New Jersey Real Estate Closings: What Every Buyer and Seller Needs to Know

© 2024 Ibrahim Ahmed Law Group, P.C. All rights reserved. Original content — unauthorized reproduction prohibited.

New Jersey's real estate transaction process has several distinctive features — most notably, the mandatory attorney review period — that set it apart from most other states. Whether you are buying or selling, understanding the process from contract to closing will help you navigate the transaction with confidence.

The Contract of Sale

The process begins when the buyer and seller sign a contract of sale. In New Jersey, most residential transactions use the standard form contract prepared by the New Jersey Association of Realtors. The contract is typically prepared by the real estate agents.

Important: Signing the contract does not bind you immediately. New Jersey law provides a mandatory attorney review period.

The Attorney Review Period

New Jersey law (N.J.A.C. 11:5-6.2) provides a 3-business-day attorney review period after the contract is signed. During this period, either party's attorney can:

• Disapprove the contract — The deal is off, deposits are returned, no questions asked
• Propose modifications — The attorney sends a disapproval letter with proposed changes; the parties negotiate
• Accept the contract — The attorney confirms acceptance in writing

If neither party's attorney disapproves the contract within 3 business days, the contract becomes binding. The attorney review period is your opportunity to negotiate terms the standard form does not address — inspection contingencies, closing date flexibility, personal property inclusions, and more.

Inspections and Contingencies

After attorney review, the buyer typically has a specified period (usually 10–14 days) to conduct inspections. Common inspections include:

• General home inspection
• Radon testing
• Termite/wood-destroying insect inspection
• Well and septic inspection (for properties not on public utilities)
• Oil tank sweep (for older properties)

If inspections reveal significant issues, the buyer can negotiate repairs, a price reduction, or — if the contract provides — terminate the contract.

The Mortgage Contingency

Most buyers include a mortgage contingency — the right to terminate the contract if they cannot obtain financing on specified terms. The contingency period is typically 30–45 days. If the buyer cannot obtain a mortgage commitment within the contingency period, they can terminate the contract and receive their deposit back.

Title Search and Title Insurance

The buyer's attorney orders a title search to verify the seller's ownership and identify any liens, encumbrances, or defects in title. Title insurance protects against defects not found in the search. In New Jersey, both lender's title insurance (required by the mortgage lender) and owner's title insurance (optional but strongly recommended) are standard.

The Closing

At the closing, the parties (and their attorneys) meet to finalize the transaction. Key events:

• The buyer signs mortgage documents
• The seller signs the deed
• Funds are transferred (typically by wire)
• The deed is recorded with the county clerk
• Keys are exchanged

The attorney reviews the closing disclosure, ensures all liens are satisfied, calculates prorations (property taxes, HOA fees), and confirms the title is clear before the deed is recorded.

This article is for general informational purposes only and does not constitute legal advice.