Whether you are buying a new home, selling your existing residence, or involved with a commercial matter, a real estate transaction is most likely one of the largest and most stressful financial transactions you will ever make. Ineffective negotiations can spoil a deal, and a missed provision in a contract can cost you thousands of dollars, complicate your settlement, or necessitate expensive litigation. You can rely on the attorneys at D’Arcy Johnson Day to protect your investment and reduce the stress involved in this important undertaking.
Experienced Counsel to Guide You Through the Process
DJD offers legal services to our clients who are buying or selling residential and/or commercial property. The most important document in any kind of real estate transaction is the Agreement of Sale. This is the time when you should be sure to have counsel to guide you through the process.
A word of note: if you are intending on purchasing a property on one of the barrier islands, please be aware that FEMA has made recommendations for changes to the flood maps and establishing “velocity zones” which have been adopted by Governor Christie. This will significantly impact your cost of flood insurance. Therefore, we suggest that you obtain quotes for flood insurance even before entering into a contract of sale because the cost of flood insurance is not typically a basis upon which a contact may be terminated.
Purchasing Real Estate
DJD attorneys are here to help you understand and effectively navigate what can be a complicated, and confusing experience. When you meet with us, we will work with you to ensure everything is in order, including covering:
- The importance of deposits;
- Obtaining property and pest inspections to identify physical and/or environmental issues;
- Zoning issues;
- Boundaries and property lines;
- Title insurance;
- Mortgage and tax issues; and
- New construction and condominium considerations.
Selling Real Estate
When selling property, there are a number of issues DJD will make sure you properly handle and are aware of.
First, if you are not a resident of the State of New Jersey, as of August 1, 2004 and thereafter, you are required to either prepay or pay at the time of settlement a Gross Income Tax Withholding which applies to nonresidents on the transfer of real property. If the payment is made at the time of settlement, the estimated payment is determined by multiplying the seller’s gain times the highest Gross Income Tax rate of 8.97%. In no case may the estimated payment be less than 2% of the consideration paid. An additional form must be filled out when either prepaying the tax, or if making the payment at closing.
There has also been an increase in the real estate transfer tax. The most significant increase has been imposed on sales of more than $350,000.00. However, there may be other tax consequences and DJD will work with your accountant or tax professional to ensure these issues are addressed.
As a seller, you must also be aware of the deadlines provided for in the contract regarding inspections. Your obligations regarding repairs should be clearly addressed by the contract.
At closing, you will be required to sign a Deed which is the document that transfers title of the property to the buyer. You will also be required to sign an Affidavit of Title which states that you are over 18 years old, you are not in bankruptcy and, among other things, have the ability to transfer good and clear title to the buyer.
DJD will prepare the Deed, Affidavit of Title, and Seller’s Residency Certification. If there is an existing mortgage on the property, or any other line of credit, home equity loan, or judgments of record, these must be paid off at the time of settlement.
Whether you are a buyer or seller, your real estate agent plays a significant role in facilitating the transaction. The agents schedule settlement, confirm when deposits have been paid, schedule a final walk-through and communicate with the other party to address inspection issues or other matters which may arise prior to settlement. The title companies provide title insurance, obtain all pay-off information, prepare closing documents including the HUD-1 settlement sheet and facilitate the settlement.
Retaining experienced counsel is vital to successfully navigating this process, and DJD will work with you each step of the way.