Frequently Asked Questions


The following is merely intended as general answers to general or normal situations. It is not intended as the only answer available, as there may be exceptions to any of the situations stated below.  All rights of this office in further supplements, explaining, elaborating or even contradicting the statements herein are fully reserved and not waived.

To skip to a particular question, click on it below:

  1. Should I use a real estate broker and what are the broker’s functions?
  2. What is the initial negotiation process like and how should it be handled?
  3. What will a lawyer do to help you in the transaction?
  4. The “Three Day Attorney Review Clause”: what is that?
  5. Contingencies: Termite, Flood, and Engineering Inspection; Title Search; “Due Diligence”
  6. What are some basics of the Loan/Mortgage process?
  7. What is the Title insurance and what is its rate?
  8. Getting the Property insured.  What is “Home Owner Insurance or HO6”?
  9. For rental property: what is a Landlord Identity Registration form, and is it applicable to me?
  10. What is the “Walk Through”?
  11. What happens on the Closing date?
  12. What is a survey and why do I need one?

1. Should I use a real estate broker and what are the broker’s functions?

When buying a home, using a real estate broker may not be a concern, as generally it is the Seller who pays the commission.

Selling your home on your own without the benefit of a real estate broker can “save” you a commission; however, the loss of an experienced broker, who may help to facilitate the transaction, will also add many hours of work to the process for you. A good real estate broker will have knowledge, as well as experience and information to help you make the best possible choices. He or she will have ability to “hold your hand” and help you with decisions in your property sale or search. He or she will also be able to assist you continually in all aspects of the transaction from home inspection issues, checking/monitoring the status of the transaction, dealing with loan agents, and also assisting in final walk-through issues.

If you are careful in your choice of a real estate broker and select an able broker, who will work hard for you, it can be a worthwhile decision to use a real estate broker.

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2. What is the initial negotiation process like and how should it be handled?

Your “asking price”, as derived by you with the assistance of your broker, is just that; an asking price. It is a starting point for  negotiations. During the negotiation process, it is likely that you will receive offers of less than the asking price.

It is also possible to receive offers in excess of the asking price. If you have an interested purchaser, offers will go back and forth until you have come to a negotiated purchase price.

Your goal is to get a price you are happy with, in addition to obtaining a signed contract, as your deal is not official until a contract has been signed.

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3. What will a lawyer do to help you in the transaction?

In a real estate transaction, once the contract is signed, the lawyer will usually help you with reviewing the contract of sale, negotiating its terms by adding or suggesting addendums so as to protect your interest in different aspect of the real estate transaction, making sure you are protected from any potential liabilities from a legal points, and facilitating a successful and smooth closing.  Our office will help you deal with all of the other players in the transaction, including the other attorney, the mortgage broker, banks, title companies, surveyors, the tax collector in town, association managing agents, co-op boards, and any other potential parties who may become involved. It is essential that you have an open effective channel with us constantly so our office can communicate with you openly and in a timely manner via telephone or email, to ensure the process goes smoothly.

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4. The “Three Day Attorney Review Clause”: what is that?

In the State of New Jersey, either the realtor or the Seller’s attorney prepares the proposed contract.  You may sign the realtor contract if the price is right, but you should not sign contract prepared by the Seller without a three day attorney review clause.

Once the contract has been delivered to the Purchaser’s attorney, the Purchaser’s attorney must respond to the contract within the three-day period (which includes the date of delivery), by providing the Seller’s attorney with any proposed changes and/or comments. The Purchaser’s attorney must also communicate with Seller’s attorney to come to an agreement on all language in the contract. The three days is a limit on the time for the Buyer’s attorney to respond. Once the response is made, there is really no limit on the time during which an agreement should be reached.

Once all the contract language has been resolved, the Purchaser’s attorney must get the Purchaser to do the inspection and provide a contract deposit, which is usually 10% of the purchase price or the amount which the contract states. Generally, the purchase deposit is escrowed either with the realtor or the Seller’s attorney.

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5. Contingencies:  Termite, Flood, and Engineering Inspection; Title Search; “Due Diligence”

Contingencies within the contract may include any of the above.  If included, the contract is contingent upon the stated issues being resolved satisfactorily. The satisfaction of contingencies may not be straight forward, but in all different forms, there may be time limit on exercising same.  It may be that you—as the Purchaser—have a request, and if it is rejected by Seller, then you can walk away. As the client, you need to be aware of any time limits and call us if you cannot meet the time limit.

Due diligence: After the attorney review is concluded, the Purchaser generally will do inspection as part of his/her “due  diligence.” The purpose of the inspection is so that the Purchaser is aware of any issues and knows for sure of what he or she is buying.  For co-op properties, the due diligence would also include reviewing the offering plan and amendments, reviewing the financial statements of the co-op, etc.   Generally, “due diligence” should include having a home inspector or engineer’s inspection of the property.  For an inspection, discuss details of the inspection with your home inspector and know exactly what services will be provided before securing the inspector.

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6. What are some basics of the Loan/Mortgage process?

Once the inspection contingency is satisfied, generally, most Purchasers apply for a loan or mortgage and apply the proceeds of the mortgage as part of the purchase price of the property.  Contracts of sale may have a mortgage contingency clause, which means that in the event the Purchaser is unable to get a mortgage, his contract deposit will be refunded.

If there is no mortgage contingency clause, the Purchaser may still seek a loan or mortgage; however, if the Purchaser is unable to obtain a mortgage, he will still have to attend the closing with all funds necessary to close the transaction, or he/she will be viewed as in breach of the contract.

The Purchaser will usually use a loan officer or mortgage broker to assist in obtaining a mortgage. It is important that the Purchaser be prompt and detailed in responding to the bank’s requirements in obtaining the commitment.

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7. What is the Title insurance and what is its rate?

Title Insurance is a form of indemnity insurance, which insures against financial loss from defects in the title to real property. It also insures against the invalidity or unenforceability of mortgage liens. Because of this, it is required by the Lender.  In the State of New Jersey, the rate is regulated and “standardized.” You may google “NJ Title Insurance rate” for a rate calculator.  Title Insurance is a onetime charge and covers you so long as you own the property.  Keep the policy in a safe place, as Title Insurance is meant to protect an owner’s or a lender’s financial interest in real property against loss due to title defects, liens or other matters that may happen down the road.  Title insurers will defend against a lawsuit attacking the title as it is insured, or reimburse the insured for the actual monetary loss incurred, up to the dollar amount of insurance provided by the policy.  Again, keep the policy in a safe place.

Typically the Title Insurance provides coverage for simple ownership or a mortgage. However, for additional premium, title insurance can be purchased to insure any interest in real property, including an easement, lease, or life estate. Let us know immediately if you desire to purchase such policy.  Just as lenders require fire insurance and other types of insurance coverage to protect their investment, all institutional lenders also require title insurance to protect their interest in the collateral of loans secured by real estate.

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8. Getting the Property insured.  What is “Home Owner Insurance or HO6”?

Home insurance, also commonly called hazard insurance or homeowner’s insurance (often abbreviated in the real estate industry as HOI), is the type of property insurance that covers private homes or HO6 – Condominium Policy, the form for condominium owners.  It’s very important and we encourage you to remember to take out a policy. Some carriers take one day and some take two weeks for a decision to insure, so you absolutely need to secure it before the closing.

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9. For rental property: what is a Landlord Identity Registration form, and is it applicable to me?

If you’re purchasing a property and you are living there yourself, it is not applicable. However, it is required by NJSA 46:8-28 and 29 for single and two-unit dwellings that are not owner-occupied, and registration is to be filed with the Clerk of the Municipality of the
property.  For multiple dwellings, NJAC 5:10-1.11 certificate of registration is required for closing; after closing, it needs to be faxed to the DOC with a copy of old deed with the registration number on it, along with the new Deed, showing transfer.   FAX# (609)633-6208

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10. What is the “Walk Through”?

Prior to the closing, (most the time, the day of closing, and sometimes even just hours before) the Purchaser will do a walk-through of the property to make sure the condition of the property is acceptable. At the walk through, the Purchaser will check the general
condition of the property to make sure that it meets with the terms of contract: that it is in “broom clean” condition, that all included
items are present, etc. The condition should be the same as of the date of inspection, PLUS any and all improvements agreed upon at the conclusion of the inspection contingency negotiation. I personally do not agree that the walk through be treated as a new inspection. However, if the property is not in the condition which was promised, often the parties will either reach an agreement by making adjustments at closing to allow for repairs and/or corrections or not to close and go for litigation.

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11. What happens on the Closing date?

Real Estate contract is not “time of essence” contract, so the estimated closing date may be delayed. Do be prepared for the possibility of delays in closing.

Who will attend the closing? Generally speaking: the Purchaser. The Seller’s attorney, the Seller, and the real estate broker are not required to be there. However, the Purchaser and/or the Purchaser’s attorney will be most likely be present (but this is not even necessarily true).  Be prepared for the Seller not to show up in person.

In the State of New Jersey, Purchaser’s attorney should act as the Settlement Agent, preparing an “HUD-1 Statement” the day or the day prior to the closing, so you will be aware of all financial aspects of the closing, including purchase price, lender’s fees, escrows, brokerage commission, closing costs, real estate tax adjustments, attorneys’ fees etc.  Please understand that if you have lender, the Purchaser’s attorney is waiting for your lender to supply figures. This information may be last hour information provided by the bank, so be patient with this process.

At closing, it is my office’s standard practice to email loan documents beforehand to the Purchaser, and Purchaser will get copies of all title documents on the spot, along with keys to property. After the closing, an original signed HUD-1 statement will be provided to you.

Thereafter, the original title documents will be forwarded to the County for recording, and all liens of the Seller will be paid off.  After that is done and discharge is forwarded by Bank for recording, the title insurer will conduct another search after the closing. The title insurer will then issue title policy. Then our office shall forward the title to you; this may take from 60 days to upwards of 6 months.

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12. What is a survey and why do I need one?

A survey is a map of your property, showing precisely where your house lies within the property boundaries, as well as easements, other encumbrances, setback lines, and building lines. A survey will reveal whether the property is in violation of any county requirements or PUD restrictions and whether there are any encroachments.

Surveys are prepared by professional, licensed surveyors pursuant to industry standards; a Survey is also mostly insured for its own liability.

Purchasers sometimes mistakenly believe that since they are buying new construction there will not be any encroachment issues. Builders often unwittingly create driveway encroachments during construction that are revealed by a survey. Building setback violations are also frequently caused by builders and exposed with a survey.

Purchasers of fee simple townhouses sometimes incorrectly assume that a survey certificate is not necessary. Remember that townhouses can just as easily be built in violation of setback requirements or encroaching upon easements that is not going to be decipher without survey or survey certificate.

It is also important to know that a survey conducted for the seller at the time the seller purchased the property is not a protection for a subsequent purchaser. A purchaser must have his or her own survey conducted.

In owner’s title insurance, your policy will offer more extensive coverage if you have a survey. Generally, title insurance companies do not insure against matters that would be disclosed on an actual survey. If you purchase a survey, however, your title insurance company will usually insure that the survey is correct.

If you want a survey prepared, you should make arrangements for the survey with us so that the survey can be completed and reviewed before your closing. This allows time to address any potential problems. A few years ago, lenders usually required a survey of the property as a requirement of obtaining the loan. Today, most lenders no longer require the purchaser to get a survey. However, even if your lender does not require it, you may want to purchase a survey because of the many potential risks.

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Thank you for your patience reading through this article; I hope it answers some of your concerns.  Again, this is just a general statement, and not to be considered exclusive; as previously stated in the beginning, all rights of this office are fully reserved and not
waived.

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