Do you really need a lawyer?

Below is an itemized list of the services and the related costs that our firm offers. Below this list is a detailed explanation of these services as well as a few low or no cost alternatives. The design of this page is to provide you with enough information to make an informed decision about hiring a lawyer.
Purchase ($800 – $950) Sale ($750 – $850) Refinance ($375)
Transactional Consultation Transactional Consultation Transactional Consultation
Contract Preparation Contract Preparation Title Policy Ordering
Contract Negotiation Contract Negotiation Title Policy Clearing
Title Policy Ordering HUD-1 Reconciliation Title Policy Markup
Title Policy Clearing Short Sales
(add $500)		 HUD-1 Reconciliation
Title Policy Markup Document Filing
HUD-1 Reconciliation
Document Filing

Please be advised that the information herein is in no way intended to be legal advice. This page contains only general information about the legal services available in the New Jersey marketplace. Feel free to contract our office for a free telephone consultation.
Click on any item below for a detailed explanation of the service provided by our firm as well as some possible alternatives.

Transactional Consultation Title Policy – Ordering
Contract Preparation Title Policy – Clearing and Markup
Contract Negotiation Closing Document Preparation
Short Sales HUD-1 Reconciliation
Document Filing

 
Transactional Consultation - this is perhaps the most valuable service a lawyer can provide and one that cannot be provided by any other real estate professional. All lawyers have the absolute responsibility to operate solely in the best interest of his or her client. In fact to do otherwise is a serious breach of attorney ethics that can lead to potential disbarment. Our firm takes this responsibility very seriously. In a real estate transaction this means more than simply having a trained eye review closing documents. As stated by the New Jersey Supreme Court:

Attorneys offer advice on a limitless range of matters. Clients
rely on them not only for legal advice but also for emotional support,
financial guidance and common sense.

Trenta v Gay, 191 NJ Super 617 (1983)

Our firm frequently counsels its clients on sensitive issues such as contract price, back-up buyers, attorney review period duration, mortgage contingencies, broker loyalty, home inspection issues, home improvement plans, tax assessment effects, termite exposure, septic and oil tank concerns, disclosure form requirements, rights of ex-spouses, hidden mortgage costs, hidden closing costs, and closing date timing.

Alternatives: None. A lawyer is unique to a real estate transaction in that he or she is the only professional involved in the real estate transaction that has no other interest (i.e. transactional fee) at stake and therefore is focused solely on your interest.
 
Contract Preparation – Lawyers are uniquely trained to prepare contracts of sale. There are many issues involved in a pending sale that can result in significant extra cost or damage to you if excluded from, or poorly drafted in, a contract of sale prepared by others.

Alternatives:

  1. Real Estate Brokers/Salespeople can prepare contracts of sale as long as the three-day attorney review language is properly included in the contract. If you allow this three-day period to lapse (in many cases this period may actually be longer than three calendar days) without consulting an attorney, then you are legally obligated to perform as provided in that contract. Often times the broker form contracts are silent or include poor language on transactional issues that can result in unnecessary cost, damage and/or headaches. The New Jersey Supreme Court prohibits brokers/salespeople from charging a contract-preparation fee.
  2. Parties (buyer and seller) can prepare a contract on their own or buy a form contract at various retail outlets. There are even forms available on the Internet. These contracts vary in price and sophistication. Besides the issues mentioned above, keep in mind that real estate law is state specific and a pre-printed contract may miss important issues if prepared in a general fashion. Also be advised that a contract prepared by the parties (this includes the form contracts purchased by either party) is subject to the New Jersey Plain Language Act. Seewww.lawrev.state.nj.us/rpts/contract.pdf.

Short-sale – A short-sale exists when the outstanding loan amount of mortgage, or the combined amount of two or more mortgagees, is greater than the expected net sales proceeds (see section x for a more detailed explanation of net sales proceeds). If so, as seller, you are unable to completely retire the indebtedness unless you bring additional funds to closing. Given current market conditions, most sellers are either unable or unwilling to pay to sell their home, and as such seek approval from their mortgage lender(s) to release the property from the mortgage lien even though they are not making full payment. This process will require you to make short-sales application to your lender which will likely involves numerous telephone calls, long wait times, and several repetitive fax submissions.

Continued Enforcement – Receipt of short-sale approval, and subsequent sale of your home, may not conclude the story. Short-sale approval is merely a deal that you make with the bank for release of its lien; the bank may retain the right to continue to enforce its right to collect the difference between what was owed and the amount received from the sale, call a deficiency. This deficiency is now unsecured debt, the home has been sold, and as such easily discharable in bankruptcy. However, the better way to deal with the deficiency is to raise the issue during the short-sale process. Our firm has great success in getting banks to waive the right to collect deficiency at either no, or little, cost to you.

Taxes – In some cases the debt forgiveness you receive as a result of the short-sale process may be treated as income for purpose of federal tax liability. We suggest you go to the following link for more information and or contact separate tax counsel for particular advice.

Credit report impact – If a short-sale is handled properly the transaction will be reported to the credit agencies as payment in full. Typically reporting issues arise if prior to completing a short-sale you missed monthly payments. Missing payments will undoubtedly be reported to the credit bureaus and recorded to your account. The irony lies in that often times bank are less willing to grant short-sale approval if you continue to make monthly payment.
Contract Negotiation – Lawyers are uniquely qualified to negotiate the legal issues of a contract of sale. This is typically conducted during the attorney review period. Among the key negotiation topics are contingencies. Contingencies are items that must be satisfied before the contract has binding effect. The most common contingencies allow a buyer to obtain a mortgage commitment from a lending institution, complete a home inspection report prepared by a New Jersey licensed home inspector (for more information on home inspections see the FAQ page), and obtain evidence of marketable title before the contract becomes binding. After this point, the parties have the responsibility to perform or they may be subject to a damage claim for contract breach such as loss of deposit or a judicial remedy. Good contract negotiation involves not only closing issues but also includes strategy to minimize downside exposure in the event the contract never reaches the “binding” point or is breached after the binding point. The percentage of potential sales that reach contract and do not close is higher than you may think.

Alternatives:

  1. Real Estate Brokers/Salespeople are trained to negotiate only the economic aspects (price, down payment, etc.) of a sales contract. Most experienced Brokers/Salespeople properly refuse to answer questions or negotiate the legal aspects of a contract of sale. A few Broker/Salespeople cannot resist “playing” lawyer but do so at their own peril and you accept their advice or service at an even greater risk. The New Jersey Supreme Court prohibits brokers/salespeople from charging a contract-negotiation fee.
  2. Parties (buyer and seller) are free to negotiate sales contract terms among themselves.
Title Policy Ordering - Title insurance protects a homeowner and lender from loss as a result of a third party ownership interest in the subject property. For more information see, www.ctic.com/whyneedtitle.asp. Although title insurance rates are regulated by New Jersey legislation, a lawyer can assist the homebuyer in purchasing title insurance in the most cost effective manner. Rates vary between the “basic” versus the “reissue” policy. A lawyer can ensure that fee for non-standard endorsement & administrative costs are properly assessed.

Alternatives:

  1. Mortgage Representatives can order title on your behalf as long as they are licensed New Jersey attorneys, albeit not representing you. However understand that the mortgage representative, even though he or she is a lawyer, does not represent you. The relationship between you and a mortgage representative is vendor/vendee and is not different than buying a car from a dealer. On the other hand, where there is a duty to a client by virtue of a lawyer/client relationship, the lawyer’s duty is well beyond that of a vendor/vendee.
  2. Real Estate Brokers can also order title on your behalf as long as they are licensed New Jersey attorneys, albeit not representing you. The same loyalty issue stated above would apply here.
  3. A Buyer/Homeowner is free to purchase title insurance directly from an insurance carrier or its agent. This is not very common but perfectly lawful.
Title Policy Clearing and Mark-up - The first step in the process of purchasing title insurance is for the carrier to issue a title binder. This binder is a commitment to provide insurance. The binder typically states exceptions, or items that the insurance carrier will not insure (for example the lien interest of the existing mortgage lender). Once all of the exceptions are properly removed, the title policy is “cleared” and the coverage takes effect. A lawyer hired on your behalf will verify this process with a “title mark-up.”
In the event that their are judgment or other items that must be removed prior to closing, our firm will complete this for you at an additional fee.

Alternatives:

  1. The Closing Agent can and frequently does handle this task as long as he or she is a licensed New Jersey attorney albeit not representing you. Be advised that if you decide to proceed to settlement without your own attorney and the closing agent (see “Closing Agent” above) is also the title agent, that this places the title agent in a situation where he or she is serving two masters. Also remember that the title agent may handle hundreds of title policy purchases with its insurance carrier and only one with you. Your lawyer will not have this loyalty conflict. New Jersey law requires that the closing agent inform the buyer/homeowner of the specific conflict stated above and the general risks of not having separate legal representation. New Jersey law also mandates that the closing and/or title agent advise the buyer/homeowner if any issues arise where “independent counsel is needed”.
  2. Real Estate Brokers – the same situation set forth above applies to real estate brokers, however from a practical viewpoint brokers do not commonly offer to clear title for their clients.
Closing Document Preparation – Buyers need very little document preparation service because nearly all of these documents are prepared by others (lender’s counsel and/or buyer’s counsel). Sellers, however, must deliver a deed, affidavit of title, IRS form 1099s and often several other documents in order to properly transfer title. Only a New Jersey lawyer can prepare these documents. Our firm does offer a document-only service to handle this responsibility. Check the fee calculator on the “Hire Our Firm” page for the cost involved.

Alternatives:

  1. The Title Agent/Closing Agent is allowed to prepare closing documents if he or she is a licensed New Jersey attorney. As stated above, be advised that if the closing agent (see “Closing Agent” above) is also the title agent, this person’s loyalty very well may lie with the title insurance company they represent. A title agent handles hundreds of title policy purchases with its insurance carrier and only one with you. Your lawyer will not have this loyalty conflict. As such, the title agent is required by New Jersey law to provide the proper warnings as stated in the “Title Policy Clearing and Markup section above.
  2. Real Estate Brokers – the same situation as set forth above also applies to real estate brokers, however from a practical viewpoint, this does not occur very often.
  3. Bank and/or seller’s attorney are clearly prohibited from preparing any seller oriented closing documents.
HUD-1 Reconciliation – a HUD-1 form, also called a closing statement or RESPA form, is a two or three page document prepared by the closing agent. This form lists the sources and uses of all monies involved in the real estate transaction and is divided into two columns; one for the Buyer and one for Seller. In addition to the flow of money from the buyer and new mortgage lender to the seller and old mortgage lender, this form also includes items such as real estate tax, homeowner association fees, real estate brokerage fees, legal fees, recording fees, etc. In some cases the fees set forth on the statement apply to only one party. For example, in most transactions only the seller pays real estate brokerage fees. Many other fees are apportioned between the buyer and seller to account for the exact moment of title transfer compared to the timeframe covered by the latest payment. For example, real estate taxes are typically paid in advanced on a quarterly basis. As such, the buyer would owe a credit to the seller for the time period after closing of title that remained covered by the latest quarterly payment.

Alternatives:

  1. The Title Agent/Closing Agent is allowed to prepare the HUD-1 closing statement. Be advised however that he or she does not represent either the buyer or seller and may be more interested in quickly completing this task than ensuring the accuracy of all apportioned amounts.
  2. Real Estate Brokers, Bank Attorneys & Seller’s Attorney may also prepare the HUD-1 form and may also have the same focus as described above. From a practical standpoint, it is uncommon for these individuals handle this task.
  3. Parties (Buyer, Homeowner, or Seller) may prepare and reconcile their own HUD-1 form. For information on HUD-1 forms and to download a HUD-1 form see http://www.hud.gov/offices/hsg/sfh/res/sc3sectd.cfm. Even if you have your own attorney our firm encourages you to get involved with the HUD-1 reconciliation process. The calculations are often complex and subject to human error, so an additional person may help
Document Filing – The closing agent is responsible for filing various documents with the county clerk’s office at the completion of closing. The list of documents that are filed include a deed, mortgage, mortgage discharge, judgment discharge, etc. In addition, the buyer’s attorney must file two notices prior to closing. The county clerk charges a filing fee for each of these documents. Most of these fees are the responsibility of the buyer with the exception of the title clearing documents, namely the discharges.

Alternatives:

  1. 1. Filing documents is open to the public. However, a mortgage lender will hold the closing agent responsible for proper recordation. So unless you are involved in an all-cash transaction, the closing agent will file documents. Seehttp://www.mercercounty.org/cc/links.htm, for more information.