Barker, Scott & Gelfand

By: Joseph M. Scott, Esquire

The purchase or sale of a home is often the largest item a person buys in the course of his or her lifetime. While each transaction is unique, there are situations and areas of concern where both a buyer and a seller may need the services of a lawyer.

A lawyer can be very influential in the drafting of the Agreement of Sale. Far too often buyers and/or sellers sign an Agreement of Sale without fully understanding all of the terms, time deadlines, and contingencies and how each can affect the transaction. It is therefore important to review your contract with a lawyer prior to signing it. In this way, any changes can be addressed prior tot he Agreement of Sale being presented to the seller.

If you sign an Agreement of Sale without consulting an attorney, most contracts provide for a three-day attorney review period. This time period gives both buyers and sellers the opportunity to review the Agreement of Sale with an attorney. If either attorney disapproves of the contract for any reason, the contract can be cancelled. If the attorney for either side recommends changes, those changes can be presented tot he other party as a counter offer by way of an addendum, or addition to the contract. If the changes in the addendum are agreed to, the changes become part of the contract.

The first step for buyers is to procure the services of experts such as termite inspection companies, home inspection companies and radon inspection companies to dispose of and remove any contingencies in the contract. These inspections are usually part of the contract and the terms and conditions respecting each are often negotiated. There is often for interpretation as to whether a particular condition gives rise to a defect which would allow the buyer to seek remedies under the contract from the seller. Usually the contract will state under what condition a defect allows for a remedy. In some circumstances, a contract may only provide that the seller has the option of having these inspections in order to obtain information regarding the property's condition, and not providing any remedies if the inspection reveals defects. Therefore, an attorney could prepare the contract or addendum is such a way as to not only permit you to complete the inspection, but provide you remedies if certain defects are discovered. Once these inspection have been completed and the buyer is satisfied with the condition of the property, it is then the buyer's obligation to obtain a title search of the property to determine if there are any liens, judgments, or issues regarding the title of the property.

Title searches in Southern New Jersey are customarily performed by title insurance companies or abstract companies rather than by the purchaser's attorney. The title insurance company, once hired, will search the title and issue insurance based upon the searches and the status of the title at closing. In addition to this service, title companies in Southern New Jersey often provide their offices as a meeting place for closing.

Title commitments should be reviewed very carefully so that any exceptions raised by the title insurance company may be removed prior to closing. For example, a title search may reveal the existence of a mortgage, judgments, real estate taxes and other municipal charges. These items must be paid for by the seller prior to closing. These items being removed is important because the non-payment of real estate taxes and services provided by a municipality such as water and sewer charges will act as a lien against the property, even though those costs were not incurred by the buyer.

One requirement usually made by mortgage companies prior to lending money for the purchase of real estate is that the buyer obtain a survey of the property. Usually mortgage loan commitments provide that certain requirements must be met relative to the survey. An attorney can be influential in ordering the survey and also in reading the survey to compare the survey against the legal description of the property. Surveys often reveal encroachments of neighboring buildings, fences, or other obstructions, and an attorney can assist in removing those encroachments prior to closing.

At the closing table, a lawyer can be very beneficial. Often when buyers do their final inspection of the property, systems are not working, or there are items missing, or there is damage to the property that previously did not exist. These items should be resolved at the closing table. Furthermore, an attorney will review and analyze the settlement sheet to ensure that the buyer is only paying for those items for which he or she contracted, and that the proper adjustments have been made for taxes, water and sewer charges, and that the various documents are filed.

Are you thinking of purchasing or selling real estate? If so, call us to learn more about how we can assist you