Though two parties legally do not require an attorney to carry out the sale or purchase of real estate, few real estate deals in the state of New Jersey are executed without one. The following are some situations where attorney services, or the presence thereof, are beneficial to either one or both parties, during the different stages of the real estate purchase:
I. THE SIGNING OF A REAL ESTATE CONTRACT & HOLDING THE DOWN PAYMENT
The type and selection of the contract is the first area where an attorney may assist. Usually a realtor or broker brings their own already-made real estate contract into the deal, but depending on whether the realtor was retained by the seller or buyer, this may have an effect on the handwritten terms the realtor fills in to this contract. When there is not an already-made real estate contract, a contract may actually be drawn by the seller, or both parties together may download one off the Internet or cobble a contract together. However, these contracts may have inherent biases that one party already knows about, and is deliberately utilizing these rights and safeguards against the other party. Even if the other party is initially a close friend or relative, the choice of a contract may cause problems down the road. However, even if you have signed a contract, an attorney review may legally take place for the next three days. During this three-day grace period, an attorney will be able to safeguard your rights by amending the contract and/or explain to you what exactly is in this contract. Should you then wish to cancel this contract, an attorney will assist you in doing so. And in terms of holding the down payment, which can vary anywhere from 10% to 20% of the purchase price, it is always best that a third party other than the buyer or seller holds the down payment in escrow until the transaction is completed. In case of a failed deal, it is a lot easier for a buyer to retrieve a down payment from the attorney than from the seller him or herself. And there is always the important question in creating contracts, “should I buy this property in my name or the name of another or in the name of an LLC or corporation?” An attorney can help you decide.
II. INSPECTIONS, SURVEY, MORTGAGE & TITLE
After the initial contract is signed, there are usually inspections which take place: one inspection for termites, one inspection is by an engineer who inspects the structural integrity of the home as well as the details like whether windows open or close. With the aid of an attorney, terms may be inserted in the contract which will provide you with a way to cancel the contract should the home fail inspection. There are timeframes which must be met, and unless the inspections are made in a timely manner, then the rights to an inspection are waived. Attorney review of new and old surveys also provides the buyer assurances that the property lines are correct. With an attorney aiding in communications, one party may not claim that they never saw or understood what a survey actually said. Depending upon what comes back on a survey or inspection report, a party may want to cancel a contract. Cancelling a contract is always easier with the assistance of an attorney. An attorney may also aid both parties in the choice of Title Insurance Provider. A title policy provides the buyer with insurance against any other parties who might raise a claim against the property or the former owner of the property. For new buyers, the choice of a title policy provider is very important. As a rule, a buyer should never just automatically accept the title insurance provider suggested by the seller.
III. Real Estate Closing
Keeping the parties on track throughout this process and bringing the parties to the final closing is the attorney’s main job. Creating a closing Settlement Statement, which may also be called a HUD Sheet comes under the purview of an attorney. A closing Settlement Statement lists all of the final costs of both parties that are required in order to finalize the real estate transaction and to transfer the deed for the property. Some of these expenses which are prorated to each party are property taxes, water bills and oil (if necessary). A closing Settlement Statement may also be created by a settlement agent, however an attorney owes to the party that hired him or her a fiduciary (trust) responsibility to review and assure the accuracy of the Settlement Statement and to make sure again that your rights are safeguarded. At the closing, the attorney does a final review any title policy, Settlement Statement, inspections and surveys. The attorney for the seller is also responsible for creating the deed of transfer, which will be delivered to the attorney for the buyers or directly to the buyer. And finally, the attorney will be present and may execute any final transfers of money in exchange for the deed.
This is only a general breakdown of the main duties and responsibilities that an attorney will take on for you during a transaction. If your transaction has already started
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