The Role of a Lawyer in a New Jersey Real Estate Closing

April 3, 2013 Paul A. Sarcona, Esq.

The role of a lawyer in a real estate transaction is to provide protection for his client and ensure that ownership is transferred free and clear of all issues. A real estate attorney is trained to handle real estate-related legal issues. You have the right to hire your own real estate attorney to represent your legal interests in a transaction.

Entering into a Contract

A buyer and seller come together to negotiate the purchase and sale of real estate. Usually, buyers and sellers are introduced to each other with the efforts of a real estate agent. The State of New Jersey is split into two regions in order to determine whether an attorney is involved. Approximately the area of Ocean County to the northern part of the state, there is usually attorney representation.

In New Jersey, real estate agents are permitted to prepare standard residential real estate contracts. A realtor prepared contract contains generally acceptable and standard language to all parties. Please remember that there are generally no tailored provisions to the benefit of any one party, and every scenario is different.

Attorney review period

The buyer and seller are permitted to present a contract to an attorney. An attorney can make amendments to the contract of sale. A buyer and seller have 3 business days from the date a fully signed contract of sale (that is prepared by a realtor) in order to either cancel the transaction or make important changes to the contract of sale, or do nothing and let the contract stand “as written”.

What really happens? Once, an attorney sends a disapproval letter, the deal is treated as though it has been terminated. Essentially, the contract is terminated but may be revived subject to the changes that the attorney proposes.

Satisfying Contingencies

In order for a closing to occur, there may be contingencies that must be satisfied prior to a deal being deemed firm. A contingency means that an event must occur before the event of a happening, i.e., if your contract is contingent upon mortgage commitment, you must obtain a commitment before a closing can occur. Two typically used contingencies are as follows:

1. Mortgage Contingency

Generally, a contract is contingent upon a buyer being able to obtain a mortgage commitment. This contingency permits a buyer a given amount of time, usually 30 to 45 days, in order to obtain a mortgage commitment. In the event, however, the buyer does not obtain a mortgage commitment within that time frame or is denied financing (depending on the contractual language agreed upon), the contract may be cancelled and the buyer will obtain a full refund of the deposit money.

Once a commitment is issued, the deal becomes similar to an all cash transaction, that is to say, you must purchase the house irrespective of the fact that the lender fails to fund the loan for any reason. Therefore, choose your lender carefully.

During the 30-45 day period, your lender will be requesting from you certain documentation that will be used to evaluate your creditworthiness and qualifications as a borrower, i.e., pay stubs, bank statements, tax returns. There may be certain conditions that the bank may require of you, i.e., pay off debt or produce letters of explanation for large deposits or derogatory credit, or sign gift letters.

2. Home Inspection Contingency

A qualified home inspector is hired to ensure that the property you wish to purchase is evaluated for visual defects, i.e., defects with the structure or mechanical systems or the existence of wood destroying insects.

In some cases, the attorneys for both parties may be called upon to re-negotiate the contract of sale (sometimes to include repairs that are to be performed by the seller or decrease the purchase price) with respect to items addressed in the home inspection report.

Municipal Certifications

Depending on the township you purchase in, a seller may be required to obtain a continued certificate of occupancy and/or a smoke detector inspection. Sellers are required to obtain this documentation and real estate agents sometimes assist in this process.

Title Insurance

After contract contingencies are resolved, a title insurance company is hired to prepare a commitment of title, which is an examination of the history of the property in the public records. The commitment of title usually discloses any defects in the chain, including, the existence of judgments, liens, and mortgages. The property must be conveyed to a buyer free of defects.


A survey of the property is usually required on all real property. A survey is a map of the property, as determined by the opinion of a surveyor, at a moment in time, which discloses where improvements lie in comparison to the property lines.

The attorneys for both the buyer and seller review the commitment of title and survey in order to eliminate any issues that would adversely affect the property.

The Closing

Once all the items mentioned above, as applicable, are completed, a closing can be scheduled. At that time, the parties and attorneys (subject to the title company’s approval as to clear title) mutually agree for a time and place where all parties can appear for the closing of title.

Shortly before the closing date, the lender will prepare the mortgage documents and a list of costs associated with the mortgage. A closing statement is prepared by either the title company or the attorney.

At the closing of title, once the deed is transferred, the buyer takes ownership of the home.

Filed Under: Real Estate