FREQUENTLY ASKED QUESTIONS . . .
 

This information is being provided to help familiarize you with various aspects of buying and/or selling a home in New Jersey. THIS IS NOT INTENDED TO BE LEGAL ADVICE, but is from the perspective and experience of a real estate broker.

PLEASE CONSULT AN ATTORNEY ON ALL LEGAL ISSUES
 

QUESTIONS . . .
Do I need an attorney?  
Does New Jersey have laws on disclosure?  
What is Megan's Law?  
What is the Off-Site Conditions Act?  
What inspections are customary in New Jersey?  
Do I have to sign a contract to make an offer on a house?  
How long does it take to close on a property?  
How much money will I need for closing costs?  

ANSWERS . . .
Do I need an attorney?

While an attorney is not required by law, it is highly advisable to have legal representation due to the large number of issues that can impact a real estate transaction.
As part of the contract of sale that you sign, there will be a separate form known as "Opinion 26" which discusses the issue of legal representation.
As a matter of custom, in the very southern and southwestern part of New Jersey , it is more common to close title through an escrow company.
 
Does New Jersey have laws on disclosure?

There are several types of disclosure that come into play with a real estate transaction:
1. Agency Disclosure - This written disclosure explains the various roles a Realtor can have in a transaction such as seller's agent, buyer's agent, disclosed dual agent, or transactional agent. It is the responsibility of real estate agents in New Jersey to discuss with prospective buyers and sellers, the Consumer Information Statement drafted by the NJ Real Estate Commission. This document explains each agency type and should be reviewed by you carefully at your first meaningful contact with a real estate agent.

2. Seller Property Disclosure - While sellers are required to disclose any material defects they are aware of affecting their property, and to provide the results of any testing they have done that would impact a sale such as radon, lead paint, asbestos, etc., there is currently no written seller disclosure mandated by the State of New Jersey.

NOTE: Ask your Realtor about written seller disclosure on any house you may be considering purchasing.

3. Lead Paint Disclosure- This is a federal law and requires written disclosure by the seller regarding the presence of or testing done of lead paint in their home. The law affects residential properties built prior to 1978. In New Jersey, there is currently no requirement on the part of the seller to remediate any lead paint condition, only disclosure.
 
What is Megan's Law?

While this law has many facets, the main issue involves the notification process regarding the presence of convicted sex offenders in neighborhoods throughout the state. Megan's Law originated in New Jersey and has been adopted in a number of other states in varying forms. The County Prosecutor in the county where you would be purchasing a home can give you more information on the workings of this law.

On July 23,2001, Acting Governor Donald DiFrancesco signed into law legislation that lists sex offender information on the Internet. Anyone with Internet access will be able to obtain this information by logging on to the new site which is provided under the NJ Dept. of Law and Public Safety. The law states that there will be no responsibility on the part of any group or individual to disseminate the information on this sex offender registry to the public.

 
What is the Off-Site Conditions Disclosure Act?

This act was initially drafted to protect purchasers of new construction by requiring the disclosure of off site conditions that could be harmful or adversely affect the real estate being sold. The act now also covers resale properties insofar as it gives the purchaser an opportunity to contact the municipality where the subject property is located in order to review any lists of toxic sites, landfills and the like that would be on file.
 
What inspections are customary in New Jersey?

Typically, when you enter a contract of sale, there is a home inspection contingency clause that covers structural and operational components of a property as well as the testing and observation of such conditions as radon, asbestos,underground storage tanks, termites and other wood-boring insects. Other issues that could come into play that are not necessarily part of the "home inspection" are proximity to high tension lines, flood zones and airport safety zones. Separate tests can also be arranged for inground pools.

Consult with your agent on these matters as part of your contract of sale.The average home inspection can range between 2-4 hours depending on the size, age and condition of the property. It is very important, especially for first-time buyers, to be present at the inspection.
 
Do I have to sign a contract to make an offer on a house?

First, under the Statute of Frauds, a contract must be in writing to be enforceable. Second, from a practical standpoint without a written contract, most sellers will not take you seriously and probably not respond to a verbal offer.
To protect all parties, New Jersey contracts of sale for residential properties up to four families contain what is called an "Attorney Review" clause which provides three business days from the date of fully executed contracts for review by the attorneys for the buyer and the seller.
 
How long does it take to close on a property?

The "typical" closing date is generally between 60-90 days from signing of contracts and depends on a number of factors. Usually they are a function of the buyers' and sellers' needs and circumstances.

Depending on the type of mortgage being applied for, mortgage approval times can run anywhere from three to six weeks. One of the most important things a buyer can do when preparing to purchase a home is to get a mortgage pre-approval from a lender. Not only will this help shorten the time period necessary to close, it is a common request from the listing agent that all offers be accompanied by a mortgage pre-approval letter.
Items that a lender will be looking for that can be expedited are title work, survey, termite warranty, smoke/carbon monoxide detector certifications and certificate of occupancy (if necessitated by the municipality where the home is located).
 
How much money will I need for closing costs?

As part of your contract of sale there is customarily a $1,000 deposit given upon signing and presentation of the offer. The balance of (typically) 10% of the purchase price is due within 10 to 14 days of approval of the contract by the attorneys.
NOTE: Each situation has its unique circumstances, so discuss your financial situation with your Realtor.

Listed below is a breakdown of customary closing costs in New Jersey for buyers and sellers:
 
CLOSING COSTS . . .
  (Please note that these are estimates and only to be used as a guideline. Check with your service providers for actual costs, which may vary).  
Anticipated Expenses for the Buyer:
  ATTORNEY'S FEES:
An attorney is not required, but it is advisable to have legal representation. New construction and more involved transactions may be considerably higher. A new change to the closing process effective 10/03/2015, known as TRID, streamlines the Truth in Lending Disclosures and the Closing Documents and places more responsibilities on the mortgage company for preparation of these documents. As such, discuss with your attorney as to how their fees may change, and if there will be additional charges for title company representation at the closing table, which may become more and more customary.
$1,000-$2,000

TITLE INSURANCE PREMIUM
A one-time charge based on the amount of the purchase price of the home and required by lender. If
there is an existing policy less than 10 yrs. old on the property, rates may be lower.
$5.25 per$1,000 for the 1st $100,000
$4.25 per $1,000/$101,000-$500,000
$2.75 per $1,000/$501,000-$2,000,000
$2.00 per $1,000 over $2,000,000


TITLE SEARCH:
(including tax search, judgement search
and endorsements):
$150-$400

SURVEY(Additional cost for stakes):
$750+

RECORDING FEES:Deed, Mortgage, Notice of Settlement
$450-$500

FLOOD SEARCH:
$15-$30

FLOOD INSURANCE:
If flood insurance is required,
check with your insurance agent for the rate formula.


HOMEOWNER'S INSURANCE:
Homeowner's insurance varies with the price of the home. Insure at least up to the mortgage amount. Some lenders require a monthly escrow.
Consult with your insurance agent as many variables go into pricing. Waterfront premiums can be considerably higher.

CONDOMINIUM FEES:
In addition to capital contribution fees (a one time charge usually an amount several times the monthly maintenance fee), there could be additional fees charged by the management company including but not limited to an administrative fee, re-sale letter fee, mortgage questionnaire fee, move-in fee and charges for copies of the condominium documents(deed, bylaws, rules and regs., etc). Also inquire as to any current or contemplated special assessments and if there is any current or pending litigation.


INSPECTIONS:
(If one firm handles the inspections,
the costs may be lower).
Structural:(cost varies with size of home)
$475-$550
Radon:
$100-$130
Termite/Pest Inspection:
$75-$95
Well:
$100-$250
Septic:(dye test/open pit test)
$100-$650
Lead Paint:
$500+

UNDERGROUND TANK TESTING:(if required)
$400-$600(Note: A separate metal detection test to check for the presence of an undeground tank usually runs between $250-$300.

MORTGAGE FEES:
With the new TRID laws in effect, lenders have taken on a larger role in the documentation preparation and closing phases of a transaction, so be sure to ask your lender what their fees cover. They can generally be broken down into several categories:
Origination Charges:
Fees that may be charged in this category are: Application fee, commitment fee, underwriting/processing, rate lock-in, and points. Some lenders may waive the application fee but have a higher commitment fee. Not all of these fees may apply to your particular situation.

Third Party Charges:
These are not bank fees but may be collected by your lender and paid to the provider such as: flood certification, credit report, appraisal fee, tax service, attorney review fee(not very common anymore).

Other Lender Related Requirements:

Insurance Premiums:
Home Owners Insurance- check with your insurance agent.
Flood Insurance- may be required depending on results of flood search.
Private mortgage insurance(PMI)- pertains to sales with less than a 20% down payment. There is an option to pay a portion up front.
Mortgage Insurance Premium (MIP)- this is for FHA loans. There is always an up-front payment as well as a monthly payment.
Funding Fee- This pertains to VA loans.

Prepaid Items:
These are not fees, but are usuall collected by the mortgage company at closing:
Tax Escrow
Per Diem mortgage interest
Home owners' Insurance Escrow
Private mortgage insurance escrow (if applicable)

MANSION TAX: A tax paid by the buyer to the State of NJ for homes in excess of $1,000,000.
1% of the purchase price.

MISCELLANEOUS:
Includes reimbursement to seller for
fuel oil in tank, prepaid fees such as
sewer charges, etc.
By adjustment.

REAL ESTATE COMMISSION:
Customarily paid by seller. Check with your agent.



ANTICIPATED CLOSING COSTS FOR THE SELLER:

ATTORNEY'S FEES:
An attorney is not required but is advisable.
$1,000+

REAL ESTATE PROPERTY TAX:
Apportioned with buyer at closing.

CAPITAL GAINS TAX
Check with your accountant to see if capital gains taxes or any taxes required under the Affordable Care Act apply to your sale.

TRANSFER TAX:
This is a sales tax paid by the seller to
the State of NJ based upon the sale price. These rates are regulated by the State of NJ but subject to change. There is a different rate for senior citizens, blind persons, disabled persons, and for a property that is classified as low to moderate income.
For selling price less than $350,000 the following rates apply:
$4.00 per $1,000 up to $150,000
$6.70 per $1,000 from $150,000.01-$200,000
$7.80 per $1,000 from $200,000.01-$350,000


For selling prices above $350,000:
$5.80 per $1,000 up to $150,000
$8.50 per $1,000 from $150,000.01-$200,000
$9.60 per $1,000 from $200,000.01-$550,000
$10.60 per $1,000 from $550,000.01-$850,000
$11.60 per $1,000 from $850,000.01-$1,000,000
$12.10 per $1,000 over $1,000,000


The fee for Senior Citizens, the Blind and Disabled and for Low and Moderate Housing is as follows:

Selling Price less than $350,000

$1.00 per $1,000 up to $150,000
$2.50 per $1,000 from $150,000.01-$350,000


Selling Price in excess of $350,000

$2.80 per $1,000 up to $150,000
$4.30 per $1,000 from $150,000.01-$550,000
$5.30 per $1,000 from $550,000.01-$850,000
$6.30 per $1,000 from $850,000.01 to $1,000,000
$6.80 per $1,000 over $1,000,000


IMPORTANT NOTE: The State of NJ is constantly reviewing and/or changing these fees. Be sure to discuss these rates with your attorney to make sure they have not changed. This information is deemed accurate but subject to errors, corrections and omissions.

MORTGAGE CANCELLATION FEE:
Check with your attorney.

REAL ESTATE COMMISSION:
Check with your Realtor.


MISCELLANEOUS:

The seller is also responsible for obtaining a smoke/carbon monoxide and fire extinguisher certification prior to closing. Some municipalites also require a Certificate of Occupancy and well and septic inspections when applicable.

Check with your local authorites on these fees.


IMPORTANT NOTE: If you are moving out of state, check with your attorney and CPA regarding funds the state may withhold from your closing proceeds. This amount is approx. 2% of the purchase price and is held by the state as an escrow until they determine if you owe them any State income taxes.

NOTE: The information provided above is intended as an aid to our clients in identifying costs they may incur in the purchase or sale of a home in NJ. While this list contains most of the costs that are customary, there may be items that are not included. Information is subject to errors, corrections and omissions and while intended to reflect current conditions may not cover the most recent changes. Please contact the various service providers for exact costs and fees.















 

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