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What Are Your Rights as a Buyer or Seller During Closing?

house keys and contract signing

With the closing date in sight, you’re just a few steps away from finalizing the sale of a home. And as the big day draws ever near, certain questions may pop up in your head. Here, we answer six of the most common questions people have about the closing process:

BUYERS

But the seller didn’t declare something!

Your chosen house looked perfect on paper and during the open house – but then you discover that it had been the scene of a serious crime. You should know beforehand that sellers in New Jersey aren’t obliged by the law to declare details like this.

Sellers only need to show that the house is fit to live in and disclose whatever material defects the property has as well as whether or not changes made to the house were built according to code and approved by the municipality. If you do learn about a non-physical aspect of the house that you think might affect its desirability, however, you can ask the seller about it and they will be required to tell you what they know.

While many sellers these days will include intangible details like these in their disclosures, it’s still best to do your own due diligence before signing anything.

Can I look at the house before the move-in date?

Absolutely. A buyer’s contract usually permits a final walkthrough 24 hours before closing. This allows you to verify that the seller has already vacated the house, and has addressed all problems discovered during the inspection. What if you find additional issues during the walkthrough? Don’t fret – if you’re still keen on buying the house, just delay the closing date until all problems are resolved.

But there’s a lien on the house’s title!

After closing on a home, the title will be transferred to you – unless there are encumbrances against the property. To wit, an encumbrance is an interest or right to a property by someone other than the owner, such as a contractor who never got paid for renovation work. It is the seller’s duty to ensure that their house if free of such obligations. If an encumbrance is discovered, you can claim breach of contract and cancel the purchase.

SELLERS

Can I still accept other offers?

At the back of every seller’s mind is the question: “Could I have asked for more money?” As such, many consider entertaining offers from other buyers, who might be willing to pay more. Luckily, you can still talk to other buyers as long as no contract to sell has been drafted and signed. But once there is, you’re legally obligated to sell the property at the agreed-upon price.

Uh-oh, the buyer couldn’t get financing…

There are many reasons why a lender doesn’t grant a mortgage, but one thing’s for sure: if the buyer’s financing falls through, so does your agreement to sell. If they can’t find the money before the indicated closing date, you have every right to entertain other offers. Furthermore, you can also walk away if the buyer’s financing changes from one type to another, e.g. from a conventional to an FHA loan.

The buyer got cold feet. Can I keep the deposit?

An earnest money deposit is a sign that the buyer is serious about purchasing your property. But what if they get cold feet and bail out of your agreement? Do you get to keep the money as an “inconvenience fee?” In general, yes – provided you can patch any contingency loopholes that allow a buyer to back out of the sale without parting with the deposit. To do so, however, you’ll need to talk to your real estate lawyer.

These are just a few of the many questions buyers or sellers have about the closing process. If you need more information, get expert advice from one of New Jersey’s top Realtors: Cindy Pagnotta and the team at Pagnotta Homes. Just call 908.436.7947 or e-mail info(at)pagnottahomes(dotted)com today.