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Some Major Difference When Purchasing a House in New Jersey and New York


The Beginning:

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”.

Financing Contingency:

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:

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)

Closing Timeframe:

NY:  Approximately 60 – 75 days

NJ:  Approximately 45 – 60 days

Closing Procedure:

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!

Anthony Palumbo lawyer litigation expert

Anthony Palumbo, Esq.


A Refresher on “TIME OF THE ESSENCE” in Real Estate Transactions


Typically, residential real estate contracts contain an “on or about” closing date. This is not a firm date, strictly enforceable against either party, but rather, a best estimate and the goal of the parties, at the time that the contract was entered into. Clearly, issues such as title exceptions, mortgage and finance contingencies, as well as the availability of the parties, their counsel, bank attorneys, title closers, etc., all lend uncertainty to trying to predict a precise closing date at the time of contract. Thus, a reasonably estimated date is picked (usually 60-90 days out from the contract signing), with both parties knowing it is subject to change, etc. Neither party can sue, or default, the other, for not being able to close on the “on or about” date.

While customarily a mutually agreeable closing date is eventually scheduled, if one party is resistant, or fails to confirm a closing date, the other party has two options: first, demand a contract rider or amendment, where both parties agree on a firm date, in writing. This language would say that “time is of the essence” as to the new closing date; this makes the closing date (referred to as “law day”) and it becomes a strict date that must be complied with, and is no longer a flexible “on or about date”. If either party fails to close title on such day, they are in default of the contract.

The second option is what is commonly referred to as a “Time of the Essence” Letter (TOE Letter). This is a unilateral designation by one party, of what the closing date will be. Because both parties are not agreeing to this date, and the date is being chosen solely by one party, the Courts have, through common law and case-law precedent, put a number of conditions on TOE Letter closings.

First, the TOE Letter must give reasonable advance notice of the closing date. Clearly, sending a letter today, which demanded that the party close tomorrow, would not be reasonable. While there is no hard and fast rule as to what is “reasonable” (case-law dictates that will be deemed “reasonable” shall be determined on a case by case basis, depending upon the facts and details of the transaction, the past conduct of the parties, etc.), thirty-days’ notice is generally used. The period can be lengthened, or shortened, as circumstances require, but the Court would look to each individual transaction to see if the advance notice period given in the letter was objectively reasonable.

Second, the TOE Letter must expressly advise the party who receives it of what the consequence will be for failing to close on the chosen date. If it is a buyer receiving it, for example, the letter should state that they will lose their deposit, and that the seller shall retain the deposit as liquidated damages, and that they will also lose the opportunity to purchase the property. If it is a seller receiving the letter, for example, the letter would typically say that the buyer can sue to reclaim their deposit (and/or additional damages), or for “specific performance” of the contract.

Third, the TOE Letter must be given in good faith. The party receiving the letter must have no valid defenses to failing to close, and the sender should not send one if there is an issue that they know the receiving party cannot fix, merely to apply leverage, and cause a technical default. (For example, if you were aware the other party needed a week to be able to close, and you were to send a TOE Letter demanding a closing in six days). In another example, a seller who has an illegal condition/ alteration at the property, cannot force the purchaser to close, merely by serving a TOE letter, and attempting to leverage them to close, by attempting to put them in a position of having committed a pre-emptive default; in that case, the purchaser may or would have a legitimate defense, or reason not to close, under the contract, and the TOE Letter would ultimately be ruled to have no effect. There is case-law that generally provides that reasonable adjournments or good faith attempts at rescheduling an “on or about” closing date should occur before resorting to a TOE letter.

Fourth, on the chosen date, the party sending the TOE letter must be ready, willing and able to perform their part of the transaction also. The TOE designation becomes a double edged sword that can cut against either party. So the sending party must be assured they will be able to perform their obligations to close on the set date, lest the other party appear to close, and the party who sent the letter is not, and be held in default themselves. While not often used, contract riders, as opposed to TOE Letters, can make “Time of the Essence” as to one party only. This alleviates the obligation of one party to be “ready, willing and able” on a date certain, where failure to be so could cut against them. They will ultimately have to be “ready, willing and able” in order to default the other party, but, they alone have the power to adjourn if they are not, while the other party would be held to the date. Naturally, since this only protects one party, it is not too often agreed upon by both sides.

On the closing day, the party who sent the TOE Letter should have everything in place to close title, even if they are reasonably certain the other party may not appear. For a purchaser, this may mean having their lender/ lenders counsel present, or at least on stand-by, ready to appear if the other party does appear, ready to close. A title closer should also be present, and the funds to consummate the transaction also available and ready to disburse. For the seller, keys should be available to deliver, and a Deed prepared, ready to be executed, along with any other transfer tax documentation, or other necessary documents. Many attorneys will arrange to have a stenographer/court report appear at the TOE closing, to memorialize the identity of the participants, to show that all necessary parties are there (other than any defaulting parties who do not appear), and that everything necessary for the closing to occur is ready; sometimes even marking documents “for identification” by the court reporter, to accompany the transcript. This is not strictly required, however, it is useful if the matter results in litigation, as good evidence of the parties default in appearing, and that everything else was ready in order for the closing to occur.

If you have any questions about “Time of the Essence” closings, or if you have clients who find themselves in a pre-litigation scenario, and need assistance, please, do not hesitate to contact our offices. We are here to help!

Jeremy Panzella nyc lawyer specializing in litigation, real estate law, and land use
Jeremy Panzella, Esq.

Is a Short Sale Better Than a Foreclosure?

real estate for sale sign selling house short sale article

Is a short sale a better alternative than losing your home in a foreclosure?

Daniela Guerrero associate attorney real estate, personal injury, litigation

Daniela Guerrero, Esq

A “short sale” is term that refers to a sale of real property where the sales price, after the expenses of the sale are deducted, is lower than the amount owed on the property by virtue of mortgages, and other liens. A short sale is only possible if the lenders and/or lienholders with respect to the property, agree to accept an amount lower than what is actually owed on the debt.

In a typical short sale scenario, the homeowner initiates the transaction by accepting an offer from a buyer and then having a Contract of Sale prepared and signed by all parties. A good contract will state that the sale is subject to the approval of any creditors with liens or interests in the property, including, their approval of the sale price, which could be below the appraised value of the property. In order to approve the short sale, the creditors will ordinarily request a copy of the contract of sale, demonstrating the sales price, an appraisal or broker’s analysis demonstrating the property value, a broker’s listing agreement stating the broker’s commission to be paid (if any), and a proposed settlement statement showing the closing costs associated with the sale. They may also request tax returns, bank statements, and financial information from the homeowner, to demonstrate a  financial hardship, and inability to pay the entire amount owed.

To qualify for a customary short sale, the Seller and the property must meet certain requirements such as: the net proceeds from the sale must be lower than the remaining balance on the mortgage (net proceeds simply is the sale price less all closing costs [e.g. legal fees, transfer taxes, realtors fees]), the seller must be close or already in default, the seller must show long-term financial hardship, and the seller must lack substantial assets that could be used to offset shortfalls. However, please note, that even if all those requirements are met, it does not guarantee that a short sale will be approved. The bank will collect all proceeds from the sale which are not used to satisfy closing costs, or other liens. The homeowner will almost always not be permitted to retain any proceeds from the sale.

There are numerous reasons why a short sale may be more beneficial and a better alternative to losing your home in a foreclosure sale. At times, the Lender will agree with a short sale because it is better to recover part of the mortgage loan in liquid funds from a closing, than to take the risk of selling the property at an auction, where the recovery could be much less, and could include multiple additional expenses to the foreclosing bank, including transfer taxes, additional legal fees, paying a broker to list the property for sale if the bank reclaims the property in foreclosure, maintaining the property while it being marketed for sale, and incurring ordinary property expenses like real estate taxes and insurance. It is beneficial for a homeowner in a few ways. First, most lenders will regard a recent foreclosure as equal to a recent bankruptcy, thereby reducing your ability to obtain a mortgage in the future. If you plan on owning another home in the future, you may want to avoid a foreclosure on your credit report. A foreclosure may be quite damaging on your credit report, and may stay on your credit report for up to seven years. Thus, it will be quite difficult and take time to qualify for a new mortgage. While a short sale can also be reported on your credit report, it is more likely to be reported in a less damaging way, which may will help you be a more attractive borrower, though you will still need to wait some time before becoming eligible for a new mortgage.

Another benefit, of a short sale is that creditors typically accept the proceeds of the sale as a settlement, and will give up the right to sue you to recover amounts unpaid after a short sale delivers less than the total outstanding loan, although this is not always the case. Unless the Lender agrees not to pursue legal action, it can file a lawsuit to recover the difference of the unpaid loan balance. If the Lender agrees to a short sale, you must be sure to obtain an agreement from the Lender that it will not pursue legal action to recover the unpaid loan balance after a short sale. This is why is it very important to have appropriate legal representation when involved in a short sale transaction.

In addition, in most cases the Lender will consider any portion of the forgiven debt as regular income to the borrower and will issue a 1099 for that amount to the IRS – meaning that the homeowner will have to pay income taxes on the forgiven amount. This is why it is very important to discuss the tax implications of a short sale with your accountant.

It is very important to get sound legal advice before entering into a short sale transaction, or any other foreclosure alternative. At Menicucci Villa Panzella Calcagno PLLC, we have the experience and legal knowledge to help you find the alternative that’s right for your situation, and to help you achieve your goals.

Why do I need a property survey?

Why do I need a property survey?

Anthony Palumbo lawyer litigation expert

Anthony Palumbo, Esq.

One of the most frequent questions I receive from many of my clients who are purchasing a home is, “Why do I need a survey of my property?” Whether it is a first-time homebuyer or not, this question has become more and more common. The reasons why I hear this question asked frequently are usually the same. The mortgage lender does not require a survey for the closing, the buyer wants to avoid the cost for a new survey, and the cost and delays that might arise waiting for the survey to be completed. Despite these reasons, a homebuyer should get a survey done prior to making any purchase of real estate.

What is a Survey?

The process of surveying real property has been around for thousands of years and has been the cornerstone for identifying who owned what parcel of land. Simply put, a survey is defined as a map or plan of a property with detailed descriptions and measurements of the boundaries and any improvements, and restrictions that are contained within those boundaries.

If you are buying a property, the survey company will research the property and prepare a survey map which will show the boundary lines around your home and parcel of land and any improvements on the property and their dimensions and locations, such as: buildings, patios, pools, garages, and driveways. Because most improvements are required to be located a certain distance from other improvements and property lines and filed plans; permits and certificates of occupancy usually limit the size of the improvements. The information contained in a survey is vital for a buyer to determine the legality of such improvements. A survey will also display whether or not any of your improvements might encroach upon your neighbor’s property that may cause legal disputes, and the existence of any easements over said property. Basically, a survey will reveal if the legal description of the parcel of land correctly matches the outline of your property.

If you are selling a property you may have to provide the buyer with an up-to-date survey of your property. This can help provide the buyer confidence in their purchase, verify the size and expanse of their new property, and help avoid later legal snafus that can arise from an inaccurate property description.

So, the answer to the question “Why do I need a survey?” is a resounding YES. A survey is fundamental to the ownership of property. However, as previously mentioned, a client might claim the following reasons for not needing a survey:

“The mortgage lender does not require a survey.”

About twenty years ago, most lenders required that the borrower/ buyer had a survey that was updated within the last ten years, but since then that requirement has waned. Title insurance companies still insure lender’s mortgage priority and other interests, while accepting or excluding the need for the survey. However, that exception to the policy while protecting the lender’s interest doesn’t protect the homebuyer’s interest. Although the lender might not require a survey before closing on the property, if there are any boundary line disputes or issues with the legality of any improvements on the property, they are the buyer’s responsibility. Regardless, if any of these issues exist your mortgage payment will still be due and you also might have a problem selling the property in the future.

“I do not want to spend the money on a new survey.”

The cost for a survey is relative and the purchase of a home is usually one of the biggest investments of a lifetime. The cost of a survey preparation is relatively low in comparison to the issues that can arise when making the investment without a survey.

The average cost of a new survey for most homes in New York and New Jersey is approximately $800.00 to $1,200.00 in 2018. The cost of a survey varies depending on the lot size, detail of the survey, and other factors.

A homebuyer has the option to price and order his own survey. Most attorneys are not going to have the time to make a cost analysis of local surveyors. Typically, a law firm will have two to three local surveyor companies that they recommend working with, or an attorney might just rely on the title company to choose the surveyor. However, a homebuyer has the ability to easily shop for these services online. Keep in mind, as can be with all professionals, especially when looking for services on the Internet, not all surveyors are the same. The homebuyer should at the very least, consider your attorney’s recommendation for a surveyor.

If a homebuyer decides to order his own survey then they should advise their attorney at the beginning of the process to avoid duplicating the buyer’s costs.

“Getting a survey might delay my closing and that delay might cost me additional money.”

Most attorneys do not order a survey until the buyer has a Mortgage Commitment Letter and the title is “clear”. The reason for this is that the cost of survey preparation is not contingent upon anything but the work performed. So, regardless if the buyer actually closes or not, they are still responsible to pay the surveyor for work performed. In order to prevent buyers paying for surveys on homes they do not purchase, attorneys only order the survey when the closing is imminent, the title is clear, and the lender has committed to finance the purchase. Some attorneys collect the survey cost upfront from the buyer and explain to their clients that the cost of the survey may be forfeited in the event that the transaction does not close for a variety of reasons. Note, this can be the same as appraisal fees and inspection costs, and considered as part of the homebuyer’s “due diligence” cost. Other attorneys completely put the
onus on their client to order and pay for their own survey prior to closing.

So if the attorney is waiting for the title to be clear and the lender to issue a commitment letter before ordering a survey, then logic dictates that the survey preparation might delay a closing date. Such a delay might cause the buyer to incur additional costs (e.g. interest rate lock extension fees). Such a delay should typically take two weeks-time, and as the survey is so important to home ownership, the delay and any costs related to it should be considered; but should not be subordinate to getting a survey.

In conclusion, although mortgage lenders, realtors, and loan officers might be advising that a buyer does not need a survey to proceed to closing, attorneys will always advise that a buyer to get the survey regardless of cost, delay, or mortgage company. It is an important component in a homebuyer’s due diligence and when you make such a sizeable investment, the cost or delay is negligible when compared to the benefits a survey provides a landowner.

If you have any questions for Anthony Palumbo, Esq. or the Menicucci Villa Cilmi PLLC team about the legality of land and home surveys, or purchasing or selling a home in New York, call 718-667-9090 today!

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