Information About Your Closing

Welcome to the family of clients who have retained our office to represent them in real estate transactions. This memo is designed to answer some of the most commonly asked questions about the procedure involved in buying and selling real property. If you have any further questions after reading this memo, please do not hesitate to consult the attorney handling your matter or their legal assistant.

• Q1.
• Will the closing take place exactly on the date indicated in the contract?
• A.
• Probably not. The contract closing date is usually a "target date". The timing of a particular transaction can be difficult to manage and is often complicated by the fact that the person selling must conclude a closing or be ready to move into the house they are buying. Also, the person who is buying may need the funds from a prior sale. The combination of timing all of these transactions can be very difficult and is often beyond the control of any particular individual, including your attorney. Inquire of the people you are dealing with as to what their timing difficulties might be and advise your attorney as soon as possible.
• Q2.
• What is the attorney's role in this transaction?
• A.
• Your attorney is primarily concerned with protecting your legal rights and seeing to the proper transfer of title. It is the purchaser's responsibility to arrange for the financing and to comply with all application and commitment requirements of the lender. Your realtor can refer you to lenders and help you through the mortgage process.
• Q3.
• What about the title search and survey? Do I need these items? When are they ordered?
• A.

• It is advisable to have a survey made of the property you are purchasing and to have the corners of the property marked so that you can define the precise property that you have acquired. It is also necessary to have title insurance. For the one-time premium, you have the assets of a substantial insurance company standing behind your claims to title and ownership. In most transactions, the lender will require that you have both a survey and title insurance. We will meet these requirements for you, choosing a title company and surveyor who we think can efficiently meet your needs and will not impede the progress of meeting your deadlines. If you have in mind any particular title company or surveyor that you prefer to use, let us know. Be aware that our ability to meet your timetables is at least partly dependent on the choice of who will provide these services.

  It will be your responsibility to advise us immediately whether or not you prefer to have the property corners marked, as some surveyors charge a substantial charge for doing so ($150.00). Please advise us if you want the property corners set.

  NOTE: We normally do not order your title search and survey until you have received your mortgage commitment. However, this can cause a delay in closing since these items can take up to eight weeks to receive during high volume periods. If you want us to pre-order your title search and survey, send a check payable to the firm for $500.00 to partially cover these costs. If for any reason you do not complete your transaction, you will still be liable for the costs of these items, together with our fee in connection therewith.

• Q4.
• How much will my attorney's fees be?
• A.

• You will be charged our prevailing fee at the time of closing. Ask our attorney what our current fee is. Also, there may be an increased fee if your closing involves extraordinary time due to any of the following: legal/title/zoning problems, attendance at closing beyond a radius of 15 miles from our office, post-closing escrow functions, closing by power of attorney, multiple party transactions, occupancy or possession problems, extensive contract revisions or similar difficulties. If for any reason you do not complete the transaction, you will be billed for the work actually done by your attorney, based upon their hourly billing rate.

  Recording and discharge fees are additional. There is a separate charge made for postage, photocopies, toll calls and express mail fees. You are entitled to receive an estimate of all costs and fees prior to closing. Feel free to openly discuss our fee so as to avoid any possible misunderstanding.

• Q5.
• How much money will I need/receive at closing?
• A.

• It is impossible to determine the exact amount to be paid or received at closing until 24 hours prior thereto. Lenders and others who must provide figures to us often do not do so until immediately prior to closing. Your mortgage representative can help you approximate the amount of your closing costs.

• Q6.
• What are my responsibilities in this transaction?
• A.

• You must comply with your lender's requirements and diligently pursue your closing obligations. Be sure to check with your mortgage processor on a regular basis to see how your loan is progressing. Your realtor should arrange for a termite certification if required and home inspection, if desired. It is prudent to inquire as to inspections for radon in the house, and its level. If the house has underground oil or septic tanks, you may wish to hire a company to inspect for possible leaks or soil damage. Provide us with a copy of these items within the time allowed for in the contract.

  Keep us advised of any agreements made between you and the other party as well as any change in your address or telephone number. Be sure your realtor arranges for a Certificate of Occupancy, if required in your town, at least two weeks prior to the anticipated closing date. However, you should contact our office to confirm the date of the closing. Be advised that the Certificate of Occupancy is valid for only 30 days from date of issuance. The realtor will usually help coordinate the transfer of all utilities including obtaining a final water and oil reading. Be sure this is done.

  At the closing, it is customary for the purchasers to pay the seller for the oil left in the tank. In preparing for the closing, the seller should arrange for a reading of the fuel on hand. The fuel dealer should provide a written statement to us before the closing.

  Also, be sure to tell us if you will not receive your mortgage commitment within the time limits of your contract. We will attempt to secure an extension of time. Always let us know immediately if your loan is granted or denied.

• Q7.
• What about homeowners insurance?
• A.

• The buyer will be responsible for providing homeowners' insurance. It is essential that you arrange for your policy sufficiently far in advance to be assured that it is issued by the time of the closing and that the actual policy, not a binder, is available at the closing. Most lenders require that you have a receipt reflecting that your have paid the full year's premium for the insurance, and further, that they be named in the insurance policy and that its amount be at least equal to the amount of money they are lending to you. Sellers of properties should maintain their insurance until the sale has been concluded.

  Purchasers should check with their lender as to exactly how the lender wants its name to appear on the policy. The mortgage commitment usually contains this information. Strict compliance with their requirements is necessary. Some lenders require receipt of the policy several days in advance of closing. Be sure to check, because failure to comply will result in a delay of your closing.

• Q8.
• What form of funds is acceptable at closing?
• A.

• New Jersey Supreme Court ethics regulations require that the money the purchaser brings to the closing be in the form of a (1) certified check or (2) cashier, teller or treasurer check or (3) an official bank check. A check drawn on a bank on an account which it maintains with another bank is not acceptable. A bank money order or uncertified money market check is not acceptable. Checks should be made payable to the purchasers, who will endorse them over to the proper parties at closing. If you are arranging for the bridge loans, if you have stock or other securities to sell, or if our are depending on the funds from the sale of another home, you should investigate the timing of the availability of these funds and the form in which they are to be made available. Most brokerage firm accounts require advance notice of significant withdrawals. Investigate these limitations well in advance and discuss this with your attorney if you contemplate a problem.

• Q9.
• How does the closing package get from the lender to the attorney?
• A.

• Most lenders will send your package to us by express mail and charge you for this service. Some lenders require that the package be picked up at their office the day of the closing. Your realtor may perform this service for you, you may to it yourself or you may request us to hire a messenger at your expense. Check with your lender and advise us accordingly.

• Q10.
• What if I intend to change the use of the property?
• A.

• When you agree to purchase a particular property, the seller will normally represent that you may continue to use the property exactly as he has. If you intend to make changes, for example, if you intend to establish a business in a building previously used as a residence, then you should look into deed and zoning restrictions that might affect the property. Likewise, if you intend to add physically to the existing structures on the property, check zoning limitations relating to setbacks and types and nature of structures that can be built or added to. We can accomplish this investigation for you. If you intend to make a different use of the property than the way the property is currently being used, we should discuss this point further.

• Q11.
• What about exemptions from real estate taxes?
• A.

• The most common reductions are those made available to veterans and their widows and to senior citizens and those who are permanently and totally disabled. Check with your attorney about how to apply for these reductions.

• Q12.
• What if there are tenants living in the property?
• A.

• In the event the property is occupied by anyone other than the persons who are parties to the contract and their minor children, such occupants may have rights as tenants even if not under written leases. New Jersey laws are very favorable to the rights of a tenant and make it difficult to remove a tenant. It is the duty of the seller to disclose whether there are any rights in favor of tenants, but it is also the obligation of the purchaser to make inquiry. Be sure to call to your attorney's attention any potential tenancy problems.

• Q13.
• Will I be able to move into my new home immediately upon closing?
• A.

• Usually. But in some instances, the seller is not able to deliver possession at the closing of title. There are practical reasons. The seller may be purchasing another home, or his mover has not yet removed all of his possession, or he has had to stay in the home until the day of closing and has not yet moved the last of his possessions out. It is up to the purchaser and seller to communicate directly with each other and to work out their own arrangements relating to possession and occupancy, and to advise their attorneys of their agreement.

• Q14.
• Must I attend the closing?
• A.

• As a general rule, lenders require that all parties attend the closing. If there is any possibility that you cannot attend, speak to your attorney immediately.

• Q15.
• What if something goes wrong with the property after I buy it?
• A.

• The purchaser ordinarily has the opportunity to inspect the property directly or through professional inspectors and make a reasoned determination as to whether or not to proceed with the purchase. The inspections should be carefully made because, for reasons of public policy, the law does not hold a non-builder seller or real estate responsible for any problems with the house after a closing, in the absence of fraud or misrepresentation.

  There are two points at which a purchaser is concerned with the condition of the property: one, at the time of the signing of the contract and the second, at the time of closing. It is strongly recommended that the purchaser walk through the home just shortly before closing to inspect to make sure that there is not change in the condition from the time he inspected the property and entered into his contract. Your realtor will arrange for this "walk-thru" with you and the other parties involved.

• Q16.
• What are the Seller's responsibilities?
• A.

• The Seller should immediately provide counsel with the following documents and information:

  1. Deed
  2. Title insurance policy
  3. Survey (drawing of property)
  4. Name, address, telephone number and account numbers of each person or institution holding a mortgage on the property
  5. List of judgments or bankruptcies filed
  6. Copies of Judgment of Divorce or Death Certificate to prove proper termination of any previous marriage.
  7. If a condominium, a copy of Condominium Offering Statement, Survey Certificate and name, address and telephone number of Condominium Association or managing agent, in addition to the above.

  Additionally, the seller should be sure to check with the realtor about the Certificate of Occupancy, oil and water readings, and walk-thru about 45 days prior to closing, as previously outlined above.

  The seller should not pay taxes, water, sewer or mortgage obligations arising during the month of closing unless the closing will take place after the fifteenth day of that month. Otherwise, the payment may not be recorded in time to be properly reflected on the closing statement. Check with your attorney first, if in doubt.

• Q17.
• What about toxic waste problems?
• A.

• The United States Environmental Protection Agency and the New Jersey Department of Environmental Protection have literature available which designates known toxic waste sites throughout the State of New Jersey. A toxic waste site may impact upon the health and safety of residents occupying properties in close proximity to any such site. It would be appropriate for the purchaser to conduct such investigation pertaining to environmental conditions, as he deems necessary to protect his own interest. Additionally, some homes are adversely affected by the existence of radon gas. The purchaser should check with their home inspection firm about the availability of radon testing. If you are particularly concerned about these problems, be sure to discuss them immediately with your attorney so that these issues can be addressed in the contract of sale.

• Q18.
• What special considerations are there for the purchase or sale of a condominium?
• A.

• The purchase or sale of a condominium is basically the same as any other real estate transaction. In addition to the other requirements you should review the Condominium Offering Statement for any restrictions on the use of your property. These restrictions may, among other things, prohibit you from having a pet or limit the number or age of occupants in the premises.

  Your attorney should be provided with the name and address of the Condominium Association or its managing agent. Advise us of the amount of the monthly maintenance assessment and whether the unit is billed separately for fuel, water and sewer charges. Most associations charge a membership fee to the buyer at closing. There may also be capital account or contingency fund charge to be paid.

WHILE WE HAVE ATTEMPTED TO PROVIDE YOU WITH US MUCH INFORMATION AS POSSIBLE IF YOU HAVE ANY QUESTIONS CONCERNING YOUR TRANSACTION, PLEASE CONTACT OUR OFFICE.

IMPORTANT NOTICE

THIS ARTICLE HAS BEEN DESIGNED AND PRESENTED BY THE FIRM OF KANTOR AND LINDEROTH, ESQ. IT IS INTENDED TO PROVIDE A GENERAL FORUM FOR DISCUSSION OF THE LEGAL ISSUES CONTAINED THEREIN. THE INFORMATION PROVIDED HEREIN IS NOT INTENDED TO BE PROVIDED AS LEGAL ADVICE, WHICH CAN ONLY BE APPROPRIATELY PROVIDED AFTER A FULL DISCUSSION WITH AN ATTORNEY WHERE THE FULL FACTS OF A PARTICULAR SITUATION ARE REVIEWED.