While it is not Required to retain a Real Estate Lawyer in New Jersey, having one can make a significant difference in the entire process. Real estate attorneys in New Jersey are instrumental in facilitating property transactions.  I review and draft contracts, conduct due diligence, address title issues, handle negotiations, and represent clients at the closing.  My expertise helps clients navigate the complex legal landscape of real estate transactions and protects their interests.

Once a contract is signed by both the Buyers and Sellers, the parties have 3 business days to retain an attorney to review the contract commence Attorney Review. It is the custom and standard in New Jersey for the Buyer’s attorney to commence Attorney Review, which is done by sending a written Notice of Disapproval. This language can be alarming to some people, but we are required to use it to prevent the boilerplate, “fill in the blank” contract from becoming strictly binding as written. If neither attorney disapproves of the Contract within the first 3 business days, the Contract will become legally binding without modification, which is not generally beneficial to either party. 

During Attorney Review, the attorneys exchange correspondence requesting changes to the contract which they believe are in their client’s best interests, that are considered industry standard, or that are specific to the particular property or township. After the proposed revisions are discussed, negotiated, and finally agreed-upon, the contract will be “Out of Attorney Review” and becomes legally binding. This milestone is strategically important because, until Attorney Review is concluded, either party can change their mind and cancel the contract with no explanation required. When representing a Buyer in a multiple-offer situation, we try get in and out of Attorney Review as quickly as possible to prevent the Seller from accepting a different [better] offer. 

At CME Law Firm, we pride ourselves on commencing, and often concluding, Attorney Review within 3-4 business hours of first being retained by a Buyer, with the same turnaround time for drafting our response on behalf of a Seller. Many general practice attorneys will “squeeze in” real estate transactions between court appearances, board meetings, and depositions, which can lead to slow turnaround times and Attorney Review dragging on for days or even weeks! At CME Law Firm, our focus is real estate and real estate only, and we understand the need to move quickly when the market so demands

Once Attorney Review is concluded, the parties are legally obligated to pursue the closing in good faith and using their best efforts. This means the terms cannot be renegotiated or removed, and neither party can “back out” unless one of the contingencies fail. The standard contingencies include (1) inspection, (2) mortgage / appraisal, (3) title / legal authority to sell. 

Assuming no issues with any of these contingencies, both parties are obligated to close or may be deemed in breach of contract. Breaching a contract can expose you to a lawsuit for monetary damages and other hefty penalties, so it is crucial to “be sure” you are ready to buy / sell before entering into a contract. The most common claims for breach of contract arise from: 

• Failure of a Buyer to disclose its financial ability to obtain a mortgage / finance its down payment and closing costs. This includes a Buyer who offers an appraisal waiver but does not have the extra money to bridge an appraisal gap. 

• Failure of a Seller to disclose material defects with the property (including title defects).  

• Unreasonable delays and failure to actively pursue obligations and duties (for example, a Buyer who has not opened a loan application weeks after the contract is finalized, or a Seller who makes no arrangements to vacate the property by the agreed closing date). 

• Simply changing your mind about wanting to sell / buy. 

“As-Is” is a legal term which simply means a Seller will NOT be in breach of contract for refusing to make repairs requested by the Buyer. Contrary to popular belief, “As-Is” does NOT mean a Buyer is required to buy a house regardless of its condition following an unfavorable home inspection. In most cases, the Buyer is still entitled to conduct the usual home inspections and can terminate the contract if there are material defects which cannot be negotiated between the parties. 

The scope of permissible inspection requests and the Buyer’s right to terminate are specific to your contract. One common limitation (typically outlined in the Buyer’s offer) is “structural and environmental only.” In this case, the Buyer would ONLY be permitted to terminate if there are material structural defects (e.g., extensive termite damage, cracks beams in the basement or attic) or environmental defects (e.g., mold, asbestos, radon or soil contamination) AND the Seller refuses to address / repair / remediate those items. In this same example, if the home has no structural or environmental issues but there are issues with the HVAC system, plumbing, etc., the Buyer CANNOT terminate the contract and will be required to proceed notwithstanding those defects. Be sure to review your inspection limitations with our office and your realtor before concluding Attorney Review – these limitations cannot later be changed! 

The New Jersey statutory definition of material defect is “a condition or functional aspect of the property that substantially affects the value, habitability or safety of the dwelling but does not include merely decorative, stylistic, cosmetic, or aesthetic aspects of the system.”

In the context of a real estate transaction, this will include structural defects, issues with the major systems (plumbing, electric, and HVAC), environmental concerns, and the broader catch-all “health and safety hazards.” 

Cosmetic Defects – e.g., discolored / chipped paint; stains on tile; scratches on hard wood floors; sidewalk cracks.

Upgrades –e.g., your inspector recommends a 200amp instead of a 100amp electric panel; you need a different grade or size of attic insulation for more efficient heating & cooling; three-prong outlets instead of outdated two-prong outlets. 

Systems that are in working order but past or nearing average life – e.g., Your inspector states the hot water heater is 15 years old and should be replaced as it is past its average life expectancy, but is properly functioning; Your inspector advises you to budget for a new roof as the existing roof appears to be 20 years old and nearing its average life expectancy. As long as these items are in working condition, a Buyer cannot require a replacement or a credit for replacement.   

Normal maintenance – e.g., leaves and debris need to be cleaned from the gutters; HVAC filter requires replacement; chimney should be swept. 

Assuming you are the Buyer and received your home inspection report, my office will ask you for a list of items you wish for the Sellers to remedy prior to closing. If my staff believes you are over-reaching or that your requests are not appropriate, we will counsel you to focus only on material defects as described above. We will prepare a repair request letter for your final approval before sending it to the Seller’s attention.

If you are a Seller, all reports and correspondence received will be sent to you for review and comment. We can work through the requests together and come up with a reasonable response, with the goal of keeping the Buyer engaged and in contract. 

The home inspection report may recommend further investigation or inspection (e.g., chimney inspection, mold analysis), which is the responsibility of the Buyer. Either party may obtain quotes or estimates for repairs to present during inspection negotiations. If you are a Buyer, it is important to schedule your inspections immediately upon conclusion of Attorney Review, in the event additional time is needed for these follow-up visits. 

It is important for each party to put themselves in the other’s shoes – if you were a Buyer, would you accept these active plumbing leaks and the resulting mold? If you were a Seller, would you prioritize a ripped window screen, or would you think the Buyer is simply nit-picking?

Maintaining an objective perspective during inspection negotiations can make the process smoother and encourage a mutually acceptable resolution. 

The Seller’s response to inspection requests could be that they will address all issues, or that they will address none of the issues, or something in between. In lieu of repairs, the parties could agree on a monetary credit to resolve some or all requests.  Inspection negotiations are done primarily via attorneys, but it is not uncommon for the realtors to discuss these issues directly. The objective of all parties will [hopefully] be to negotiate a mutually acceptable resolution, although this is not always possible and the inspection phase is where many contracts “die.” If the Seller declines to address / repair / correct material defects, the Buyer may have the right to cancel the Contract pursuant to the inspection contingency. This right of termination is not applicable to all Buyers, as further discussed above. 

All home inspection reports must be prepared by a licensed NJ home inspector (not a friend or family member, no matter how knowledgeable) and should include a Wood Destroying Insect (WDI) inspection. If the property is a free-standing structure, we recommend having an oil tank sweep AND a sewer line inspection (not needed for condos, etc.). If the property has a basement, a radon test should be conducted. Your home inspector may offer these as add-on services to be completed the same day as the general inspection, and we are happy to provide referrals if needed. 

Depending on the property characteristics and the results of the initial inspections, the additional inspections listed below may be applicable to your transaction. These are typically not offered by your general home inspector and must be separately scheduled. Referrals are available if needed. 

• Chimney

• Septic   

• Stucco / EIFS Siding

• Mold / Asbestos 

• Basement Waterproofing  

• Soil Testing 

• Private Well 

A survey is essentially a map depicting the general layout of the property and indicates the boundary lines and any improvements on the land (e.g., garage, driveway, fence, patio, etc.). A survey is prepared by a professional land surveyor to map out the land included in the property deed in detail, including information about any encroachments on the land, easements, rights-of-way, and potential zoning violations. 

In addition to providing a clear picture of the land you’re responsible for and where you can build, it provides conclusive knowledge of whether there are encroachments extending onto or beyond your lot lines. As with all other aspects of the property, once the closing occurs, the Seller is no longer liable for any survey defects. For this reason, we strongly recommend all Buyers obtain a survey prior to closing. 

While a survey is not generally required at the time of purchase, the town will need one if you decide to install or replace a fence / shed / house addition / patio / deck; and would be helpful in any disputes with neighbors regarding trees/ fences/ driveways potentially crossing over the lot lines. A survey typically costs $800-$1,000 depending on the size and shape of the lot. There is an extra fee to have "corner markers" placed on the lot

Generally, appraisal waivers are agreed upon between the Buyer and Seller during initial contract negotiations and prior to signing the Contract of Sale. For most transactions, the purchase price will be subject to approval by a Buyer’s lender and can be reduced if the property appraises for less than the sale price. An appraisal waiver, if agreed upon by both parties, will guarantee a certain sale price regardless of appraisal value.

With a full appraisal waiver, the Buyer commits to paying the full sale price notwithstanding a potentially low appraisal. A partial appraisal waiver, the Buyer is committing to pay a certain dollar amount above the appraisal value, up to the agreed-upon sale price. By offering an appraisal waiver, Buyers are representing that they have the liquid funds to bridge the gap between the appraised value of the property and the purchase price.

To put it simply, the answer is NO.  A Buyer cannot rescind an appraisal waiver once Attorney Review has concluded and cannot legally terminate the Contract if they can no longer produce the liquid funds at closing.  Moreover, a denial letter from Buyer’s Lender citing low appraisal as the reason for loan denial shall not override the contractual appraisal waiver.  If you waived the appraisal but do not have enough cash at the time of closing, you will be in breach of contract. Therefore, it is crucial you fully understand the implication of any appraisal waiver before concluding Attorney Review.

Title insurance is a type of insurance that protects property owners and lenders against financial loss due to defects in the title of a property. These defects can include mortgages from any owner in the chain of title, liens, encumbrances, undisclosed heirs, and other challenges that may arise in the chain of ownership. 

In New Jersey, title insurance is not legally required, but it is strongly recommended in ALL real estate transactions. While the state does not mandate title insurance, ALL lenders will require a lender's title insurance policy to protect their interest in the property. 

Here's an overview of the two main types of title insurance policies:

• Lender's Title Insurance: This policy is required by the lender (whether at the time of purchase or refinance) and protects the lender's financial investment in the property. It is usually based on the loan amount and decreases as the mortgage is paid off. Lender's title insurance does not protect the Buyer's interests.

• Owner's Title Insurance: This policy is technically optional but, for liability reasons, our firm will not agree to represent a Buyer who refuses title insurance. The insurance policy protects the property owner's right of ownership and pays to defend him/her in future legal actions which challenge that right. The amount of coverage will generally equal the sale price of the home and the cost is regulated by the State of New Jersey; whichever New Jersey title company issues the policy, the cost will be the same. The fee for title insurance is charged as a one-time premium and paid at the time of closing, but the coverage lasts as long as the owner or their heirs have an interest in the property. 

  The title insurance process involves a State and County records search to identify any mortgages, liens, or other potential issues with the property's title. If issues are found, they are typically resolved before the closing by the Seller; however, even with a thorough title search, some hidden defects may later emerge and title insurance provides coverage for these unforeseen issues. If the Seller is unable to clear title defects, the transaction will likely be terminated as a result and the deposit will be returned to the Buyer.