Purchasing Residential Real Estate: What You Should Know

The purchase or sale of a home is frequently the most important transaction in a person’s life. The attorneys at D’Alessandro & D’Alessandro, LLC, have over 65 years of collective experience in handling residential real estate transactions and can guide you through the complexities of real property law as it relates to your purchase or sale.

Whether you are buying or selling a home or a condominium, we will work closely with you, the real estate agents, the other party in the transaction and the mortgage lender to ensure a smooth and timely closing. We have the professional experience, trained support staff and automated systems to handle your closing efficiently. If problems arise during the course of your transaction, we can guide you through the proper steps to assist you in resolving those problems to the mutual satisfaction of all parties involved. For more information about how we can assist you with the purchase of residential real estate, contact us online.

Contract Signing And Attorney Review

When the parties are working with realtors, the real estate contract is usually prepared by the buyer’s realtor. It is generally acceptable for a party to sign a contract prepared by a realtor before even meeting with a lawyer because the lawyer has the power to cancel or modify the contract. This is because realtor prepared contracts contain an “attorney review clause”. Ordinarily, the contract is signed by the buyer and is then presented to the seller as an offer to purchase. If the seller signs the contract, there is an agreement that may become binding upon the completion of attorney review. You should make sure that you or your realtor immediately faxes or hand delivers the contract to our office for review.

Attorney review begins once the fully signed contract is returned to the buyer or his/her agent. Attorney review is a three-business-day period during which attorneys for either party may either cancel or recommend changes to the contract. If the parties cannot agree upon the changes, the contract is automatically terminated. If the parties mutually agree upon the changes, the contract becomes binding as modified. If neither party requests modifications to the contract within three business days, it will become binding as originally written. Attorney review will not necessarily be completed within three business days. The parties need only request modifications to the contract within that period. If it takes more than three business days for the parties to negotiate the requested modifications, attorney review will be extended accordingly

Once we receive the contract, we will contact you to confirm our representation of your interests. We will either schedule an in-person meeting with you to review the contract, or, if your schedule does not permit, we will handle the contract review through a phone conference with you. We will ask you questions about the transaction and your particular needs to ascertain what modifications, if any, we must make to the contract to help protect your interests. Frequently, the attorneys for both the buyer and seller have some requested modifications to the contract. We will explain to you the nuances of the requested modifications and negotiate on your behalf. Once attorney review is complete, we will notify you.

If you are not working with a realtor, the attorneys will routinely prepare the contracts and review the contract terms with you prior to signing. Attorney-drawn contracts are frequently binding when signed and not subject to a three-business-day attorney review period. You should not sign a contract without an attorney review clause without first consulting with an attorney.

Home Inspections

Immediately following the completion of attorney review, the buyer usually conducts numerous inspections of the property. We recommend that you inspect all aspects of the home including the basic structure (foundation, basement water seepage, roof, electrical system, plumbing system, HVAC system, etc.) and also inspect for pest infestation, mold, lead paint, radon, underground storage tanks, well capacity, water quality, septic system as well as any other inspections that may be relevant to your piece of property. As part of the inspection process, buyers should also obtain from the local construction department a copy of all permits for work completed at the property. Buyers should particularly make sure that there are permits on file at the township for any finished basements or attics, patios or decks, and all tanks which have been removed from the property. The inspections are generally scheduled by the buyer in coordination with the realtor. The inspections must be completed and forwarded to the seller within a certain time frame, usually 10 to 14 days following completion of attorney review. The buyer is ultimately responsible for ensuring that the inspections are completed and reports furnished in a timely manner. If the inspections reveal defects in the home, the buyer may request that the seller perform repairs or offer a monetary credit at time of closing. We will work closely with you and your realtor in guiding you in the negotiation of the home inspection issues. Negotiation of home inspection issues can be very stressful. With our experience, we can offer you practical solutions that will help you in resolving home inspection issues quickly and effectively.

Mortgage Contingencies

A typical contract for the sale of residential real estate usually contains a mortgage contingency clause. The buyer usually applies for a mortgage commitment within a few days following completion of attorney review. The mortgage contingency clause provides that if the buyer does not obtain a mortgage commitment for a specific amount of money within a prescribed period of time, generally 30 days, the transaction may be cancelled. The ramifications of the wording of the mortgage contingency clauses can be very technical. For example, if a buyer obtains a mortgage commitment, but the mortgage commitment contains condition, the buyer may not be deemed to have satisfied the mortgage contingency. A common condition in a mortgage commitment is the sale of a buyer’s current residence. This is commonly referred to as a home sale contingency. Similarly, if a buyer loses his/her job between the issuance of the mortgage commitment and the scheduled closing date, the buyer in some instances may have the right to cancel the contract. We have vast experience in negotiating mortgage contingency clauses and can provide you with the necessary guidance so that you know what to anticipate in your transaction.

Title Insurance

Title insurance provides the buyer of property with certainty and security by guaranteeing against title defects and hidden problems that could be costly to the buyer. The title insurance protects the buyer against items that are not disclosed to you in your title search. A title search is an exhaustive examination of the public records to determine who may have an interest in the property, and what easements and restrictions may affect the property. It is common for a property to be affected by easements and restrictions so long as they do not unreasonably interfere with the use of the property for residential purposes. Common easements are for utilities servicing the home. Planned unit developments commonly contain deed restrictions prohibiting acts such as constructing fences in the front yard or storing commercial vehicles on the property.

If you are a seller of property, we will ask you to provide us with a copy of the title insurance policy and survey you obtained when you purchased your home. We will in turn provide this information to the buyer’s attorney. This will speed up the title search, and will also help in resolving certain title problems that might arise.

If you are a buyer, we will order the title search on your behalf after home inspections are resolved. On occasion we will order the title search sooner if there is a rapidly approaching closing date because it takes approximately two to three weeks for the title search to be completed. When we receive the title search, we review it for liens and defects, and then submit it to you and your lender. We will point out to you the liens and defects that will be cleared prior to closing and identify the easements and restrictions of record which will affect your property following closing. The lender will need to review and approve the title search before allowing you to close. The lender typically requires about one week to review the title and schedule closing.

The title search is ordered from an independent title company. The cost of the title search and title insurance is a fixed rate regulated by state law that does not change from company to company. You will be required to pay the cost of the title search and title insurance at time of closing.


The title search and title insurance will not protect a buyer against facts which would otherwise be disclosed by an accurate survey of the property. A survey is a map or blue print of the property that shows the property boundaries and the placement of the dwelling on the property, as well as the location of other improvements on the property such as sheds, pools, decks, driveways, fences, etc.

A new survey is not required on every purchase. Sometimes the mortgage lender will permit the buyer to utilize the seller’s survey if it is not too old and if there have been no changes which would be shown on a new survey. Our law firm can order a new survey on your behalf when we order the title if an old survey is not available or not acceptable to the mortgage lender.

Certificate Of Occupancy/Smoke And Carbon Monoxide Detector Certificate

By state law, a seller must obtain a smoke and carbon monoxide detector certificate prior to closing. This is obtained through the municipal government. Additionally, some municipalities require a Certificate of Occupancy or septic system approval for the resale of a home. Sellers should check with their local municipal officials to determine if a certificate of occupancy is required. All municipalities require that the builder obtain a Certificate of Occupancy in the case of new construction. A seller does not want to wait until the last minute to obtain a Certificate of Occupancy, because the municipality may require that certain repairs be made to the home before the Certificate of Occupancy is issued. This will probably require a re-inspection, and may take time. The parties cannot close without a Certificate of Occupancy if it is required by the municipality.

Well Water Test

New Jersey recently enacted a law that requires the testing of most private wells. Usually the Seller attends to the well testing. The testing takes a long time, so all required tests should be ordered as soon as possible. At closing, the parties will be required to sign a certificate evidencing that the results have been received and reviewed by both parties.

Scheduling The Closing Date And Location

It is custom and practice in New Jersey, and most Contracts provide, that the closing will occur at the office of the Buyer’s attorney. The exception to this rule is if you are buying new construction, in which event the closing will most likely occur at the office of the builder’s attorney.

The closing date identified in the contract is only an estimated closing date unless the contract provides for “time of the essence”. There is no guarantee that the closing will occur on the exact date set forth in the contract. The attorneys will confirm the scheduled closing date approximately two weeks before closing. The exact time of the closing will usually be established a day or two before the closing.

What Happens On Closing Day

The buyer will conduct a walk-through inspection of the property the day of or the day before closing to ensure that there has been no damage to the property and to confirm that all repairs negotiated through the home inspections have been performed. If any damage is found or incomplete repairs are noticed, they immediately must be reported to the realtors and the lawyers. Waiting to raise these issues at time of closing may prevent the closing from taking place if appropriate estimates cannot be obtained or other arrangements made.

At time of closing, the house must be vacant and in “broom clean” condition unless the contract provides to the contrary. This means that all furniture and debris must be removed from the house. It does not mean that the bathrooms must be scrubbed and cabinets wiped out. We suggest that our seller clients schedule their movers to pack them the day before closing so as to avoid the risk that the closing will be delayed.

We also suggest our selling clients make an appointment with our office prior to the closing, to pre-sign all of the closing documents. We will then be able to attend the closing on your behalf without inconveniencing you. You can then either pick up the closing proceeds or we can send them to you. Of course, you will need to be available by telephone in the event that questions arise during the closing.

The closing usually takes approximately one to two hours for a buyer. The buyer typically arrives one hour before the seller to permit the review and execution of the mortgage documents. The mortgage lender does not attend the closing but sends all documentation by overnight delivery. The sellers are welcome to attend the closing, but generally do not attend because they pre-sign all closing documents and to send an attorney as their legal representative. Often, the realtors will also attend the closing.

The buyer will be required to bring a certified check, bank check, or cashier’s check representing the balance of the purchase price and closing costs. Personal checks are not acceptable as all funds must clear on the day of closing. Our office will provide you with the exact amount of the check as soon as the numbers are available, which is typically the afternoon before closing. The check should be payable to “D’Alessandro & D’Alessandro, LLC Attorney Trust Account”.

You may also wire transfer the funds into our attorney trust account. If you would like to wire transfer your funds, please contact our office and we will provide you with wiring instructions. All wires must be placed at least one day prior to closing to ensure receipt on the day of closing.

At the closing, the seller tenders a deed, affidavit of title, smoke/carbon monoxide certificate and other necessary documents. In exchange, the buyer delivers the purchase price for the property. The buyer’s attorney will prepare a settlement sheet showing all of the financial details of the transaction. The settlement sheet (also called the HUD-1 or RESPA) records all financial details of the transaction for both the buyer and the seller including the purchase price, deposit, lender charges, title charges, recording charges, survey charges, realtor commissions, attorney fees, mortgage payoff amounts, realty transfer taxes, real estate tax adjustments, sewer adjustments, condominium association adjustments, and required lender escrows. When the closing is complete, ownership of the property has changed hands.

Contact Us For A Consultation

If you have transaction, litigation law, real estate or estate planning needs in northern or central New Jersey, contact us. We represent clients in Basking Ridge, Bernards Township and the Bedminster area. To contact us, call 908-766-5400.