Representation by a Lawyer in a New Jersey Real Estate Closing

Representation by a Lawyer in a New Jersey Real Estate Closing

By Gerald D. Siegel, Esq.

The first phase of a real estate closing begins with the preparation of a contract after there has been an agreement in principal about the key terms of a purchase or sale. The law requires that any agreement for the purchase and sale of real estate be in writing to be “legal.”

In New Jersey, real estate agents are allowed to prepare such contracts. The contract must contain a paragraph concerning each party’s right to have the contract reviewed by an attorney within three business days of the delivery of the signed contract to each party. The “attorney review clause” gives the attorney for either party the right to disapprove the contract, for any reason should their client want to get out of it. Oftentimes, due to time considerations, an attorney will disapprove the contract to obtain more time to negotiate more favorable terms for their client.

A good contract should encompass the following:

1. A contract sales price.
2. The amount and time frame for the agreed upon deposits to be paid.
3. Identification of who will hold the deposit until closing.
4. The amount of the mortgage loan the buyer must obtain to buy the property.
5. A date by which the mortgage loan must be obtained.
6. The right of the buyer or seller to cancel the contract if the buyer can’t legitimately obtain the mortgage loan.
7. A clear closing date.
8. That the seller must convey good title to the home so that no one in the future can challenge the buyer’s right to ownership.
9. What appliances are included in the sale.

A clause providing buyers with the right to have an inspection of the property for termites, radon, and physical defects in the property, when these reports must be obtained and delivered to the parties and how objectionable finding will be handled.

The reason is simple: all home purchases in New Jersey are “as is.” This means that
You have to go into the purchase with your eyes open. Once ownership is transferred, the
Seller is relieved of any responsibility if the home has problems or the appliances break
down, unless the seller has committed a fraud.

Once the inspections occur and reports provided, further negotiations may take place
if physical defects are found. Sometimes seller will agree to make repairs or allow a credit
against the sales price to resolve inspection issues. Sellers will usually not be responsible
to make cosmetic repairs.

A clause stating that the Seller is responsible for obtaining and paying for repairs, if any, to obtain a municipal Certificate of Occupancy.

Most towns have a law that requires that the building department perform an inspection of
property before it is transferred/sold.

Therefore, the classic real estate closing can be looked at in phases: contract preparation and attorney review, inspections and negotiations as a result of the inspection and the activity which takes place once the buyer received the written mortgage loan commitment, and the closing itself.

Once the mortgage loan commitment is obtained by the buyer, the seller is so advised. This makes the seller feel secure. A flurry of activity takes place. It is at this time that buyer’s attorney orders title, assessment and judgment searches. This is a history of the Property and its owners which reveal problems, if any, with the title to the house and any legal judgments against the seller.

This work is performed by a title company which will make a written report, continually updated until the closing. The report is provided to all the lawyers and to buyer’s lender so that everyone is aware of the history of the property. Any title issues or judgment issues will be resolved at this time with a view towards the closing.

The closing is normally held at the office of the buyer’s attorney. A day or two before the closing the title insurance company, which usually prepares the HUD -1 will contact you and inform you how much money to bring to closing in certified funds. (Personal checks cannot be accepted).

The buyer comes to the closing before the seller to sign the mortgage loan documents and other papers required by the lender. Buyers should be prepared to sign papers until their hands are very tired. At the very least you will sign a “note”, a promise to pay back your lender, a “mortgage”, in which the house is given to the bank as collateral for the loan, an affidavit of title that recites your marital history and any open judgments against you, and a “RESPA” or “HUD-1’ which is the closing statement breaking down and itemizing each closing cost and where all the money in the transaction is going and who is getting it.

After the mortgage loan is closed the seller comes and provides a ‘deed” the document giving you ownership, a certificate of occupancy, keys garage door openers and other routine documents.

While each party usually has an attorney, closings are usually non-adversarial. Lawyers who excel in real estate transactions are good problem solvers who help make the process run smoothly. The purchase and sale of a home should be positive life cycle events and good attorneys guide the parties towards that goal.


Gerald D. Siegel, Esq. is an established attorney who has been practicing in this area for 30 years. He has performed numerous closings concerning local properties with clients who utilize the various lenders in the area. Mr. Siegel’s contact information is set forth below, should you have any questions.


Gerald D. Siegel, Esq.
Law Offices Siegel & Siegel, P.C.
666 Plainsboro Road Bldg 100 Suite F
Plainsboro, N.J. 08536
Tel. 609-799-6066
Fax. 609-799-6274
E-Mail: gsiegel@nj-negligencelawyer.com
Web Site: www.nj-negligencelawyer.com
www.centraljerseypersonalinjurylawyer.com