NY: When an offer is accepted, the real estate agents prepare a “Deal Sheet” with the basic terms of the deal. Although sometimes referred to as a “Binder” this is not binding on either party. Once the Deal Sheet is completed it is then forwarded to the Purchaser’s and Seller’s respective attorneys and the Seller’s attorney will then draft a proposed Contract of Sale and deliver same to the Purchaser’s attorney. The attorneys will then negotiate the terms of the proposed contract, by either making changes to the form contract or adding a Rider. Once the terms are all agreed upon, and the inspections are completed, then the Purchaser signs the contract, provides a check for the contract deposit and then the Seller countersigns the contract, then it is considered “In Contract.”
NJ: When an offer is accepted, the real estate agents prepare a basic Contract of Sale to be signed by both the Purchaser and the Seller. That begins the “Three (3) Day Attorney Review” stage. Within three (3) days both parties will choose an attorney to represent them and review the contract. Typically one or both of the attorneys will “reject” the contract, but however approving it if certain terms are agreed upon, this is called the “Attorney Review Process” and the new provisions are added and agreed upon via the Attorney Review Letter. Once the terms are agreed upon, then it is considered “out of attorney review.” In the event either party does not retain an attorney, and the contract is not rejected, then the real estate agents’ form contract shall become binding after the passage of three (3) days.
NY: Contracts are “as is” and not contingent upon any inspections, therefore the Purchaser will usually get the inspections completed prior to signing the Contract of Sale.
NJ: Contracts are contingent upon inspections, therefore the Purchaser will typically get the inspections completed after the contract is out of attorney review. In NJ, it is recommended that the Purchaser in addition to the typical home inspection and termite inspections, they perform a “tank sweep” as the presence of abandoned underground fuel storage tanks is more common. Also, if the house is serviced by a well, then the law (and contract) requires that the Seller pay for and perform the test for potable well water. If the parties cannot come to an agreement in connection with the inspection results, then the Purchaser may choose to continue or cancel the contract with all deposit monies refunded.
Both: If any agreement for repairs or seller credits are made in connection with the inspections, then that agreement will be reduced to a writing, in the form of a “ Repair Rider”.
NY: Typically the Purchaser has 45 days from the date of the contract to procure financing.
NJ: 30 days.
This timeframe is called the “Mortgage Contingency Period.”
Both: If within the Mortgage Contingency Period, the borrower is denied a mortgage commitment, then Buyer can terminate and all deposit monies are returned. Or in the alternative, the Purchaser may then elect to waive the Mortgage Contingency and proceed to closing without financing.
Closing costs in NJ are generally less than those in NY due to two things:
- New York State Mortgage Tax (No Mortgage Tax in NJ)
- Title Loan Policy in NY is based upon the mortgage loan amount (Only cost $25.00 in NJ)
NY: Approximately 60 – 75 days
NJ: Approximately 45 – 60 days
NY: Prior to the COVID Pandemic all parties, including the title company and an attorney for the Lender appeared at the closing and signed their respective documents and delivered checks for closing costs and sellers balance check. This is considered a “traditional NY style closing.” However, since the pandemic, this style has been modified to a more “escrow style” closing procedure.
NJ: Generally, only the Buyers, the Buyers’ attorney and the title company (also acting as settlement agent for the Lender) appear at the Closing. Sellers provide all their signed documentation to the title company to hold “in escrow” until the conclusion of the closing. This is considered an “escrow style closing.”
If you have any questions, or if you have clients who need assistance, please, do not hesitate to contact our offices. We are here to help!