure that you get a mortgage commitment from the bank promising – usually with many conditions – that it will give you the money needed to close title at what is called the “closing.” We will assist you every step of the way during this process.
What Is Short Sale Real Estate Transaction?
When an economy sinks, many homeowners find themselves “upside-down” on their mortgage. Namely, the equity or value of their home is worth far less than the mortgage amount. Due to financial distress, these families cannot make the mortgage payments, or they don’t want to pay, for example, a $400,000 mortgage on a property that is only worth $200,000. Buyers can often find some great value in considering a short sale. If you are considering entering into this type of transaction, be mindful that the seller will need permission from the bank holding the mortgage to sell the house to you.
It could take months for the seller to get that permission. Sometimes the bank wants more money than the parties originally agreed upon before agreeing to the short sale. Also, in a short sale, the seller is not getting any money – it all goes to the seller’s bank, so there is no money and no incentive for the seller to make any repairs to the property that may be required as a result of the home inspection. Basically, the buyer takes the property “as is.”
We don’t recommend anyone entering into a short sale unless they have some patience and a little flexibility. With just a little patience, a buyer could easily find a dream home at a bargain-basement price. We have handled hundreds of these transactions and have developed a method to preserve these transactions and get you – either as a buyer or a seller – through the process.
What Is A Bank-Owned Real Estate Transaction
A bank-owned sale is when the bank actually owns a distressed property – usually after a foreclosure – and will sell it to you. These deals move fast and in almost every instance the bank is totally inflexible to changes in time or contractual terms. Here are some things you should know concerning bank-owned residential transactions:
- “Time of the essence” closing date. The closing date in all bank-owned contracts is one called “time of the essence,” which means that if you do not close by the date shown in the contract, you will risk the loss of your deposit and you may face monetary penalties for each day that you cannot close. To avoid this, you should work closely with your mortgage representative and communicate with your attorney about any timing issues that you may have so that your rights are protected.
- The buyer is responsible for satisfying all municipal requirements. In a typical residential real estate deal, the seller is responsible for satisfying the municipal requirements of securing a certificate of occupancy (CO) and/or smoke certificate. In a bank-owned contract, the buyer is responsible for the CO/smoke certification municipal requirements and is not required to obtain the certificate of occupancy or satisfy any other municipal requirement before closing. In such cases, we attempt to put a monetary cap or limitation on such a responsibility. What if, for example, a municipality requires $10,000 worth of repairs to the property before issuing a CO? Are you responsible for doing these repairs at risk of losing your deposit? If you cannot complete the repairs by the closing date, are you also responsible for the penalties under the “time of the essence” clause? You might be able to get a temporary CO from the municipality that may allow you to close and we have seen some flexibility in the seller when situations like this arise. However, having expressed the foregoing, there is no contractual assurance that the selling bank would put a cap on this obligation, as they are very inflexible in altering their form contracts of sale.
3. Home inspection. In a “normal” real estate transaction, the buyer is permitted to do a home inspection and ask the seller to pay for or repair any defects revealed through the home inspection. Here, the seller will not do any repairs and you are taking the property “as is.” The greater concern is that typically, your inspection rights run from the “effective date” which, depending on the contract is either when you signed it or when the seller signs it, which can be days or weeks before you speak with an attorney. A home inspection is more important than ever. Conduct the inspection immediately and either decide to move forward with the transaction or cancel the deal. If you wait to do the home inspection and allow time to pass (typically 10 days from the effective date), you may not be able to cancel the contract without risking the loss of your deposit and possibly other penalties for breach of contract.
Speak With A New Jersey Real Estate Attorney Now
We enjoy working with first-time home buyers and investors and playing a role in their future. For many individuals, this will be their only direct experience with an attorney. In handling your real estate transaction, our goal is to make you a client of ours for life – so that you recommend us to others and turn to us for any future legal need you might have.