Dealing with Surprise Liens on a NJ Title Report

While there are many unknowns when it comes to real estate transactions, when those unknowns become unpleasant surprises, the sale of a property can slow to a halt. One common reason for a stalled or cancelled real estate transaction is surprise liens that the seller wasn’t aware of.

What is a property lien?

“Lien” is one of those terms that gets tossed around all the time in the real estate world, but oftentimes real estate professionals find that their clients don’t fully understand what a lien is.

A property lien, in simplest terms, is a notice that becomes attached to a property (in this case, the home that is listed for sale). The notice states that the current owner of the property (i.e. the seller) is indebted to a creditor.

The reason creditors file liens on real property is because they are of public record. This means that the creditor is more likely to be able to collect the money they are owed.

How does a lien affect the sale of a home?

One of the steps in any real estate transaction is a title search – usually performed by a title company or a real estate attorney. The property up for sale must come back with what is called “clear title” – meaning no liens were found.

If your title search shows a lien on your home that you weren’t expecting, don’t panic. Mystery liens do happen, and as such, most real estate purchase agreements give sellers 30 days to address property liens without significantly delaying the closing.

Do I need an attorney to clear up liens on my property?

While it is possible for some homeowners to reconcile their debt with the creditor in question, many people need to clear up any property liens quickly in order to allow the sale of their home to continue. NJ real estate attorneys who are well-versed in handling surprise property liens can quickly and completely eradicate your lien(s), making their services invaluable at such a time.

Not only will your real estate lawyer help you with any surprise liens, he will also provide legal review of all paperwork surrounding the sale of your home, including the sale contract itself. Working with an experienced real estate attorney in New Jersey will reduce the time it takes to clear up any surprise liens and will ultimately give sellers (and buyers) an optimal result.

Additionally, if your property liens were placed by the IRS because you failed to pay your taxes properly, working with an attorney is in your best interest because of the possibility of tax fraud charges.

What are my options to contest a lien?

In the rare occasion that a lien is found on your property and you feel confident that it was placed in error, it’s possible that the debt was in fact repaid but the lien was simply never removed. While this may sound like an easy problem to resolve, it actually presents sellers and their attorneys with a challenge. Your NJ attorney will have to locate the original lienholder in order to obtain official lien release documentation.

If you refuse to make good on a lien that exists on your property (that has not been paid off already), you will be found in breach of contract. It is rare that a buyer decides to handle paying of a seller’s lien(s), but it does happen if a buyer is very motivated to purchase your property. Upon your refusal to clear up any liens, your buyer is more likely to simply walk away from purchasing your home.

 

 

 

 

Understanding a NJ Home Inspection Report

For those who are looking to buy or sell a home, the home inspection is a crucial part of the process.Whether you are the buyer or the seller of a property, you must have a solid understanding of all of the details found in your New Jersey home inspection report. This report will ultimately determine the overall condition of the property in question, and will specifically itemize any problems, both large and small.

Typically, the home inspection is ordered by the home buyer after they have signed a purchase contract. It is important to work with a professional, licensed and well-respected home inspector to ensure that nothing substantial is missed.

While the seller is required to disclose any and all existing issues with the house, they can only disclose problems that they are aware of. The job of the home inspector is to dig beneath the surface to find problems that may not be visible to the untrained eye, such as damage to any area of the home including: the foundation, pipes and plumbing, HVAC system(s), electrical systems, roof, walls, attic, ceilings, floors, doors and windows.

After he has inspected your potential future home, your NJ home inspector will provide you with a detailed report. This report will explain any and all findings of the home inspection. Some home inspection reports can run upwards of 30 pages, which can be a little bit intimidating to the novice home buyer.

Understanding Your Home Inspection Report

Home inspection reports can also come in different formats. Some home inspection teams report with a checklist, while others use a summary along with a longer narrative portion explaining the summary in detail.

Typically, home inspection reports will include a table of contents for ease of navigating through each portion of the report. Professional home inspection teams will include an introductory portion that provides important industry definitions along with details about the report, including: date completed, home address, age of the home, weather conditions during the report, and people who were present during the inspection.

Following any introductory sections will be the meat of any home inspection report. This portion of the report should be divided into areas of the home or home components that the inspector evaluated. Here, notes will be made and details will be listed about the condition of each home area/component (roof, plumbing etc.) along with suggestions, recommendations and any applicable photos and or videos that the home inspection team acquired during their review of the home.

Is a Home Inspection Really Necessary?

It is extremely important that anyone looking to purchase a home invests in a home inspection during the contingency period of the home purchase. Any New Jersey real estate contract/purchase contract is conditional until the home inspection has been completed. This means that the contract is not official until after the home inspection and can be terminated if there are significant issues discovered by the home inspector.

Many times, minor issues can be negotiated between the buyer and the seller, allowing the sale to proceed. Aesthetic changes, such as fresh paint or minor kitchen repairs can be added to the contract as the seller’s responsibility. Before closing, the buyer will have a final walk-through of the home, at which time they can determine whether or not all of the requested repairs have been made as agreed to in the contract.

 

Image by Andy Piper – licensed under CC 2.0

What to Expect When You’re Expecting to Close

Now that you’ve invested extensive time and energy into the process of buying a home in NJ, it can feel a bit overwhelming to realize that you still have one hurdle to clear – the closing. Most people have at least a vague, general knowledge of the fact that you have to “close” on a property before it officially becomes yours. But what exactly does this mysterious “closing” entail?

The How (to prepare):

To ensure that your closing (or settlement, as it is often called) goes smoothly, it’s best to be fully prepared in advance. Because contract language can be confusing and lengthy, it is in your best interest to have an experienced New Jersey real estate attorney review all of your loan statements and the purchase contract during your three day attorney review period, which is required by law to begin within three business days of your official closing date.

Along with having your attorney carefully review all of your paperwork, you should be allowed to do a last walk-through of the home 24 hours before the closing. This walk-through has two main purposes: to ensure that everything is in the condition that the seller agreed to in the contract, and to make sure that the seller has fully and completely vacated the premises (unless it has been otherwise negotiated in the contract).

The Who:

State laws dictate who must be present at a real estate closing. In New Jersey, the buyer(s) must be present to sign all of the official paperwork and final loan documents. The buyer’s attorney can be present if there are any questions still left unanswered, but your NJ real estate attorney is not required to attend the closing. Your real estate agent and/or title company representative will typically handle all of the closing details.

Other people who may attend the closing include: the seller, the seller’s real estate agent and occasionally, a representative from your lending institution.

The Where:

New Jersey real estate closings most often take place at the buyer’s attorney’s office or at the buyer’s realtor’s office. The location is negotiable so that it is as accommodating as possible for everyone involved.

The What (to bring):

On the day of your closing, you’ll to bring proof of your identity, proof of your homeowners insurance policy, any home inspection reports and a copy of the contract that you have reviewed with your attorney. You’ll need this copy to verify that no changes have been made to the official contract that you will be signing.

This is also the time to fork over your down payment and closing costs. You cannot make these payments with a personal check, so be sure to verify with your closing agent beforehand what form of payment is preferred. It will likely be a cashier’s check or, in some cases, a wire transfer. If there are any smaller surprise fees that need to be paid at closing, you should be able to pay for those with a check.

The What (to expect):

Once you arrive at your closing or settlement meeting, you can expect to do a lot (and we mean A LOT) of signing your name on all of the closing documents and final loan paperwork.

The transaction will be recorded by a representative from the title company, who will then file the deed with the appropriate township/municipality.

Just as your hand starts to cramp uncontrollably from all of the signing you have to do, it will be over and you’ll be handed the keys to your new NJ home!

 

 

 

 

Announcing the Opening of our Bordentown, NJ Real Estate Law Office!

At Veitengruber Law, our client success rates have continued to climb every year since our inception in 2010. Helping people is what motivates us, so we are always thinking about how to help even more clients. Our current office is located along the Jersey Shore in Wall, New Jersey. This location allows us to assist clients in Union, Mercer, Monmouth, Ocean, Camden and (parts of) Burlington counties. We’ve known for awhile that we wanted to expand our reach via a second office, situated on the western side of the state. Introducing Veitengruber Law’s second location:

33 Third Street
2nd Floor
Suite 3
Bordentown, NJ 08505

The founder of Veitengruber Law, George Veitengruber III, Esq., lives in Bordentown, NJ with his wife and two sons. Bordentown is a beautiful small town that sits along the Delaware River in north Burlington County. Just a few miles south of Trenton, our new office location will make our services more readily available to those who live in Mercer, northern Burlington, northern Camden, western Ocean and western Monmouth counties.

In addition to assisting you with all of your NJ real estate needs, Veitengruber Law: Bordentown will continue to represent clients in matters of: bankruptcy, foreclosure defense, debt negotiation, credit repair, asset protection, estate planning and collections.

By maintaining a limited number of practice areas, our attorneys and legal staff have been able to gain immeasurable experience regarding New Jersey real estate, foreclosure defense, bankruptcy and other financial matters, making our firm hard to beat in terms of expertise. In fact, we feel confident in saying that our NJ legal knowledge base and success rate cannot be beaten.

Our Bordentown office hours are by appointment only. Please call 856-318-2759 OR 609-297-5226 to set up your initial consultation in Bordentown. Also, if you have been seeing us in our Wall office but feel that our Bordentown location would be more convenient for you, do not hesitate to let us know!

 

Can my Landlord Evict me if I File for NJ Chapter 13 Bankruptcy?

Living paycheck-to-paycheck is the way of life for many Americans, and unfortunately, it doesn’t seem as though this has the potential to change any time soon. With the Mortgage Crisis of 2007 having lasting effects on the US real estate market, many former homeowners were forced to give up their underwater homes and downsize. Many of these people did not take on a new mortgage, but decided to become renters – at least until the real estate market righted itself.

The new renters brought on by the Mortgage Crisis (which had aftershock effects lasting well past 2010) plus those Americans who were already renting prior to 2007 combined to create a large population of US renters. While some renters have since been able to secure mortgages, a plethora of tenants feared losing yet another home to foreclosure and have continued to rent property in NJ.

The struggle of not knowing whether or not you’ll have enough money to cover your monthly living expenses is real. As of the end of 2016, nearly 11% of New Jersey residents were living at or below the poverty level, which is an excessively high number. For these New Jerseyans, figuring out how to stretch their low income to pay for food, housing and utilities is a daily burden that weighs on them constantly.

As a renter in New Jersey, filing for chapter 7 bankruptcy no longer prevents a landlord from initiating the eviction process. New legislature in 2005 protected homeowners but not tenants in chapter 7 cases. Those renters who need to file for bankruptcy to get out from under crushing debt cannot do so with a chapter 7 without risking eviction.

Although chapter 13 bankruptcy doesn’t completely wipe out debts like a chapter 7 discharge does, the good news for NJ renters is that it offers protection from eviction. All back rent that you owe your landlord can be included with your other debts when you file. A chapter 13 bankruptcy can save you from eviction by creating a payment plan wherein you will repay your landlord the arrears you owe over a set period of time that is considered reasonable.

As long as you continue to make all of your chapter 13 repayments (made through your bankruptcy trustee who then pays your creditors/landlord) along with your current rent payments, you cannot be evicted due to being behind on your rent. Your chapter 13 repayment plan will be structured in such a way that you can afford in comparison with your unsustainable living expense schedule prior to filing for bankruptcy.

It’s important to note that in order for you to avoid eviction via chapter 13 bankruptcy, you must be able to prove that you have enough income to afford your repayment plan with enough money left over every month to be able to make your current rent payments on time and in full. In addition, any landlord may evict a tenant who has endangered the property in question through illegal activities such as drug use, drug distribution or breaking the lease agreement in other dangerous ways, even if they have filed for a NJ chapter 13 bankruptcy.

 

Image: “Evicted” by Gideon – licensed under CC 2.0

New Jersey Title Insurance: Do I Really Need it?

Purchasing real property in New Jersey (or in any state, for that matter), is definitely not a time to take short cuts. While most home buyers acknowledge this fact, some may still question the necessity of some of the steps along the journey to home ownership. The process of buying a home involves a pretty long checklist – if you’re doing things the right way.

One standard task that you need to accomplish before the closing date is purchasing title insurance. Buyers who aren’t familiar with title searches and title insurance may be caught off-guard when they discover another fee that they are responsible for in their quest to own a home. Important questions you may have include:

What is the purpose of a title search?
The person or persons listed on a property’s title are the rightful owners of the home. When the title insurance company (or your NJ real estate attorney) performs a title search on your intended home, they are looking for anything in the history of the property’s ownership that suggests there may be a problem in transferring the ownership of the home. This preliminary examination combs through records surrounding the previous ownership of the home, i.e: deeds, trusts, wills, divorce agreements, judgments, bankruptcies, tax records and liens. Any minor encumbrances (a lien that needs to be paid off, missing signatures) can usually be cleared up, allowing the sale to proceed.

Why do I need to buy title insurance if the title search was clear?
The reason title insurance is necessary is because it is virtually impossible for any initial title search, no matter how thorough, to foresee a claim to ownership that was filed incorrectly and/or is long-buried in a pile of dusty paperwork. Misspelled names, long-lost relatives, estate planning snafus and other problems can pop up at any time in the future – after you’ve already closed on the property and have moved in.

If a title problem arises after I’ve moved in, how will title insurance help me?
Your title insurance lender’s policy will act as a safety net if a buried problem turns out to present a real claim to the property even after you’ve closed on it. If a long-lost co-owner turns up and wants to enforce his claim of ownership, he can take the matter to court, however, even if he wins and is granted ownership of the home, your title insurance lender’s policy will pay your lender the balance on your mortgage. If you also purchase an owner’s policy, that will kick in to reimburse some or all of the money you already paid, such as a down payment and any initial mortgage payments.

How much does title insurance cost?
Purchasing title insurance is going to cost you a one-time fee of around $1,000, give or take, for the lender’s policy, and less than $100 for an owner’s policy. This is money well spent even if you never make use of the coverage. That may sound strange, but here’s why it’s true: on the very small off-chance that a missed claim surfaces and you are without title insurance, you could lose your home and a significant amount of money.

Virtually all lenders will require you to acquire title insurance before they agree to approve your mortgage. In addition, most NJ real estate attorneys won’t represent you if you attempt to refuse title insurance because of the inherent risks involved in your future as a property owner. Title insurance may seem unnecessary, but it is absolutely, without a doubt, a crucial piece of any New Jersey real estate transaction.

 

NJ Senate Bill 1593: A Proposed 6 Month Foreclosure Stay

Because the number of New Jersey foreclosures continues to rise even as we are now reaching the mid-point of 2017, the NJ Senate and Assembly have proposed new legislation with the goal of generating positive change for underwater New Jersey homeowners.

Senate Bill 1593 proposes that a six month stay of foreclosure proceedings shall be implemented in New Jersey if such action is agreeable to the homeowner and lender. The bill also proposes that the court can impose the six month stay if it has been determined that it would be possible for credit counseling and/or negotiations to occur during the six months that would potentially eliminate the need for a foreclosure.

Homeowners who are offered a reasonable and feasible mortgage loan modification by their lenders prior to beginning foreclosure proceedings will not be eligible for the six month stay. If an acceptable loan modification agreement is reached between the parties during the six months, the forbearance will be lifted and mortgage payments will resume. Additionally, if at any time during the six month forbearance, the homeowner moves out of the residence or advises their lender in writing that they have no intention of participating in the formal foreclosure mediation program (required during the six month stay), the stay will be lifted immediately and foreclosure proceedings will commence.

This legislation is an attempt by the Senate Committee along with the Urban Affairs Committee to drastically reduce the overall number of NJ foreclosures that continue to plague the Garden State a full decade after the Mortgage Crisis that began in 2007. While most states’ real estate markets have bounced back, several states are still struggling with high foreclosure rates.

In addition to NJ, the following states still have excessively high foreclosure numbers as of May 2017: Florida, Nevada, Oklahoma, Illinois, Maryland and Delaware. New Jersey tops the list with a foreclosure rate of one in every 515 residential housing units. Delaware, in second place, has a foreclosure rate of one in every 753 housing units. As you can see, New Jersey is the clear “winner” by a landslide.

In fact, the country’s two most foreclosure-stricken cities are also in New Jersey, with #1 being Atlantic City and #2 being Trenton. Jersey’s neighbor across the bridge, Philadelphia isn’t far behind, coming in at #5 even though Pennsylvania’s overall foreclosure rates are down.

New Jersey’s continued inability to pull out of what can now only be described as a foreclosure emergency has led to damaging effects like neighborhood blight, which greatly reduces property values. This, in turn, leads to more homeowners who are ‘underwater’ (owing more money on their mortgage than their home is actually worth), which then leads to more foreclosures. The cycle seems unending in NJ, and drastic measures are needed to put a stop to the deleterious effects on the state’s economy. We have high hopes that New Jersey will be able to come out ahead of foreclosure, and this bill is one giant step in the right direction.

 

Can I Kick Out My Annoying Roommate?

Living with a roommate or roommates is a great way to bring down your monthly costs. This living arrangement is especially great for young people starting out on their own before settling down and starting a family. However, jumping into a lease agreement with someone is a serious undertaking, especially if you don’t know the person(s) very well.

If you sign a lease with a roommate, you will be considered co-tenants. It doesn’t matter if you moved in together or if your roommate was there before or after you – if you’re both on the lease, you’re both equally legally responsible for everything in the lease agreement.

What happens if you move in with someone only to discover that your personalities really clash? Perhaps your new live-in mate is horribly late with paying you their fair share of the utilities. Or maybe they’re a night owl and watch (loud) late-night tv shows while you’re trying to sleep.

Whatever differences may arise between you and your roommate, know this: it is exceptionally hard to kick a true co-tenant out. Even if your roommate simply stops paying their portion of the rent, your landlord is likely to demand the full amount anyway. Typically, landlords care very little about in-fighting amongst their tenants as long as the rent is paid in full each month.

Beware: if you stop paying your landlord the full rent payment (because your roommate has shorted you) – you can suffer the same consequences that will be doled out to the non-paying roommate. When one roommate breaks the lease agreement, it affects all of the co-tenants equally.

The only situation that calls for immediate eviction is if your roommate becomes violent toward you. Even the mere threat of violence can be cause for a restraining order. If you are granted a restraining order against your roommate, they’ll be forced to move out post haste.

In order to avoid such roommate conflicts, it’s a good idea to take a page from The Big Bang Theory and rustle up a ‘Roommate Agreement.’ While you most certainly don’t have to get as serious as Sheldon Cooper does (for example: he demands that his roommates stand a certain distance away from the bathroom mirror when brushing their teeth in order to keep the mirror clean) – things like noise limitations, quiet hours, cleaning the apartment, and rent payments can make your life a lot more enjoyable.

You can actually create a legally binding roommate agreement that would give you some power if a roommate stops paying their portion of the rent. You’d have to take them to small claims court, but it may be worth it if your living situation has become unbearable. While a small claims judge doesn’t have the power to evict your roommate, s/he can order full payment of the rent that you’re owed.

And, even if your roommate doesn’t comply with the Court Order, taking them to court may be just enough to make them want to move out on their own.

New Jersey Foreclosure: Frequently Asked Questions

In a New Jersey foreclosure sale, your home will be sold in an auction-type setting. The sale will be publicly announced and will be open for anyone to attend. Since New Jersey is a judicial foreclosure state, the local sheriff will typically lead the auction. If the sheriff cannot conduct your sale, another public official will do so.

Everyone who attends the foreclosure sale is able to place bids in order to buy your former home. As in all auctions, “to the highest bidder go the spoils.” The spoils in this case refers to your mortgaged home.

So: you stopped paying your mortgage payment. For a variety of reasons, people sometimes do this. Maybe you ran into temporary (or permanent) financial trouble because you: lost a job, got divorced, fell ill, made some poor money choices – the potential reasons are endless. Regardless of how you ended up in foreclosure, it’s probably not something you hoped would happen to you one day.

No one goes around saying, “I hope I get foreclosed on at least once in my lifetime!” Because foreclosure something you didn’t wish for – you probably don’t know what to expect. As a general rule, we don’t sit around thinking about things that we don’t plan to experience. Therefore, now that you have found yourself smack dab in the middle of a foreclosure, chances are that you have some questions.

We’ve covered a lot of foreclosure sub-topics here on our blog. Today’s foreclosure question we’d like to answer for you is:

“Who gets the money from the foreclosure sale?”

The normal course of a foreclosure auction is that the bidding remains rather low and the final, winning bid is often less than the house is actually worth. In fact, many times foreclosed homes are sold for less than the original mortgagor still owes the bank. There are, of course, exceptions.

Here is a breakdown of what will happen to the proceeds from your foreclosure sale, who receives payment, and in what order:

  • The first person/entity to be paid from the foreclosure sale proceeds is the New Jersey lender who granted you the loan for the mortgage in the first place. The bank or mortgage company needs to recover as much money as possible because you didn’t repay them like you originally agreed. A small portion of the proceeds will also go toward settling the cost of having the foreclosure auction.
  • If there is still money left after the sale is paid for and the lender has fully recovered the amount they are owed, any secondary lenders (2nd or 3rd mortgage granters) will receive the full amount you borrowed (perhaps for a home equity loan) or as much as possible.
  • After the above parties have received payment in full is the only time you, as the mortagor, will be entitled to receive any money from your foreclosure sale. Keep in mind: you are not likely to receive much, if any, money from a foreclosure sale because foreclosed homes don’t typically sell for as much as they would in a traditional real estate transaction.

In fact, you may even owe money when all is said and done. If the winning foreclosure bidder pays less than you still owe on the property, your lender will suffer a loss. This discrepancy is known as a deficiency balance. As the mortgagor, you can legally be held accountable for this amount.

You can learn more about NJ foreclosure procedures, get the answers to common foreclosure FAQs, and find out how a foreclosure will affect your life on our NJ law blog. We can also help you save your home via foreclosure defense, if that is your ultimate goal.

Do You Understand Your Mortgage’s Fine Print?

Now that the housing/mortgage crisis has begun to level out in most parts of the country, it has once again become a buyer’s market, and this time in a much more reasonable manner. Interest rates are good, but not unbelievably good like they were leading up to the 2007 crisis. As we all know by now: if something seems too good to be true, it probably is.

Just because we’re looking at the US Financial Crisis (2007-2008) in the rear view mirror doesn’t mean that getting a mortgage loan today comes without risks, though. In fact, there is a lot to be learned from the mistakes made a decade ago.

In order to ensure that you aren’t getting yourself into something you can’t handle or something that will change over time (and not in your favor) – you simply MUST have a complete and solid understanding of everything contained in your mortgage agreement.

To most people, this probably sounds like common sense. But have you ever looked at a real, live mortgage agreement? They are very lengthy with a lot of industry jargon that can quickly spin you into a confused puddle on the floor.

Your best bet is to find a New Jersey lawyer with real estate knowledge. Make sure you trust him and his team implicitly – in all likelihood a paralegal may also work with you on real estate matters, so be sure to meet everyone in the office who will be helping you understand your documents.

Questions to have ready for your attorney and/or paralegal include:

  • Is my rate variable or fixed? If the answer is variable, find out the lowest fixed rate that you’ll be able to lock in your loan.
  • Will there be penalties if I have to break my mortgage contract?
  • Am I required to pay mortgage insurance? If so, find out why. You may be able to work with a different lender who will not require mortgage insurance. If mortgage insurance is non-negotiable, be sure to ask how long you’ll be paying it, because it can often be a significant sum.
  • How long does my mortgage loan last? Will different terms lower my monthly payment?
  • What fees am I required to pay up front and are there any fees that were tossed into the total loan amount?
  • Do I have a balloon payment clause?
  • What are mortgage “points?”
  • Is a down payment required?
  • What is my monthly payment?
  • What is my credit score? We left this question until the end for a reason. We wanted to leave you with it on your mind. Finding out your credit score should be one of the first things you do even before you begin applying for mortgage pre-approval.

Your credit score will have a significant impact on the interest rate you will be offered by lenders. If your score is less than desirable, or even “fair”, talk to your NJ real estate attorney and paralegal about waiting to buy a home until you can boost your score into the “good” or “excellent” range. Work with your trusted legal team to raise your credit score. They will also be able to guide you in determining the best time to jump into the real estate market so that you qualify for the best loan options. This will save you a lot of money throughout the length of your mortgage.

 

 

Images: “Chocolates 1” and “Chocolates 2” by Windell Oskay – licensed under CC 2.0