Decluttering the Obstacles That Slow Down a Real Estate Closing in New Jersey

The Closing Is The Last Link in The Chain, But Different Circumstances May Postpone the Final Execution of a Transaction.

You have searched high and low, weighing the pros and cons of each house you visit. You finally find the one you can’t live without. You have been approved for a mortgage, and everything is ready; now comes the closing. A purchase and sale agreement, also known as a real estate contract or contract of sale, is a legally binding document that outlines the terms and conditions of a real estate transaction between a buyer and a seller. This contract typically includes information such as the purchase price, the closing date, contingencies (such as financing and inspections), the parties’ names, and other relevant sale details. While the closing process ideally takes up to 60 days, it can vary significantly depending on the type of financing, market conditions, and other factors. Cash deals may close faster, while more complex transactions could extend to 90 days or more.

The purpose of the purchase and sale agreement is to ensure that both the buyer and the seller understand the terms of the transaction and to provide a framework for the sale to proceed smoothly. Unlike in other states, in New Jersey, it’s customary and highly recommended to have attorney involvement in the process. Real estate agents generally use standardized forms approved by the New Jersey Association of Realtors, while attorneys may make revisions or additions specific to your needs. Once the purchase and sale agreement is signed, it becomes legally binding, and both the buyer and the seller are obligated to fulfill the terms of the agreement. If either party fails to do so, they may be subject to legal consequences such as financial penalties or property loss. Although it sounds like things run smoothly in every closing situation, this is not always the case. Some frequent issues affect the speed and expediency of real estate closings, and any number of these may happen to you.

Is Your Real Estate Closing Delayed? These Issues may Explain Why

Setting realistic expectations for closing timeframes is important. While some transactions can close quickly under ideal circumstances, many closings benefit from having adequate time to address financing requirements, inspections, title searches, and other necessary procedures.

Pending Additional Documentation

The closing can be delayed when the buyer cannot secure financing or the lender requires additional documentation or a longer approval process. Even if you have a pre-approval, your bank may request more documentation at the last moment. It’s important to understand that pre-approval is not a guarantee of final loan approval—it’s only the first step in a complex process.

Pre-approval indicates the lender has done a preliminary review of a borrower’s credit and financial profile and indicates how much the financial institution is willing to lend. Getting that final stamp of approval on your loan isn’t automatic. Your lender will want to see that the home appraises well, the title is clean, and your finances haven’t taken a nosedive since pre-approval. They’ll check your latest bank statements, call your employer, and even look for any new credit cards or loans you’ve taken out. One wrong move during this waiting period—like financing a new car—can send you back to square one.

Documents such as employment history, income verification, child support or alimony obligations, credit report, assets, debts, and rental history may be requested. Unfortunately, the bank doesn’t work as rapidly as one would wish, which could delay the closing process.

Appraisal Problems

If the appraisal of the property comes in lower than the purchase price, the lender may not be willing to provide the total amount of financing, which can delay the closing as the parties renegotiate the terms of the sale. Anytime a buyer needs a mortgage, the bank must appraise the home at the value of the requested mortgage.

Real estate appraisers must be licensed by the New Jersey State Board of Real Estate Appraisers, and their primary function is to determine market value, not to identify structural issues. They use information such as recent renovations to the home, the curb appeal, and market conditions in the area. Sales comps are also included—an appraiser will consider other homes sold in the area with similar square footage, bedrooms, bathrooms, etc., and compare your property to calculate a fair market price.

Some appraisals may note obvious defects that must be addressed, such as roof damage, electrical problems, faulty electrical systems, and any obvious safety issues that may need to be repaired before final loan approval.

Title Issues

A title search is conducted by a title company or real estate attorney prior to closing. The goal is to identify and resolve any problems before issuing a title insurance policy, which protects the buyer (and lender, if applicable) against future claims.

Title issues may include unpaid mortgages, home equity lines of credit, property taxes, or mechanics’ liens (filed by contractors or subcontractors who were not paid for work) that can be attached to the property. Court judgments, such as credit card debt, unpaid child support, or lawsuits, can result in recorded liens that affect the title. Easement disputes or property restrictions (prohibitions for certain types of construction) are not necessarily defects but may not be known to the buyer until the title search is done.

Occasionally, mistakes are made in public records, which can further delay closing. The seller can hire a real estate attorney to unravel the problems and get the closing underway.

Home Inspection Findings

When the home inspection reveals issues with the property that require repair, the parties may need to renegotiate the terms of the sale or delay the closing until repairs are completed. The buyer and seller will frequently negotiate the asking price for the home, or an agreement regarding closing costs will be made to cover repair costs. The inspector goes over every inch of the home with a fine-toothed comb and a flashlight. Everything from the darkest corner of the basement to the roof is inspected. Typically, a few minor repairs need doing, but the closing could be delayed when significant repairs are required.

Unclear Boundaries and Property Lines

If there are boundary disputes or other issues with the property lines, the parties may need to resolve these issues before closing. A boundary or land survey is conducted to confirm the property’s dimensions and to check for encroachments or discrepancies with the legal description. Fencing, walls, paths, or driveways can encroach on a neighbor’s property. Most people are reasonable and will find a solution that is suitable for all parties involved, but an affidavit must be signed by everyone before the sale can continue. The closing will be delayed if the neighbors are on a month-long Alaskan cruise or an agreement between the parties cannot be reached shortly.

Implications of Delayed Real Estate Closings

As you can see, closing on a house has many moving parts, and if any of those parts isn’t running smoothly, it can slow or shut down the entire process. A delay in closing can result in financial losses for the buyer, seller, and real estate agents. The buyer may end up paying more for their mortgage due to the delay, while the seller may incur additional expenses for holding the property longer than expected.

A delay in closing can also have legal implications, especially if contingencies were not met within the agreed-upon time frame. For example, if a buyer’s mortgage approval expires, they may need to reapply. However, most real estate contracts include provisions for reasonable delays and extensions before a party is considered in breach. Contract delays can be addressed by a written agreement that extends the previously determined deadlines, such as providing additional time for title clearance or mortgage approval.

Unfortunately, sometimes it isn’t in anyone’s control when a wrench is thrown into the works, and the closing comes to a screeching halt. It is immensely frustrating to have to change plans that were made weeks in advance. Where will you put your furniture if the movers are coming but the house isn’t ready? Delayed closings cause turmoil, stress, and can ruin the rapport between the buyer and the seller.

That relationship can be strained even further if either party elects to sue the other for breach of contract. Not only is it an expensive endeavor, but it may leave the buyer without a house altogether. The best way to solve any disconformity is to communicate clearly and proactively address any possible bumps in the road.

What Role Can A Real Estate Attorney Play in a Timely Closing?

When a real estate attorney drafts or reviews a purchase agreement, their job is to make sure everything is legally sound. They examine the agreement meticulously to identify potential legal issues such as zoning problems, title defects, or hidden liens that could delay or even prevent the sale. Their legal insight ensures the contract is binding and enforceable, which gives both parties peace of mind and helps avoid costly surprises down the line.

A purchase agreement requires the seller to provide a marketable title. A title search by an attorney ensures that no defects or encumbrances could prevent the sale or lead to litigation. Examples of title defects include liens, missing signatures, gaps in ownership history, or judgments.

Attorneys can suggest or negotiate changes such as closing date flexibility, inspection contingencies, or conditions concerning loan approval. Ensuring that deadlines, deposits, and other responsibilities are clearly spelled out is also part of their contribution.
In summary, attorneys have responsibilities that span from beginning to end of the real estate purchase. They review and negotiate the purchase agreement, drafting or modifying it to reflect the client’s needs. They ensure all legal documents are accurate and represent the client at closing. Attorneys, unlike real estate agents, can give legal advice. They can represent the client in disputes or negotiations that are beyond the scope of the real estate agent’s capabilities. They are also responsible for guaranteeing that the sale complies with New Jersey law.

Our Real Estate Legal Team can Successfully Handle Your Closing at the Jersey Shore

Our talented team of real estate lawyers at The Bronzino Law Firm can provide valuable assistance during the closing process by managing documents, handling legal issues, giving legal advice, and ensuring compliance with regulations, helping to ensure that the transaction goes smoothly and your interests are protected.

We understand the complications that can arise during a closing and can take proactive steps to pave the way to a smoother process. Our legal experience and extensive knowledge can work to your advantage in every aspect of a real estate purchase or sale in Asbury Park, Tinton Falls, Manalapan, Howell, Ocean Township, Bay Head, Eatontown, and elsewhere in Ocean and Monmouth County.

Call us today at (732) 812-3102 or contact us online to make an appointment for your confidential consultation. The process of buying or selling a house can be a positive one with the right team supporting you.