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 real estate closing contract, also known as a purchase agreement or a sales contract, 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. The closing process usually takes 45 to 60 days.
The purpose of the real estate closing contract is to ensure that both the buyer and the seller understand the terms of the transaction and to provide a framework for sale to proceed smoothly. The contract is typically drafted by the buyer’s real estate agent or attorney and reviewed by the seller’s agent or attorney before being signed by both parties. Once the real estate closing contract 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
Right off the bat, if the contract closing date is unrealistic, there will be trouble. An agent who proposes a 21-day closing date is setting up for failure. There are too many steps to make that short period sufficient.
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 are pre-approved for a mortgage, your bank may request more documentation at the last moment. If you are not pre-approved and apply for the loan after having put a bid on a house and begun the closing process, there is a possibility that your lender won’t give you the loan you require. Documents such as employment history, income verification, child support or alimony obligations, credit report, assets, debts, and rental history. Unfortunately, the bank doesn’t work as rapidly as one would wish, which could delay the closing process.
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. Some appraisals are contingent on repairs that must be made, such as roof damage, electrical problems, faulty electrical systems, and any obvious safety issues that may need to be repaired before the appraiser can make their decision. The appraiser is not an inspector but looks for major structural faults.
Title issues, such as liens, judgments, or unresolved legal issues with the property, may delay the closing until these issues are resolved. The title identifies the owner of the property. Sometimes, a seller must be made aware of title issues such as unpaid property taxes or even a dispute over who owns it. 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. An instrument survey measures a property’s boundaries, and a survey may show a discrepancy. 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, and if the seller cannot close on the agreed date, they may be in breach of contract.
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?
It’s imperative that anyone preparing to purchase or sell property consults with a knowledgeable real estate attorney to overview all transactional documentation, including purchase agreements, loan documents, and other title information.
During closing, there is always a possibility of legal hiccups arising. A real estate attorney can identify and handle issues such as title defects or boundary disputes, proactively foreseeing potential problems that could arise during this process. If you encounter any difficulties relating to the closing, they will advocate for you to offer the best possible result in the least amount of time.
It’s essential that you have the utmost confidence in your real estate attorney. A professional real estate attorney will assist you with what will probably be the biggest investment you will ever make. Real estate attorneys are familiar with state and federal laws regarding building codes, zones, boundaries, and more. They can explain any parts of the contract or procedures that you don’t fully understand.
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.