Residential Real Estate Closings
Why use our firm for your real for your Real Estate Closing?
The Law Offices of John J. Cardile offers Real Estate closing services in New Jersey and New York. We have over 30 years of experience in Real Estate. Our firm has done closings for a variety residential property types such as Single Family, Multifamily, Condos, Coops, and Town Homes. We have completed residential transactions at all price points ranging from $50,000.00 to properties over $4,000,000.00. We know that Purchasing or Selling a home can be a stressful process. We strive to make the transaction proceed smoothly and efficiently by addressing all your concerns and answering any questions you may have along the way.
PURCHASING A HOME:
For most of us purchasing a home is one of the largest financial decisions we make in our lives. Due to the various legal factors involved in the transfer of real estate you should consult an attorney to discuss some of the complications and costs that may arise during the transaction.
What is a Contract for Sale of Real Estate?
In order for a contract for the purchase of Real Estate to be enforceable it must be in writing and signed by both parties. Generally, the real estate brokers will prepare a form contract that both parties will sign. Once both parties have signed the contract you have a fully executed contract then it is submitted to your attorney for review.
What is The Attorney Review Period?
Attorney Review is when both the buyer and the seller consult with their attorney, who will review the contract with their client and each party has an opportunity to change the contract. Either party may cancel the contract for any reason or no reason at all. If the contract is cancelled all deposits monies will be returned to the Buyer without penalty regardless of which party cancelled the contract.
After the Client and Attorney go over the contract the Attorney will prepare a Rider or Addendum to the contract. The Rider or Addendum will create additional provisions that were not addressed in the original contract or memorialize in writing terms both parties agreed to verbally. Some common provisions are an extension of the deadline to obtain a mortgage or home inspections, adding additional parties or correcting the spelling of names, and including additional items in the sale such as furniture.
Attorney review period begins when both parties have received a signed contract and lasts for 3 business days (Holidays and Weekends do not count). The day the signed contract is received does not count as one of the 3 days. If neither party proposes any changes to the contract within the 3 day review period the contract will become binding in its present form. The 3 day review period can be concluded earlier if both the Buyer and the Seller approved and signed off on each others revisions.
Once both parties agree to the Rider and Attorney Review is concluded all dates begin to run from the commencement of attorney review such as obtaining a mortgage and home inspection.
What are My Expected Closing Costs?
Home Inspections and Other Inspections
The buyer may waive the right to inspect the home. The home inspection is an out of pocket expense and ranges anywhere $300.00 to $600.00. Depending on the size of the home and what has to be inspected the cost may vary. The buyer may accompany the Home Inspector when he inspects the premises. It is recommended that you go with the inspector because the inspector will explain the defects so you can have a better understanding of any problems that the house may have and what is entailed in correcting the problem.
The buyer may inspect the Home, the Septic, the Pool, the Septic, heating oil tank, and/or lead paint. Normally the Buyer has 10 days to complete the inspection and return the results to the Seller’s attorney. The Buyer may inspect the Well Water but, traditionally the Seller is required to by State law. However, in a foreclosure proceeding or REO the Buyer may be required to inspect the Well Water.
The Buyer may request his Attorney write an Inspection Letter to the Seller’s Attorney either requesting repairs or a credit at closing. The Seller is not required to provide a credit or repair the premises. The Buyer has the option to cancel the contract if there is a structural defect, which the Seller will not mitigate. If you need a recommendation of a reputable home inspector in your area please contact us.
Radon is a radioactive gas that comes from the breakdown of naturally occurring uranium in soil and rock. If the Radon test shows more than 4 picocuries per liter than the Buyer may void the contract within 7 days of receiving the results. The Buyer may request the Seller remediate the Radon to acceptable levels if the seller fails to do so or refuses the Buyer may void the contract or remediate the Radon themselves.
Attorneys Fees are paid at the closing some attorneys may require a small up front deposit. Please contact us today for our rate on the purchase of your new home.
Generally, the bank will require an appraisal on the property you are seeking to purchase. The bank will only want to lend up to the amount the property appraises for. However, if you are purchasing the property for all cash you are not required to get an appraisal. An appraisal can cost anywhere from $400.00 to $700.00.
Title Insurance, Surveys, and Searches
Title Insurance protects both the owner and lender from loss of ownership interest due to legal defects such as Liens, past Legal Claims against the property, encumbrances not picked up by the survey, and defects in previous Deeds. There are two types of Title policies a Lenders policy and Owners Policy. If you are purchasing with a mortgage it is required by the Lender that you purchase a Lenders policy. However, it is recommended you also have an owner’s policy.
Title Insurance is paid at the closing and the cost is based on the value of the property being purchased. These websites offer free title insurance fee calculators http://www.commonwealthtitleagency.com/home.aspx
Title Insurance is not required when purchasing a home for cash. However, it is strongly recommended because it will protect against any legal claims or liens that the search did not pick up.
A survey determines the extent of the real property that is being sold. Generally, it is attached to the deed and designates the size of the parcel that is being conveyed to the Buyer. A survey is generally not required but the lender may require you get a survey. It is recommended that the Buyer request a survey if boundaries lines appear to be in dispute, if the property line is unclear, or if there are any easements that are visible.
Mortgage costs vary depending on the lender you use and your financial situation. It is recommended that you contact multiple lenders and rate shop. Locking in a lower interest rate will save a Buyer money over a loan period of 30 years. Lenders charge fees up front known as application fees. If you need a recommendation of a reputable lender please contact us.
Home Owners Insurance
Home Owner’s Insurance protects your home against natural disasters. However, it will not protect your home against floods and earthquakes your lender may require additional insurance. If you are purchasing a home with a mortgage the lender will require you purchase Home Owners Insurance.
When purchasing a townhome or a condo the Home Owners Association may have a master policy that covers your home. In which case you can purchase Renters insurance to protect your possessions. If there is no policy you will be required to purchase a Home Owners policy.
Flood and Earthquake Insurance
When purchasing a home in a Flood or Earthquake zone the lender will require you obtain additional insurance. However, if you are not getting a mortgage you are not required to have Flood or Earthquake insurance. It is recommended you obtain such insurance as Floods or Earthquakes occur frequently without warning.
The Buyer is only responsible for property taxes from the date of purchase going forward. However, the lender will require the Buyer to pay the upcoming month of taxes, which will be held in escrow until they are due. In addition, if the purchase occurs mid quarter the taxes will be apportioned between the Buyer and Seller.
Recording Fees for Deeds and Mortgages
The Buyer is responsible to record the mortgage and deed. These costs are based on the number pages contained in the documents. They can from $80.00 to $160.00 each. Each County has a breakdown of the recording fees on the County Clerks website
SELLING A HOME:
Generally speaking the Seller’s cost will be higher than the buyers cost. However, there are strategies that can be employed to mitigate these costs. For most of us a home is our largest financial asset and our primary residence holds sentimental value it is where we raised our families. Selling a home can be the biggest decision we make in our lifetimes. Due to the various legal factors involved in the transfer of real estate you should consult an attorney to discuss some of the complications and costs that may arise during the transaction.
Paying off the Mortgage
The Seller will be required to pay off the mortgage at the time of closing. This is usually the largest selling expense.
The Seller must provide a mortgage payoff statement. The payoff statement is provided by your lender and represents the sum of the outstanding principle balance on the mortgage, any interest owed through the anticipated payoff date, and any unpaid charges such as late fees and any applicable prepayment penalty noted in the mortgage provisions. This statement will be used to calculate the cost on the Closing Disclosure statement.
Although New Jersey passed a law forbidding this type of fee pursuant to N.J.S.A. 46:10B-2 Prepayment of mortgage loan without penalty, there are certain types of loan products and lenders which this law does not apply. For example, Adjustable Rate Mortgages (ARM) can carry a prepayment penalty but fixed term conventional mortgages do not carry a prepayment penalty.
Selling your home could have a major impact on your taxes both at the Federal and State level. It is always recommended that you discuss tax implications regarding the sale of your home with your accountant or other tax professional. Each persons tax situation is unique.
Realty Transfer Tax
The seller is responsible for paying the Realty Transfer Tax. The Realty Transfer Tax is based on the sale price of the home. The tax is required to record the deed and it establishes evidence of the transfer of title of real property. To estimate the cost of the Realty Transfer Tax click the following link: https://www.njrealtor.com/consumers/realty-transfer-fee-calculator/
Some Seller’s may qualify for a full or partial exemption from the tax. Sellers over the age of 62 that are selling their primary residence qualify for a partial exemption. Contact an attorney to determine if your are eligible for a full or partial exemption. The following link can provide you with additional information: http://www.state.nj.us/treasury/taxation/lpt/rtffaqs.shtml
The Seller is responsible for property taxes up to the date of closing. If the closing occurs mid quarter the cost apportioned between the Buyer and the Seller.
If the Seller used the services of a realtor they will be required to pay the commission of both their realtor and the buyers realtor. Typically most commissions in New Jersey range from 5% to 6% of the total sale price of the home. However, commissions in New Jersey are negotiable and may be lower or higher so it is important to interview multiple Realtors to determine the best rate and level of services. If you need a recommendation of a local realtor in your area please contact our firm today. We work with many brokerages and skilled agents.
Some companies offer flat rate pricing for the sale of your home, Sellers are encouraged to investigate these services to determine if it suits their needs. The Seller may be required to show the house themselves among other things that a traditional realtor would do depending on the amount of the flat fee. Make sure that you determine what services are included when negotiating the flat fee.
Attorneys Fees are paid at the closing some attorneys may require a small up front deposit. Please contact us today for our rate on the sale of your new home.
Recording Discharge of Mortgage
The Seller is responsible for recording the discharge of mortgage on nay existing mortgage on the property. This is essential to transfer clear title from Seller to Buyer. The cost is based on the number pages.
Documents Required to Sell Your Home
The Seller will provide the sale documents which include: (Your Attorney should prepare all these documents prior to closing)
The Deed (This document gets record and evidences transfer of title from Seller to Buyer);
Git-rep ( this form is necessary to record deed and is used to determine the amount of Realty Transfer Tax owed);
1099 (this ensures the Seller is reporting the full amount of Capital Gains on the sale);
Affidavit of Title (is a sworn statement of fact designed to protect the buyer from potential legal issues facing the seller);
The Seller must provide a mortgage payoff statement.
FRPTA (Federal form that states you live in the United States),
Power of Attorney (it is standard practice to have this however, if you are going to attend the closing this form is not required); and
Affidavit of Consideration (is only required if the property is valued over $1,000,000.00 or it’s a commercial property or if you qualify for a full or partial exemption)
The Seller will also provide the following certificates:
Certificate of Occupancy (a limit is set in the contract up to a certain dollar amount that the seller is required to repair to receive the certificate usually it is $500.00);
Smoke Detector Certification and Carbon Monoxide Certification (This is a State requirement and the local municipality will send an inspector out)
In some transactions the Seller may shift the responsibility of obtaining these certificates to the Buyer.