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The Process of Selling a Home
When does attorney review begin?
Attorney review begins once the contract is signed by both parties and the fully executed contracts are distributed to both parties. It is a three day period, and weekends do not count. You should make sure that your REALTOR® immediately faxes the contract to our office. If the REALTOR® does not, you should. The attorney review period runs, even if your attorney has not received the contract. Remember, the time periods runs from the date the contracts are signed, not the date that the attorneys received the contract.
What about the deposit?
Commonly, the buyer will post a deposit of $1,000.00 upon signing the contract and additional deposit monies will be given between 10-14 days following completion of attorney review. Many contracts are drafter with variations involving the amount of the deposit and the timing of the deposit. The deposit is typically held by the sellers attorney or the buyers attorney. Also, due to today's low interest rates, the deposits are not usually kept in interest bearing accounts.
What certificate do I need to close?
Certificate of Occupancy: You need to check with the municipality in which you house is located. Some municipalities require that the seller obtain a certificate of occupancy prior to closing and some do not. You cannot close without this certificate, if it is required by the municipality.
Smoke Detector Certificate: New Jersey State Law mandates that when you sell your home you must obtains a smoke detector certificate. This must be obtained whether or not your municipality requires the issuance of a Certificate of Occupancy. In most municipalities you must schedule an appointment with the fire code official to inspect your home to determine that you have the requisite number of smoke detectors and that they all work. These appointments cannot be scheduled last minute. We strongly suggest that you schedule the appointment as soon as attorney review is completed. We will not close your transaction if a smoke detector certificate has not been obtained, since it is against the law to close without it. Also, check to see how long the smoke detector certificate is valid. If the closing is delayed, you may have to reapply and obtain a new certificate.
Carbon Monoxide Certificate: New Jersey State Law also requires that you obtain a carbon monoxide detector certificate. like the smoke detector certificate, the carbon monoxide detector certificate is administered at the municipal level. All of the comments made regarding the issuance of a smoke detector certificate apply to the issuance of a carbon monoxide detector certificate as well.
Fire Extinguisher Law: Effective, November of 2005, New Jersey State Law requires that at least one portable fire extinguisher, rated for residential use and no larger than ten pounds, be mounted within ten feet of the kitchen area and not more than 3 feet from the floor. Like the smoke detector certificate and carbon monoxide certificate, this is administered at the municipal level.
Title and Survey
The buyer's attorney will order the title search and survey, and the buyer will pay for those. However, you should try to provide us with a copy of the title policy and survey you obtained when you purchased your home. We will in turn provide the buyer's attorney with copies of the title and survey. This will speed up the title search, and will also help in resolving certain title problems that might arise.
Will we close on the closing date set forth in the contract?
The closing date in the contract is a target date only. There is no guaranty that your closing will occur on that exact date set forth in the contract. Likewise, the exact time of the closing is usually established a day or two before the closing.
What do I do with the utilities?
The utilities should be switched to the buyers name as of the closing. The REALTOR® can assist or guide you in this process. Do not turn off the utilities completely, because the buyer has the right to test the water and electricity at the walk-through inspection and if services have been turned off, this is not possible and will delay the closing.
I prepaid the real estate taxes and/or sewer charges, What do I do?
When the tax and sewer searches are obtained, the buyer's attorney will see that you either pre-paid for these items (in which case the credit will likely be in your favor) or that you did not pay for the current period (in which case credit will probably be in favor of the buyer). We suggest that if payments are made for real estate taxes and/or sewer, they be made well in advance of the closing. Do not make any payments within a 3 week period prior to closing, but do make sure that all payments are made in a timely manner to avoid the imposition of interest or late penalties. If you make payments shortly prior to closing, you run the risk that they will not be posted in a timely manner, and that you will not received the appropriate credit.
Since closing is coming up, should I pay the mortgage?
With regards to the payment on your current mortgage the general rule is as follows (assuming that your current mortgage imposes a penalty if the payment is not received by the 15th of the month):
- If you close prior to the 12th of the month, you do not need to make your monthly mortgage payment.
- If you close after the 12th of the month, you must make your monthly payment of you with to avoid the imposition of a late fee.
What happens with my existing mortgage?
The buyer's attorney will obtain a pay-off statement indicating the amount due on your current mortgage as of the closing date. The appropriate sum will be deducted from the closing proceeds and a check in an amount sufficient to pay off the mortgage will be sent by overnight delivery directly to your lender. The buyer's attorney will likely charge you a nominal fee for overnight delivery and a small fee for filing a discharge of that mortgage. Should you received a notice from your lender after the closing indicating that you load is overdue or not paid off, please contact our office immediately.
What happens to my line of credit?
If you have a home equity line of credit that is secured by the home that you are selling, that line needs to be closed. If there is any money die on the loan that will have to be paid off at closing like any other mortgage. Once a contract of sale is signed, you should not make any draws against this line of credit, and certainly do not make any draws after the closing.
When do I cancel my insurance?
Do not cancel the homeowner's insurance until you have confirmed with our office that the sale has been completed.
At closing, the seller is required to sign a certificate regarding their New Jersey residency status. Why?
Effective, August 2004, the Gross Income Tax Act requires nonresidents of New Jersey who derive income from that sale of real property in this State to pay estimated gross income tax. The deed will no be recorded unless this certificate is submitted and/or the proper estimated gross income tax has been paid. The seller may be subject to withholding under this Act. We urge all sellers to familiarize themselve3s with the certificate prior to closing and to alert is if they are considered a non-resident of the State of New Jersey. If you have any questions with regard to the Act's applicability, please consult your tax professional.