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  • The Gill Group

8 Common Pitfalls in Real Estate Transactions

Tips for NJ Buyers and Sellers

By: Daniel J. Portuese Esq., Managing Partner of Portuese Law Firm LLC


Whether buying or selling, consummating a real estate transaction in New Jersey can be difficult to navigate without a good team behind you.  Realtors and Attorneys will perform different roles, while working together to achieve the common end goal.  While the objective of both the buyer and seller is to consummate the transaction timely, smoothly, and efficiently, some obstacles can sometimes burden the process.  While some issues are unavoidable, knowing some of the pitfalls and working closely with your real estate team can minimize the occurrence, as well as any impacts.  

 

As an attorney concentrating in the field of real estate law, I have seen and heard it all when it comes to a variety of issues that arise during the course of a real estate transaction. Based on that experience, I have reduced these potential pitfalls to the following seven issues, in no particular order, which are some of the most significant, in order to share them with buyers and sellers alike as they embark on their real estate transaction.

 

1.      Incomplete or Incorrect Information

One of the realtor's largest problems in conducting a transaction is receiving incomplete or incorrect information at the outset. Make sure all the paperwork—from items included in the sale to disclosures—is checked thoroughly for completion and filled out correctly. Without this simple step to verify with your realtor, sometimes this can result in delays, or may even be the source of unnecessary conflict and negotiation later in the transaction.

 



2.      Title Issues


Title issues unbeknownst to the seller or buyer can be discovered with a title search. Issues such as outstanding liens (including first or secondary mortgages and Home Equity Lines of Credit), disputed boundaries, or undisclosed easements are real threats to a smooth transaction. A careful search into the title requested by the Buyer’s attorney, and the purchase of title insurance at closing (required on lender transactions), will protect the buyer from future claims.  Seller attorneys will also review the known debts and liabilities of Seller’s in advance during attorney review, so being honest and overinclusive in those conversations will avoid hurdles that can delay closing.

 

3.      Financing Delays


This is also a critical area in which, if not managed with a sense of urgency and consistent follow up, problems can arise. Buyers should have the mortgage preapproved before seeing properties with the realtors and making offers, and should be aware of all of the lender's requirements and time frames, especially as they may be adjusted during attorney review. Sellers should confirm that buyers are financially qualified before accepting an offer to purchase to minimize chances of delays at closing.  On cash transactions, providing proof of funds is also a necessity so that the Seller will feel confident that the money is ready for the closing date.  If Buyers and Sellers alike stay engaged with their lender and monitor the progress of the loan, surprises are minimized.

 

4.      Home Inspections


Property inspections are critical to Buyers to ensure they understand the current condition of the home, as well as to reveal unforeseen issues.  If a major issue arises, it is important that attorneys and clients alike quickly and accurately convey the defects they are requesting be addressed. Buyers should do an in-depth inspection at the front of the process, and sellers might consider doing pre-listing inspections.

 

5.      Environmental Concerns


Radon, Underground Storage Tanks (UST) -primarily oil tanks - and contaminated soil are the significant environmental concerns that might have adverse effects on the property transactions in the State of New Jersey. In older homes and homes with basements this is especially critical.  Having a knowledgeable realtor and attorney familiar with the area you are purchasing will assist in guiding you on these inspections often done in addition to the base home inspection and wood destroying insect (WDI) inspections. It is also important to quickly address any issues that may arise for these types of issues.

 

6.      Local Compliance Issues


Both buyers and sellers must make sure their purchase or sale complies with all state and local laws, including those that might specifically impose various requirements in connection with the sale of a home, such as obtaining certificates of occupancy, smoke alarm/fire certificates or passing some other inspection required by a local jurisdiction.  Having a good real estate team to guide Sellers on this process, as well as ensuring you receive these approvals at closing is critical.  In addition, an Open Public Records Act request to the local municipality in advance of listing to ensure there are no delays later, or when Buying can ensure that there are no open/missing permits for the property as they will run with the property when sold.

 

7.      Negotiation Breakdowns


Negotiations can be a very sensitive part of any real estate deal. Misunderstandings or aggressive tactics can bring things down. It is important to maintain clear, open communication, working with experienced professionals who can offer sound advice and effective mediation and negotiation of key issues like the offer terms, inspections, and in preparation for closing.

 

8.      Closing Delays


Lastly, although it is always the goal to close timely on the closing date established at the end of attorney review, closing delays do happen.  This can be due to any of the problems above or perhaps logistical issues that come up with availability of movers, etc. Clear and consistent communication early and often in preparation for closing by your attorney and real estate team will help reduce instances of unnecessary delays.

 

When buyers and sellers navigate the maze of a New Jersey real estate transaction, knowing how to properly prepare and prevent these common pitfalls will greatly enhance the likelihood of closing quickly and smoothly. There are plenty of knowledgeable professionals, such as the team at the Gill Group and Portuese Law Firm LLC, who can guide and provide the needed support to effectively take on these challenges. Remember, forewarned is forearmed and proper preparation is the key to success in any real estate transaction.

 

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