Articles Tagged with “New Jersey Real Estate Attorneys”

Published on:

New Jersey real estate law is enormously important – the purchase and sale of a home are often the largest transactions in many people’s lives.  It is fraught with risks for both buyers and sellers.

For example, let’s say you’re buying a house and you receive a disclosure form from the sellers saying that there are no problems with thetax-appeal-thumb-170x127-38564 house, so you buy it and, lo and behold, there are significant issues.  Do you have any recourse?  The Appellate Division addressed that question in the recent case of Rogers vs. Conti.

Background: The Rogers vs. Conti Case

Published on:

At first glance, both commercial and residential New Jersey real estate transactions seem to be quite similar.  A contract is executed, title work must be checked, lender requirements must be met and the closing must be completed.  But, from the initial offer through closing on the transaction, there are significanthouse2-300x223 differences.

A commercial real estate transaction usually starts with a letter of intent.  This is a non-binding preliminary offer which states the basic terms of the anticipated contract and may include a non-disclosure agreement to give the parties security in the knowledge that the information provided will remain private.  Under New Jersey real estate law, commercial real estate contracts are not subject to the three day attorney review requirements which control residential real estate transactions.  Because of this, the contract will be prepared by one of the real estate attorneys and then negotiated and finalized before it is executed.    Once it is executed all parties are bound by its terms.

The contract will usually include due diligence clause during which the purchaser is permitted to conduct inspections of the property and the records related to it.  These Inspections can be quite detailed, particularly for industrial property, and can include structural and system inspections, environmental contamination inspections (which range from tank sweeps to phase 2 environmental inspections and compliance with the Industrial Site Recovery Act (known as “ISRA”), reviewing the history of the property, including the environmental history, investigating the zoning rules and regulations against the purchasers’ intended use of the property, performing title searches and searches with the New Jersey Division of Taxation to insure that the Seller is paid current on taxes, and examining records of income and expenses related to the property and/or its leases and tenants.  Once due diligence has been completed and the purchaser accepts the property in its current condition, or the parties agrees on repairs, remediation or credits in lieu thereof, the next step is purchaser obtaining approval of any financing, if financing is involved.

Published on:

Yes, New Jersey property law allows for the partition of the property, or if a partition is not feasible, then the forced sale of real estate which is owned by more than one person.

Often real estate is owned by several people. This commonly occurs through an inheritance. For example, parents, in their last wills and testaments, bequeath their real property to their three children in equal shares and do not include directives that the property be sold and the proceeds be split equally. During the administration of the estate, the executor transfers title to the property to the three siblings. Often, one of the siblings had been caring for the now deceased parents and is still residing in the property. Yet, the other two siblings want the property to be sold so that they can have their share of the proceeds. This can be a difficult time and can result in significant disputes and turmoil within the family. If the child residing in the property cannot afford to buy out the remaining siblings and cannot (or will not) qualify for a mortgage, the remaining siblings are often at a loss on how to proceed. New Jersey Estate law provides a mechanism to resolve the dispute, the partition action.

If a co-owner of real property refuses to sell the property and divide the proceeds of sale in accordance with each co-owners’ ownership interests, a partition action is the only method available to a person who owns a share of real estate as a tenant in common or joint tenant can separate his or her interest from the other co-owners. If the joint tenants are spouses this remedy is not available to them.) In order to start an action for partition, an action must be filed in the Superior Court of New Jersey, usually filed in the county where the property is located.

Published on:

Thumbnail image for stock-photo-17214080-mortgage-loan.jpgRecently, many potential home buyers have been seeking (“FHA”) loans. FHA lenders will finance up to 96.5 percent of the purchase price for a property, and many buyers are attracted by the low down payment required to purchase a home (3.5 percent). Additionally, FHA lenders will allow a seller’s concession in the contract for sale of up to 6 percent of the purchase price. For example, if a property is being sold for $400,000 with a 3 percent sellers concession, the seller will pay $12,000 of the buyer’s closing costs, and the buyer will only need to pay $14,000 up front on the purchase price. If a buyer is obtaining a conventional mortgage, it will typically require at least 10 percent down at closing, or $40,000. The purchase of a home with an FHA loan which is structured with a seller’s concession can enable people who would otherwise not qualify to be able to purchase a home.

Additionally, FHA loans are assumable, which means the loan can be transferred to a qualified buyer when the home is sold, thus avoiding the costs associated with a new mortgage. Additionally, the new buyers can retain the low rate provided in the first loan. However, the transfer of an FHA mortgage can be a more difficult process than actually obtaining a new mortgage.

FHA loans, however, have disadvantages as well. FHA loans require borrowers to pay significant mortgage insurance premiums. There is at the onset of the loan, a fee equal to 1.75 percent of the principal amount of the loan. This can be rolled into the mortgage, however it increases the monthly payment. The borrowers will also be required to pay annual mortgage insurance premiums which are significantly higher than the mortgage insurance premiums required by convention loan for loans which exceed 80 percent of the value of the property. Additionally, if an FHA borrower makes a down payment toward the purchase which is less than 10 percent of the value of the property, the mortgage insurance will be required for the life of the loan. If an FHA borrower makes a down payment which is equal to or greater than 10 percent, the borrower can cancel the mortgage insurance after 11 years.

On a conventional mortgage, once the loan to value ratio is below 80 percent, the borrower no longer has to carry mortgage insurance. In a rising real estate market, this can happen quite quickly. Moreover, usually, when the outstanding balance on the loan reaches 78 percent of the home’s value at the time of the mortgage, the mortgage insurance must be cancelled even if the current value of the home has dropped. For this option, the borrower must not be in default on the mortgage, having made his or her payments on time throughout the life of the loan, and the 78 percent value must be reached through normal amortization of the loan, not by additional unscheduled payments being made by the borrowers.
Continue reading

Published on:

1341259_cosy_rural_cottage.jpgStandard form real estate contracts in New Jersey usually contain a provision that a home is being sold in “as is” condition. This is essentially an indication that the seller feels that the contract sale price takes into consideration the condition of the home and the seller does not intend to make any repairs to the property. However, buyers generally have a right under a separate provision of the contract to conduct inspections of the property to ascertain its condition. If the buyer is not satisfied with the condition of the property for the contract price, they can often still request repairs and may cancel the contract if the Seller fails to make them. Further, these clauses often provide that the buyer accepts the property in its “as is” condition at the closing and the seller will not be held responsible for defects discovered by the buyer afterward.

This does not, however, mean that a seller can intentionally misrepresent the condition of the property. Courts have held that if a seller knowingly makes a material misrepresentation they can be found liable for common law fraud if the seller intends the buyer rely on the misrepresentation, the buyer does indeed rely on it, and the buyer suffers damages as a result of it. If this occurs, the buyer may be able to cancel the contract or seek damages from the seller.

New Jersey courts have found that failing to disclose certain types of conditions will constitute material misrepresentations. If a seller fails to disclose a condition which is latent (not currently visible or obvious) and plays a vital role in the buyer’s decision to purchase the property, the seller may be liable for damages. For example, in Weintraub v. Krobatsch, although the buyers found the condition of a home acceptable during their home inspection, when they visited the property on another occasion they were able to see that the property suffered from an insect infestation. The inspection was during the day and the subsequent visit was at night. The buyers refused to close. As the insect activity only occurred at night, this was a latent defect which was not observable during the day. The court found that the failure to disclose this information to the buyers was an intentional and material misrepresentation, and therefore the buyer was permitted to cancel he contract.

Real estate brokers have responsibilities for not making misrepresentations as well. Arguably their responsibility is even greater than that of the seller if the condition is known to the real estate broker, as they can be subject to the Consumer Fraud Act. The New Jersey Division of Consumer Affairs publishes a property condition disclosure form which should be completed by a seller of real property. Under the Consumer Fraud Act, real estate brokers will only be liable for misrepresentations of sellers if they had actual knowledge of the condition or failed to make a reasonable inquiry as to whether the information provided was false. The reasonable inquiry can be satisfied by a home inspection report by a qualified inspector, the report of a governmental official, or by a seller’s property disclosure statement – provided the buyer is advised that the information came from the seller themselves. The seller’s real estate broker can also be held liable for the failure to disclosure a defective condition if it was a latent condition known to the broker, and the broker, intentionally concealed the condition with the purpose that the buyer would rely on the concealment of the condition.
Continue reading

Published on:

If you are in the market for a new home, you may not be aware of the legal principle of “procuring cause,” but many New Jersey realtors are painfully aware of the ramifications of it. In the swirl of open houses and realtors involved in finally deciding upon a home, procuring cause helps determine which realtor is entitled to profit from the sale.

New Jersey law acknowledges that more than one real estate broker may be involved in developing the interest of a potential buyer in a home, and that often “one reaps what another sows.” Ordinary services that do not result in a home sale are considered the cost of doing business. Procuring cause enters in when the broker brings together a buyer and an owner with “no substantial break in the ensuing negotiations,” at which time the broker is considered to be the “efficient cause of the sale” and entitled to a commission. Further, New Jersey courts have found that negotiations do not need to be uninterrupted if the broker can establish his or her continuity in bringing the transaction to a conclusion. But a broker may be denied commission if negotiations break off and the broker abandons his or her efforts or if there is a “substantial break” in the negotiations and the broker does not help conclude the transaction.

Understandably, what counts as a “substantial break” can be the source of controversy and even litigation. Courts have found that a potential buyer’s passivity does not necessarily equal purposeful abandonment. Also, a seller’s acceptance of different terms than those in the listing agreement does not interrupt procuring cause. Further complicating the issue are sales occurring after expiration of an extension period in an exclusive listing agreement. Some courts look for evidence of “meeting of the minds” between seller and buyer or otherwise evidence of bad faith in deciding whether to apply the procuring cause doctrine. The area can be thorny, and all sides need effective legal representation.

Procuring cause finds its roots in contract law and the equitable principle that a person should not be allowed to enrich himself unjustly at the expense of another. Courts look for evidence of notice that a real estate broker expected payment when performing services and have allowed brokers to recover for services even though a contract may prove unenforceable because of lack of agreement on essential terms such as the amount of the broker’s commission. Courts rely heavily on terms of contracts drafted between buyers and sellers and will try to enforce them first before looking to other legal principles.
Continue reading

Contact Information