The Importance of Title in NJ Real Estate Transactions

NJ real estate transactions

Whether you’re a first-time homebuyer or not, NJ real estate transactions are loaded with lingo that can be confusing at first. Case in point: “the title.” You may be asked to have a title search done or to acquire title insurance. We’ve found that most people aren’t familiar with what a title is and why it is important.

Breaking Down Real Estate Titles

To understand what a title is, you first need a deeper understanding of the concept of real estate. Real estate is any physical property and the land the property is built on, including all structures, natural features and other resources. Real estate is broken into two main categories: private real estate, like a family home, and commercial real estate, like a mall or grocery store.

The title of a real estate property (commercial or private) is the documentation that shows the legal owner of a piece of landed property. Possession of the title allows the owner of a property access to a set of legal rights and protections concerning ownership and use of the property. The title can be transferred from person to person along with the rights and protections through the buying and selling of a piece of property. There are different kinds of real estate titles that all include their own sets of ownership rights and protections, with pros and cons to each.

The five main types of real estate titles are:

1. Tenancy in Common: two or more people have ownership interest in a single property

2.  Sole Ownership: one individual holds the title and ownership over the property

3.  Community Property: ownership shared between married spouses

4.  Tenants By Entirety: a different kind of joint ownership shared between married couples

5.  Joint Tenancy: an equal legal right establishment between two owners of a single property that can be passed down to heirs

Each of the various real estate titles have slightly different legal applications and may apply to your situation differently depending of your specific circumstances. This is why it is important to discuss the different titles with an experienced real estate attorney. Using the correct title for your situation can give you a legal advantage down the road.

Now that you know what a title is, you may be wondering why you would need title insurance. Title insurance can protect the owner(s) of a property from unknown issues or encumbrances with the property. It can help protect the buyers of a property from any legal ownership issues down the road. Without title insurance, if a dispute were to arise about the ownership of the property, the buyer could lose the property and all the money they have put into their mortgage loan. Mortgage lenders will require title insurance whereas independent buyers will need to make this decision on their own.

Real estate contracts and corresponding documentation are confusing. Veitengruber Law will sit down with you (or work with you virtually) to review all of your real estate documents. Do you need a real estate attorney in New Jersey? Give us a call or email us today to see how we can help with your situation.

Renting to Own in New Jersey: A To-Do List

renting to own in new jersey

Renting to own in New Jersey can be a great option for those Garden State residents who are ready for home ownership but just don’t quite have the finances in place to qualify for a mortgage right away. A rent-to-own situation will enable you to:

  • Move into a home immediately
  • Begin building equity in that home
  • Spend a few years getting your finances in order so you can qualify for a mortgage.

While renting to own may be the perfect compromise for you (the ultimate “in-between” renting and owning) it’s true that there are some things to be aware of when it comes to rent-to-own contracts.  Before you sign any seller-financed or rent-to-own agreement, please be sure you have accomplished the following four actions.

1.   Get a Home Inspection

Just because you are taking a different route to home ownership DOES NOT mean you should skip this crucial step. A home inspection will help you make sure the property in question is up to code and doesn’t have any glaring issues. It will also let you know ahead of time if there are repairs that will be needed soon.

If, for instance, the roof will likely need to be replaced in five years, that is good information to have now to help you plan for that (substantial) expense. A home inspection will alert you to any major issues, and you can request they be repaired by the owner before you move in. Be wary of a property that has a ton of issues: it may not be worth it in the long run if a property requires too many expensive repairs.

2.   Request an Appraisal

Ask the owner for a copy of a recent, certified home appraisal. If they do not have one, it may be worth it to pay for one yourself. While you are not yet at the point of applying for a mortgage for the property, when that time comes you don’t want to be blindsided. If, in the future, you attempt to purchase the property for more than its appraised value, a lender will not mortgage the home. An official appraisal can help you determine the real value of the property and help you negotiate a sales price when the time comes.

3.   Make Sure You Will Qualify For a Loan Soon

Do not jump into a rent-to-own contract if you aren’t reasonably sure that you will be able to secure a mortgage to buy the home when the time comes. This means seriously committing to getting your finances in order, improving your credit score, paying down other debts, checking your credit report for black marks, and saving up for the costs of a down payment and closing fees. Some of your monthly rent will be able to go towards your down payment, but purchasing a home is still expensive and will require some savings.

4.   Hire an Experienced NJ Real Estate Attorney to Review the Contract

Before you sign anything, it is a good idea to have an experienced real estate attorney look over the contract to ensure you are getting a good deal and that the contract protects your investment. They will also be able to point out places in the contract where you may want to negotiate terms with the seller. Veitengruber Law is an experienced New Jersey real estate law firm. We can review and discuss real estate contracts with you to ensure that the contract is fair and that you have the full protection of the law on your side.

Can Rental Debt Be Discharged in NJ Bankruptcy?

nj bankruptcy

NJ renters spend an average of 19.26% of their monthly income on rent. With a major uptick in unemployment and income loss over the last year and a half, many Jersey renters have been unable to keep up with rent payments. While the eviction moratorium has been extended for some in NJ, others will find themselves facing eviction over the next few weeks due to lack of rent payment. If you are considering bankruptcy to help alleviate the pressure of unmanageable debts, you may be wondering if rental debt is dischargeable under bankruptcy. Rental debt can be discharged during bankruptcy, but it will be handled differently depending on how you file.

Will bankruptcy stop my eviction?

Filing for bankruptcy can delay legal proceedings for eviction, but not for long. The court will issue an automatic stay when you file. This will prevent all lenders and creditors—including your landlord—from taking legal action to collect debts from you until your bankruptcy case is resolved. Your landlord can also file a motion for automatic stay relief, which if granted would allow them to continue with the eviction. You can also be evicted if there is a judgement of possession or writ of eviction ordered prior to the date of your bankruptcy filing. Other than that, you will have the duration of your bankruptcy case to avoid eviction.

Rental Debt Under Chapter 7

Under Chapter 7 bankruptcy, many or all of your debts will be discharged, including your rental debt. There are two options under Chapter 7 to deal with overdue rent. Your bankruptcy trustee or yourself will be able to either assume the lease or reject the lease. If you assume the lease, you will have 30 days after the date you filed for bankruptcy to deposit the overdue rent with the court. Once you pay the overdue rent in full, you can formally assume the lease and remain in the rental with regular monthly payments from there on out. If, however, your bankruptcy trustee or you reject the lease, your past-due rent will be discharged. You will not have to continue paying rent and your landlord will be able to begin eviction proceedings.

Rental Debt Under Chapter 13

A Chapter 13 bankruptcy will allow you to reorganize your debt under a 3 to 5 year repayment plan. With Chapter 13, you will be able to determine if you will assume the lease, pay back the rent owed, and keep your rental or reject the lease. If you decide to assume the lease, your rental and the back-rent you still owe will become part of your repayment plan. After the bankruptcy, as long as you continue to make payments on time, you will be able to stay in the rental. If you do miss payments, however, your landlord will be able to petition the court to lift the automatic stay in order to evict you. If you reject the lease, your landlord will be able to bring eviction proceedings against you immediately.

If you owe back-rent and you are considering filing for bankruptcy, Veitengruber Law can help. We can work with you to determine the best path forward for your specific circumstances.

Unemployed Due to COVID-19: Can I Get a Mortgage?

With millions of Americans experiencing income or job loss during the COVID-19 pandemic, many are unsure about taking the next steps in their real estate goals. Buying a home with a mortgage can be tricky if you are currently experiencing or have recently experiences job or income loss. Your specific situation will determine if you will be able to get approved for a mortgage, and how much you are likely to be approved for. Here is everything you need to know.

Is it possible to get approved for a mortgage without an income?

The short answer is yes—with some caveats. If you are applying jointly with someone else who is employed, there is still a good chance you will be approved. Many spouses and domestic partners have one income households and still get accepted for a mortgage all the time. As long as the person you are filing with has maintained a steady income, you will likely be accepted (barring any other glaring financial issues). How much you will be approved for, however, will rely solely on the income of your spouse/partner. This amount will likely be less than it would be for a two-income household. You cannot use your previous income to increase your loan amount.

I lost my job during a mortgage application—now what?

First and most importantly: if you have lost employment after applying for a mortgage loan, do not hide this from your lender. Your lender will double-check your employment status before you close on a home. When they find you are unemployed, any money and time you spent previously on the closing process will be lost. They will find out, so it is in your best interest not to lie.

Whether you will be able to move forward in the application process will depend on if you are applying jointly or alone. If you are applying alone, your application will likely be rejected. If you are applying jointly, your application will be re-assessed to determine how much house your joint-borrower can buy with their income alone. You may find that you were approved for a higher loan when your income was taken into account on the application than after it is removed due to job loss. If your loan amount decreases after your income is removed from the equation, you need to determine if you are still interested in moving forward in this new price bracket, or how you can make up the difference in price of the home versus amount of the loan.

What if I am temporarily unemployed?

One thing that has been unique to the pandemic over the last year is a big wave of temporary lay-offs and unemployment. If your employer has had to shut down or reduce hours due to pandemic restrictions, but you fully expect to return to work once these restrictions are lifted, you should discuss this with your lender. It may be possible for your employer to provide a letter indicating you will be able to return to work as soon as restrictions are lifted. For some lenders, this may be enough to continue the application process.

Should I buy a home when I am unemployed?

This is something only you can answer. It is impossible to know for sure how long the impacts of the pandemic will be affecting employment status. Purchasing a new home while unemployed is not a realistic financial choice for everyone, though, and you need to make sure you have the finances before you commit to a home purchase.

Should I Purchase a NJ Home that’s Part of a Homeowners Association?

NJ home, New Jersey HOA, Homeowners Association

Before you purchase a NJ home in a planned neighborhood, you must weigh the benefits and costs of being part of a housing association or co-op. In New Jersey, the most popular of these is the Homeowners Association (HOA). The HOA has rules in place to ensure a neighborhood or community runs smoothly by adhering to certain property rules and regulations. An HOA will have guidance concerning lawn maintenance, planning, home insurance, utilities, community financing, and more. While some HOAs are voluntary, others are mandatory depending on the location. Elected members will run the HOA and serve to provide their community with a variety of services. Is this kind of neighborhood right for you?

Pros of an HOA Community

  •    The Amenities

Many NJ HOAs have shared amenities like a community center, gym, tennis and basketball courts, pools, and members-only parks. An HOA may also offer lawn care services and will often contribute to maintaining the streets, sidewalks, and garbage disposal. When you join an HOA, you get access to all kinds of community facilities, events, and services. This can expand your living space to beyond the walls of your home, allowing you the benefits of the access without the time and energy of maintaining a pool or a big backyard. You can also rest assured knowing you will live in a community with well-manicured lawns and clean streets.

  • You Really Get to Know Your Neighbors

Because there are so many shared amenities, you learn about your neighbors beyond the basic daily greetings. An HOA will facilitate regular community events and programs to get neighbors interacting. If any issues arise between neighbors, you will also be able to turn to your HOA to mediate and resolve conflicts.

Cons of an HOA Community

  • Rules and Regulations

While rules and regulations will vary from one HOA to another, all HOAs will have rules and regulations of some kind. This means you get to benefit from an orderly neighborhood, but it also means you have a responsibility to follow the rules. HOA rules are typically non-negotiable and in some cases can be very specific. They can dictate the number and kind of pets you are allowed, where you park your car, the exterior aesthetic of your home, and how high your grass can be. It’s imperative that you review all of the rules before you agree to join an HOA.

  • Costly Maintenance Fees

Most HOAs charge members monthly, quarterly, or yearly—and the costs can be alarmingly high, depending on the HOA. Most HOA memberships (but not all) include: lawn maintenance, roof maintenance, and cleanliness/safety of the community in general. HOAs may add services to be included in the fee or for an additional cost. Either way, you’ll need to assess whether these services are worth the cost.

With buyers looking for homes in a strong seller’s market, more people may be considering a home in an HOA community even if they weren’t necessarily looking for one in the first place. If this sounds like you, make sure you’ve read all of the fine print (and your NJ real estate attorney has too) before you sign the contract.

The Difference Between a NJ Real Estate Contract for Deed VS Mortgage – and Why It Matters

NJ real estate contract

Many would-be homeowners apply for a mortgage only to discover that they’ve been denied for home financing despite actually having the necessary funds. There are many reasons mortgage lenders reject a home financing application, and some of them are out of your control.

If this has happened to you, fear not! Buying a home via NJ real estate “contract for deed” can help you realize your home ownership dreams when traditional financing is not a possibility.

In a contract for deed, the seller finances the purchase of the home, as opposed to a third-party lender. Also known as a land contract or an installment sale agreement, it is a direct agreement between the buyer and the seller in which the buyer agrees to pay the seller an agreed upon monthly payment to eventually own the home. Often these agreements allow the buyer to take immediate residency in a home without a down payment. Buyers can also avoid lengthy closing procedures as well as expensive closing costs and application fees. The seller keeps in their possession the legal title to the property until the payment schedule is completed while the buyer enjoys the right to occupancy as they make payments.

It should be noted that while there is an attractive ease to this option, it is not without risk for both the buyer and seller. Important information includes:

  • Buyers have very limited legal protections under this contract.
  • Buyers will not have full ownership rights, but are required to make repairs, pay taxes, and keep up with monthly payments to the seller.
  • The seller has the rights to the title throughout the life of the contract.
  • The seller can attempt termination of the contract if the buyer misses a payment.
  • The buyer will only have 60 days to address a default before the house can be taken, whereas a traditional mortgage lender would typically allow the buyer six months.
  • The seller can offer a property under contract for deed without disclosing the condition of the property, leaving the buyer with little to no collateral if the home is in poor or unsafe condition.
  • Sellers can have a mortgage of their own on the property while under a contract for deed (CONFUSING, RIGHT?) as long as it is paid off by the time the title transfers to the buyer.

There are steps buyers can take to minimize the above risks. If you’re interested in a property via contract for deed and you discover the current owner has a mortgage, check with the lending company to see if the loan is current. Ensuring the contract is clear and responsibilities for both parties are outlined in detail can save a lot of headache down the road. Having an experienced real estate firm like Veitengruber Law review your contract for deed can also help you protect yourself legally.

As long as you approach with caution and are armed with knowledge, a contract for deed can be a great way for you to realize your dreams of home ownership even if you don’t qualify for a traditional mortgage.

Tips on Starting Your 12-Month Emergency Fund When You Have No Savings

Conventional wisdom about emergency fund savings used to be having three to six months of expenses stashed away to hold you over in the event of income loss or a costly emergency. But in the aftermath of a global pandemic and nationwide financial unrest, experts are now pushing their estimates for a healthy emergency fund to a whopping 12 months worth of expenses. For those who struggled to maintain a six or even three month emergency fund, a whole year’s worth of expenses can seem out of reach. Let’s take a closer look at how and why you should work to build a solid financial safety net, along with some of the most common concerns related to this topic.

1.   Do I really need to save up 12 months’ worth of expenses?

As of June 2021, the average length of unemployment was just over 31 weeks, putting the average duration of unemployment past the three to six months of savings previously recommended. That being said, not everyone will have such a hard time finding employment. If you work in a field wherein it is notoriously challenging to find new work opportunities, you may in fact need to exceed 6-months of expenses saved.

If your household is relying on one income to pay the bills, a 12 month emergency fund can act as a second income if you face unemployment. That being said, there are many careers with ample job opportunities that will always be open for business—think about all the essential workers that continued to report to work throughout the pandemic.

2.   How can I build my savings when I can barely pay my bills?

Clearly, building up 12 months’ worth of savings won’t be realistic for everyone. It can take a lot of time to generate that kind of savings and working towards that financial goal could take away from other worthy financial goals, like paying down debt or putting money into a retirement account. You can’t do it all, and while planning for the unexpected is certainly worthwhile, it shouldn’t come at the expense of staying in debt and missing out on retirement savings. Finding a balance that is right for you will look different with every budget. If you have a lot of debt and are living paycheck to paycheck, a three-month emergency fund is a great start for now.

3.   Help! I am really bad at budgeting!

Take a deep breath. First, you’ll need to determine what your bare-bones budget is. This is not your yearly salary, but the amount of money it would take to pay your most basic bills over a 12 month period. Think about your mortgage or rent, your utilities, loan payments, grocery bills, etc. Determine the absolute minimum amount required to survive month to month and multiply that by 12 to get your target savings.

While you are looking at your budget to determine the bare minimum needed for monthly expenses, also look for luxuries (however small) to eliminate. Are you overpaying for convenient delivery services? Paying too much for extra entertainment channels you don’t even use? Overpaying for cell phone or internet services? It’s time to really examine your needs and winnow down any and all “extras” that you can survive without.

PLEASE NOTE: If you need help identifying expenses you could reduce, Veitengruber Law can sit down with you (in person, over the phone, or via video chat) to assist. Once we’ve zeroed in on the expenses that have some potential wiggle room, we can negotiate with your lenders and utility companies for lower prices, reduced interest rates, and more advantageous loan terms with lenders and utility companies on your behalf.

When you have a solid handle on your budget, determine how much money you can comfortably put towards your emergency fund each month. It may not be much and reaching your savings goal may feel impossible at first, but don’t give up! Everyone has to start somewhere, and some savings is ALWAYS better than none. In addition to reducing your spending (as we detailed above), consider putting your money in a high interest savings account to accrue more interest. With consistency and discipline you will be able to achieve this admirable financial milestone!

How is the Delta Variant Affecting NJ’s Hot Real Estate Market?

When COVID-19 started to shutter businesses and send people home in March 2020, many real estate experts thought the market would go cold in the face of financial uncertainty. As we know now, the exact opposite happened. As unsure sellers pulled their properties off the market, buyers eager to get out of big cities and into homes with at-home work spaces were left to fight over the few houses on the market. Buyers motivated by some of the lowest interest rates in history found themselves competing with multiple other offers and housing prices shot up. Now that the delta variant is hitting many parts of the US, how can we expect the NJ housing market to react?

It may be too early to tell for sure. We have seen the CDC announce a return to masking in many parts of the country as well as general economic uncertainty and volatile financial markets. Housing experts are debating whether the delta variant will have a big impact on the market or none at all. Here are some things to consider:

1.   Mortgage Interest Rates Falling Again

Just like we saw at the beginning of the pandemic, financial uncertainty has led to mortgage interest rates falling once again. This was a huge incentive for buyers to get out and house search even through the uncertainty of a pandemic and worldwide financial unrest. Real estate experts expect to see a similar wave of buyers this time. The week ending July 22nd saw interest rates drop down to 2.78% for 30 year fixed-rate loans. If the pandemic worsens, as is predicted with the delta variant, mortgage rates should stay pretty low.

2.   Home Prices are Still High—and Could Get Higher

If low interest rates are enticing more buyers to enter the market, this could exacerbate already high home prices. The average home price in New Jersey hit $419,636 as of July 2021. While many buyers will be looking to save money through low interest rates, such a competitive market could lead to bidding wars and homes selling far above list price. This can cause housing prices to skyrocket just as they have over the last year.

3.   Delta Could Slow the Return to Big Cities

Many individuals and families fled big cities in the beginning of the pandemic for the security of less populated suburbs. There has been a growing trickle of these people moving back into the city, perhaps realizing suburbia is not for them and seeking to get back into city life. But if businesses close again and big cities face lockdown, it could cause hesitation about moving back into bigger cities. This could create an uneven market where homes for sale in urban areas sit on the market, while rural and suburban properties remain scarce.

4.   People Aren’t as Fearful This Time

The biggest factor to many people’s real estate decisions at the beginning of the pandemic was fear of the unknown. Now, nearly a year and a half into the pandemic, we know what it means to live through a worldwide pandemic. The uncertainties that kept many people from exploring their real estate options previously may not factor in as much this time around. Because of this, most real estate experts are not predicting any significant changes to the market with the introduction of the delta variant, but only time will tell.

What Happens When the Eviction Moratorium Ends?

Throughout the COVID pandemic, both the federal and state governments have instated protections for homeowners and renters in the form of foreclosure and eviction moratoriums. These protections are changing now for some NJ residents. Whether or not you are protected will now come down to your household income. Here is what you need to know.

How long you will be protected under the new eviction moratorium will depend on your income and the reason your landlord is trying to evict you. If your landlord is attempting to evict you because of missed rent payment, consistently late rent payments, or refusal to pay a rent increase, you will be protected under the new law until the end of August. Beyond this, you will need to determine how your household income impacts your protections. If your household income is above 80% of the median income in your county, but below 120%, you will be protected until the end of August. If, however, your household income is below 80% of your county’s median income, you will be protected through the end of 2021.

The CDC has also issued its own federal eviction moratorium through October 3rd, 2021, that protects households living in high COVID-19 transmission areas from being evicted. In New Jersey, this includes every county except for Warren County. The federal moratorium also stipulates that a renter has to make less than $99,000 a year ($198,000 for couples), certify that they attempted to obtain rental assistance, and show that they are currently making an effort to make partial payments. These protections do not cover evictions for reasons outside of late or missed rent payments. If your landlord is seeking eviction for other reasons that fall outside of the purview of the new law, then evictions can proceed.

If you meet the qualifications for the state protections, you will need to submit a certification at covid19.nj.gov/pages/renter or call at 609-490-4550. You will legally certify your household’s income, that you and your household were unable to pay rent due to the pandemic, and that you and your household applied for state, county, or local rent assistance programs. If your landlord has already filed for eviction, the form will also ask for your docket number. A copy of this form needs to go to your landlord or be presented in court should you be summoned before the form is processed. Depending on if you qualify, any cases against you will be dismissed. Your landlord will have to bring a new case against you after the protections are no longer applicable.

The state bill also allocated an additional $500 million in rental assistance and up to $250 million for utility assistance. Households making 30% or less of their county’s median income will qualify to receive an amount that allows them to pay no more than 30% of their household income toward rent. Households making between 30% and 80% of their county’s median income qualify for the same, with a cap at $800 a month. Households making between 80% and 120% of their county’s median income also qualify for the same, with a cap of $500 a month. Qualifying households will be required to provide proof of income every six months at which time the subsidy can be increased or decreased based on need.

If you are still struggling to pay your rent due to the coronavirus pandemic, there are still many options that will allow you to keep you in your residence until you get back on your feet. The state and the federal government want to keep residents housed through the end of this pandemic.

Why Listing Price Matters When Selling Your NJ Home

selling your NJ home

There is no doubt that we are in a solid seller’s market. Homes are selling quickly and most offers are coming in above asking price. This has led to an increase in home prices across New Jersey. If you have been considering selling your NJ home, you could make out really well in this market. Sellers should, however, be wary of pricing their homes too high. While it might be tempting to take advantage of high home prices and list your home at the higher end of market value, you need to make sure you aren’t limiting yourself too much with a high sales price. Here are some big reasons you should avoid overpricing your home.

1.    You Could Deter Buyers

When looking for a home, many buyers set a price limit. Most online real estate websites allow buyers to set their purchase limit and remove all results above that limit. Similarly, real estate agents in your area may see a high price tag and steer their clients towards other properties in their price range. Just because you are listing your home for a high price doesn’t automatically mean buyers will bite. Otherwise interested buyers may assume the price is too far outside of their range and move on without making an offer.

2.    Your Property Could Sit on the Market Longer

No seller wants to watch their property languish on the market for months at a time. The longer you own a property, the more money you are spending on mortgage payments, maintenance, utilities, taxes, insurance, and other incidentals. As a seller, you want to get rid of the property quickly. On average, homes are selling within 20 days in New Jersey. If your home is sitting on the market longer than that—especially if there are no offers—chances are you have priced the house too high. A high price tag won’t always justify the money you spend as your home sits on the market.

3.    You Could Have a Price Drop

If your property is sitting on the market long enough without any serious offers, you could end up having to reduce the price of your home to fit into more buyer’s price range. A price drop can often send the wrong message to buyers. They might think there are issues with the home. Especially if you find yourself dropping the price on a home over and over again, it could set off alarm bells for potential buyers that the quality of your home is lacking. It could also indicate to the buyers that you are not confident in the price of your home and could be easily bulldozed into going much lower. The best way to avoid this is to list your home for a fair price to begin with.

The bottom line: listen to your real estate agent. They will be able to help you set a price that is fair based on the value of your home. They will be able to determine what similar homes are selling for in the area and come up with a realistic price based on the actual market value. Taking the advice of your real estate agent can save you a lot of time and back and forth with potential buyers.