Do I Need An Attorney To Buy Or Sell My Home In New Jersey?
The simple answer is:
No, you do not need an attorney to buy or sell a home in New Jersey.
There is no legal requirement in New Jersey that an attorney must be involved in any stage of a real estate transaction.
The question you should really ask is:
“Should I be represented by an attorney?”
The purchase or sale a home is probably one of the largest financial decisions you will make during your life. There are complex legal decisions you have to make to successfully complete a real estate transaction and only a licensed real estate attorney is allowed to advise you.
What does a real estate attorney do for you in a real estate transaction?
Attorney Review
In New Jersey there is a 3-day attorney review period. During the attorney review period, your attorney goes over the contract prepared by someone else (like your realtor) or prepares a custom contract for you (common in for sale by owner transactions). The problem with the Standard Realtor contract is that it is so neutral that they doesn’t properly protect either side or perhaps they only protect the other side. To be honest, the most protected person in your realtor’s contract is your realtor. The reality is, these standard forms often are not designed to deal with the unique circumstances of your property or your particular situation. Your attorney will attempt to make the contract protect you and reflect your unique transaction by adding and removing terms to the form contract. We also review the contract with you so you understand your obligations and answer any questions you may have about the process.
Negotiate Inspection
For buyers, we will negotiate your repair requests or credit and ensure the Seller’s response is in compliance with your lender’s expectations. For Seller’s we make sure the Buyers aren’t asking for unreasonable repairs or beyond the scope of what was agreed to in your contract.
Review Financing Documents
For buyers, we review your loan documents to ensure they are aligned with what you were promised in your mortgage commitment. For sellers, we ensure that your buyers are promptly getting their financing in order to close in time.
Review Title Documents
For buyers, we review the title insurance commitment and title search results. Often times, there are exceptions to the title insurance coverage that may or may not be acceptable to you. For example you may not want a property that has an underground utility pipe running through it if you were planning on putting an in-ground pool in the backyard. We will also review the transfer documents from the seller to make sure they are legally and properly transferring the property to you.
Prepare Transfer Documents
For our seller clients, we prepare all the documents in order to legally transfer the property to your buyer. Your real estate attorney will prepare your deed, transfer tax documents, and seller’s affidavit. Without an attorney, typically your title company will complete these forms for you and may or may not understand the implications to their questions and the title company cannot advise you.
Informed Consent
Most importantly, your attorney empowers you to make the best decisions for you. Sometimes there is no “right” answer but your attorney can explain to you the legal pros and cons of each option. You will have your alternatives laid on the table so you can make the best decision. We don’t get a commission so we don’t have an incentive to force the deal through. We just want you to be confident and informed with all the important decisions you make from contract to closing.
Closing
Your real estate attorney will attend closing (or “settlement”) with you, explain everything happening there, review all the documents with you before you sign them and make certain that everything goes as planned.
Who Else is Involved In a Real Estate Transaction?
Real Estate Agent
Your real estate agent is the one who helps you find a home right for you if you are buying or can help you properly price your home and find a qualified buyer if you are selling.
Mortgage Broker
Unless you are purchasing with cash, a Mortgage Broker will likely be the person you seek out to obtain financing for your purchase. There are a number of different mortgage options from FHA, VA, to Conventional loan products. Each type of loan comes with different terms, interest rates, and requirements. A mortgage broker will be able to shop around for the best loan product for you. A good mortgage broker will also be aware of any special incentives in your area, for example, first time home buyer tax credits.
Home Inspector
Your home inspector will advise you whether the home you have selected has any major defects or potential problems. You can also opt to do additional inspections to evaluate the condition of the sewer lines, septic, well water, or the presence of environmental hazards such as mold, asbestos, and radon.
Property/Casualty Insurance Broker
Obtaining a homeowners policy for your real estate is critical. Your home is often your biggest asset and it needs to be protected. If you have a mortgage, the lender will undoubtedly require you to obtain homeowners insurance, and sometimes special insurance coverage such as flood insurance. However, if you purchase with cash no one will force you to purchase homeowners insurance so it’s your responsibility.
Title Company
A title company is an insurance company that protects against potential claims of ownership interests in your land. The title company will also ensure that you are receiving the property free of any liens placed on it - like the seller’s mortgage. This is another insurance that a lender will require you to have but if you purchase with cash, in an “off-market” transaction without an attorney or agent, it may get missed.
Accountant
A CPA can help you decide how much you can afford to spend for a home and can determine the tax effects of a purchase or sale on your unique circumstances.
Surveyor
A surveyor will work in connection with your title company to ensure there are no encroachments or illegal structures on the property.
Each of these professionals has their own unique, important role to play in the transaction. However, none are permitted to give you legal advice about the decisions you are making. Only your attorney can do that.
The Price of Peace of Mind
Consider your attorney like an insurance policy. If the broker prepares the contract for you, and everything goes smoothly - perhaps you didn’t need an attorney and you saved some money by not using one. However, if problems arise during the course of the transaction or at closing - the attorney is there to advise, assist and protect you - like an insurance policy when you need to make a claim. Without an attorney, even if things seemed to go smoothly, you may never realize something went against you because no one was looking for legal problems for you. We often hear stories of people realizing they paid too much at closing, gave too much in inspection requests, or agreed to terms that put them on the hook. These are all things an attorney can prevent.
In Conclusion
Do you need an attorney? Nope. (How’s that for honesty?!)
Should you have one? Only you can make that call but let us say that these two attorneys hired attorneys for their first home purchases before they specialized in real estate law.
Want to speak with an attorney about buying or selling real estate?
Book a free 15-minute consultation with one of our attorneys