Buying a Home at the Jersey Shore - What You Need to Know...The Contract and Contractual Provisions

Buying a home at the Jersey Shore – What You Should Know…The Contract and Contractual Provisions.

You’ve been out looking at homes with the real estate agent you selected, you’ve got your mortgage lender in place, and you’ve found the perfect home in the perfect community.
 
It’s time to make an offer!  While some agents representing bank owned properties, or builders of new construction homes require their own contracts for a home purchase, most contracts to purchase homes in New Jersey are standard, fill in the blank contracts, approved and supplied by the New Jersey Association of REALTORS® (NJAR).

I usually give my buyer clients a blank copy of the NJAR Standard Form of Real Estate Contract when we start looking at homes.  If your agent doesn’t do this, ask!  This will give you time to review the nearly 8 page document, and ask questions you might have.
 
Briefly, here’s a review of the important contractual provisions.  This summary is a guide to the standard contract.  Once you have a copy of your contract of sale, before it’s submitted to the seller, review each section with your real estate agent or an attorney.  Get answers to any questions you have at this time!
 

The Cover Page is a general notice to both the buyer and seller.  It again stipulates how the real estate agent submitting the contract is working, as a buyer’s agent, seller’s agent, disclosed dual agent or a transaction broker (representing neither the buyer nor seller).
 
It also outlines in the importance of using an attorney because the contract determines your rights, risks and obligations.
 
Here we run into a difference between north Jersey and south Jersey.  Attorneys are almost always used in north Jersey.  But once you get south, beginning in the southern sections of Ocean County, attorneys are seldom used.  (More on this in the next installment.)

Sections 1 through 3 of the Contract of Sale includes the sale price, buyer and seller information, the address and description of the property, the amount of your deposit (escrow), in whose account that money will be held, the amount of your mortgage, the mortgage commitment date, the type of deed and the closing date.
 
Section 4 requires the buyer to state he/she has the money (including the mortgage) to close the transaction.

Section 7 requires the seller to provide clear title and allows reimbursement to the buyer if clear title cannot be provided.
 
Section 8 is where the buyer and seller state how the property will be used (single family, etc) and that it complies with zoning ordinances.  This section also requires the seller to provide a Certificate of Occupancy.
 
Sections 9 and 10 outline the items included or excluded in the sale (refrigerator, washer, dryer, etc).
 
Sections 18 through 20 include inspection contingency clauses.  The first is Lead-Based Paint.  Any home built prior to 1978 requires the seller to provide a Lead-Based Paint Disclosure form.  If the buyer wishes to have an inspection or risk assessment, that is allowed at the buyers expense. There are strict time frames built into the contract for the inspection and/or risk assessment.  Be sure to review these with your agent.  Failure to comply with any of the dates in this section will forfeit your rights to negotiate a remedy.
 
Section 20 continues the inspection contingency clauses.  More specifically this section provides the time frame for a home inspection.  Again, there are strict time frames built in, and to negotiate repairs you must adhere to the built in time frames.  In the standard contract the only date you can set is the time frame for conducting the home inspection.  Providing the report to the sellers and requesting repairs, must be completed within the time frames in the standard contract or amended in the additional contractual provisions section of the contract.
 
Section 24 explains the attorney review process and Section 26 outlines the broker’s commission and again provides a declaration of business relations for the real estate agents.
 
Section 31 is of particular importance in southern Ocean County.  It outlines the seller’s responsibility for State mandated well testing and certification.
 
Section 35 is for additional contractual provisions.  This section can be used to clarify any of the previous sections, or to cover additional concerns the buyer may have.
 
This is a general review of some of the sections in New Jersey’s Standard Contract to Purchase, used in the sale of most single family homes in New Jersey.  Review the entire contract with your real estate agent and an attorney.

This Contract and Contractual Provisions report is the 4th in a 6 part series for home buyers at the Jersey Shore.

New Jersey Real Estate Agency Relationships
Lenders and Loans
Homes and Communities
The Contract - Contractual Provisions
Offer and Acceptance - Attorney Review
Closing