Real Estate

Published on: May 17, 2023

New Jersey Real Estate Law Decision Examines Duty to Disclose Defects in “As Is” Residential Real Estate Sales

New Jersey real estate law is enormously important – the purchase and sale of a home are often the largest transactions in many people’s lives. It is fraught with risks for both buyers and sellers.

For example, let’s say you’re buying a house and you receive a disclosure form from the sellers saying that there are no problems with the house, so you buy it and, lo and behold, there are significant issues. Do you have any recourse? The Appellate Division addressed that question in the recent case of Rogers vs. Conti.

Background: The Rogers vs. Conti Case

Published on: March 27, 2023

New Jersey Business Law Decision Examines Requirements for an Enforceable Contracts

by Maurice W. McLaughlin

Contract drafting and negotiation is one of the most important aspects of New Jersey business law. Contracts govern the relationship between business parties. Therefore, it is vital to ensure that a contract embodies the terms which the parties bargained for, and protects their interests. And it must meet all the legal requirements for contracts to be enforceable. signature-3113182__340-300x200

The Appellate Division recently explored those requirements, and the consequences which follow when they are not met, in the case of Tyler at First Street, LLC vs. Yengo.

Background

Published on: March 22, 2021

Commercial Versus Residential New Jersey Real Estate Transactions

by Jennifer C. Meusel

At first glance, both commercial and residential New Jersey real estate transactions seem to be quite similar. A contract is executed, title work must be checked, lender requirements must be met and the closing must be completed. But, from the initial offer through closing on the transaction, there are significant house2-300x223 differences.

A commercial real estate transaction usually starts with a letter of intent. This is a non-binding preliminary offer which states the basic terms of the anticipated contract and may include a non-disclosure agreement to give the parties security in the knowledge that the information provided will remain private. Under New Jersey real estate law, commercial real estate contracts are not subject to the three day attorney review requirements which control residential real estate transactions. Because of this, the contract will be prepared by one of the real estate attorneys and then negotiated and finalized before it is executed. Once it is executed all parties are bound by its terms.

The contract will usually include due diligence clause during which the purchaser is permitted to conduct inspections of the property and the records related to it. These Inspections can be quite detailed, particularly for industrial property, and can include structural and system inspections, environmental contamination inspections (which range from tank sweeps to phase 2 environmental inspections and compliance with the Industrial Site Recovery Act (known as “ISRA”), reviewing the history of the property, including the environmental history, investigating the zoning rules and regulations against the purchasers’ intended use of the property, performing title searches and searches with the New Jersey Division of Taxation to insure that the Seller is paid current on taxes, and examining records of income and expenses related to the property and/or its leases and tenants. Once due diligence has been completed and the purchaser accepts the property in its current condition, or the parties agrees on repairs, remediation or credits in lieu thereof, the next step is purchaser obtaining approval of any financing, if financing is involved.

Published on: May 29, 2019

Can One Owner of Jointly Held New Jersey Real Estate Compel the Sale of the Property?

by Jennifer C. Meusel

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Yes, New Jersey property law allows for the partition of the property, or if a partition is not feasible, then the forced sale of real estate which is owned by more than one person.

Often real estate is owned by several people. This commonly occurs through an inheritance. For example, parents, in their last wills and testaments, bequeath their real property to their three children in equal shares and do not include directives that the property be sold and the proceeds be split equally. During the administration of the estate, the executor transfers title to the property to the three siblings. Often, one of the siblings had been caring for the now deceased parents and is still residing in the property. Yet, the other two siblings want the property to be sold so that they can have their share of the proceeds. This can be a difficult time and can result in significant disputes and turmoil within the family. If the child residing in the property cannot afford to buy out the remaining siblings and cannot (or will not) qualify for a mortgage, the remaining siblings are often at a loss on how to proceed. New Jersey Estate law provides a mechanism to resolve the dispute, the partition action.

If a co-owner of real property refuses to sell the property and divide the proceeds of sale in accordance with each co-owners’ ownership interests, a partition action is the only method available to a person who owns a share of real estate as a tenant in common or joint tenant can separate his or her interest from the other co-owners. If the joint tenants are spouses this remedy is not available to them.) In order to start an action for partition, an action must be filed in the Superior Court of New Jersey, usually filed in the county where the property is located.

Published on: August 17, 2018

The Extent of State University’s Immunity from Local Governance

by Pauline M.K. Young

baltimore-city-hall-1482793__340-300x205 Montclair State University has spent the last decade or so trying to obtain approval from the County of Passaic and the City of Clifton to construct a roadway which would intersect with a county road. Both the County and the City raised concerns about the proposed development and Montclair State made significant efforts in an attempt to address those concerns. In 2014, Montclair State submitted an application to Passaic County for a permit to install traffic controls at the intersection.

Montclair State did not seek permission from Clifton or Clifton’s Land Use Board based upon belief that, as a state organization, it was not subject to local regulations. Montclair State asserted this position largely based upon the 1972 New Jersey Supreme Court case of Rutgers v. Piluso.

The question in the Rutgers case was whether Rutgers University was subject to zoning ordinances of the town where it was located, Piscataway. Piscataway had an ordinance which restricted the number of matriculating students’ “family dwellings” Rutgers could have. When Rutgers sought to build more, the town denied the request, citing the ordinance. Rutgers then brought a suit seeking a determination from the court that Rutgers was not subject to local zoning ordinances because it was an instrumentality of the State of New Jersey.

Published on: December 7, 2017

Is Title Insurance Really Necessary?

by Jennifer C. Meusel

new-home-2897352__340-300x200 The short answer is: yes.

To understand why you should have title insurance, you must first understand what “title” is. When you purchase real estate, at the closing you receive “title” to the property. “Title” is the owner’s right to possession and use of the property. There are different forms that “title” can take: individual ownership, tenants in common, joint tenants, life tenant, etc.

There are also different uses for land and the rights for those uses can be given or sold, or they could be restricted by prior title transfers. There can be different owners for different uses: one person may have mineral rights, another air rights, and another utility rights on the same piece of property. A mortgage lender can have an interest in the property, as can anyone who performed work on the property if they filed a lien against it. The government can have a lien for unpaid taxes, and the municipality or a utility company could have an easement giving it the right to string utility lines across the property.

Published on: October 16, 2017

Should a Prospective Purchaser Obtain a Survey of the Property?

by Jennifer C. Meusel

new-home-2841442__340-300x200 Recently, many people who are purchasing real property have been reluctant to spend the money to obtain a survey of the property they are purchasing. However, in most circumstances it is obtaining a survey is vitally important and it is money well spent. Also, if the purchaser is financing the purchase with a mortgage loan, the lender will almost always require a survey before closing.

Surveys are performed by licensed surveyors who are subject to regulations imposed by the State of New Jersey. A survey will locate any structures and other above ground improvements on the premises, including fences, identify easements the property is subject to and provide the purchaser with the property’s dimensions. It will show the exact boundaries on the deed – which sometimes yields surprises.

There are many reasons why you should obtain a survey prior to closing (beyond it being required by the lender). These are some of the universally applicable reasons to get that survey:

Published on: May 22, 2017

Discharge Federal Estate Tax Liens Prior to Sale of Property

by Jennifer C. Meusel

key-2114044__340-300x169 Generally, before the estate of a decease person can sell real estate, the individual(s) named as executor in the will must probate and be formally appointed as executor. If there is no will, then the closest heir at law must apply to the surrogate’s court to be appointed as administrator of the estate. An administrator would follow the same steps as an executor in order to sell real estate.

Estates with a value in excess of $5,450,000 are subject to federal estate tax pursuant to IRC Section 6324. IRS estate tax liens automatically attach to real property (“real estate”) which was owned by a decedent on her date of death. In order to have this tax lien discharged, the seller must follow these steps in order to close on the sale of the property and have the federal estate tax lien discharged:

The executor of the estate must complete and file IRS Form 4422 and provide the required supporting documents. In order to compete this form you must know the value of all estate assets and expenses. And you must have the required supporting documentation including: the last will and testament, the contract for sale of the real estate, the closing statement or proposed closing statement for the sale (which shows all payments, credits, expenses and offsets), the federal estate tax form 706 and documentation reflecting the value of all the estate’s assets. With Form 4422 the executor must also submit for 8821, a tax information authorization form. Additionally, IRS Form 4422 must be filed at least 45 days prior to the closing of the sale of the real estate.

Published on: December 28, 2016

The Consequences of “Liars Loans”

by Maurice W. McLaughlin

keys-1317391__340-300x279 Our transactional attorneys handle many types of commercial and real estate transactions, from closings on homes, office buildings, factories, to commercial transactions including the sale of all or part of a business. The overwhelming majority of these transactions require the purchaser to take out a loan to finance the purchase. Whether a buyer qualifies for the loan is one of the main contingencies in the transactions.

In many instances the purchasers will have already obtained financing before they talk to us about the transaction. However, once we are involved in the transaction one of the things we stress most, based on long experience, is that the application for the loan must be one hundred percent honest. Anything less than perfect honesty with the bank is a crime. The days when “Liars Loans” was acceptable are now over – in fact, that day existed only in fiction. Our transactional attorneys’ extensive experience in New Jersey real estate and business transactions has convinced us that honesty with the bank is the only way to go.

Federal law makes it a felony to “execute a scheme… to defraud a financial institution.” More particularly, the federal statute states that:

Published on: June 13, 2014

New Jersey Property Tax Sale Certificates and Foreclosures

by Jennifer C. Meusel

In New Jersey, every municipality is required by law to hold sales of unpaid property taxes at least once each year. The municipalities sell the tax liens to obtain the tax revenue which they should have been paid by the property owner. The municipal tax collector conducts the sale which allows third parties and the municipality itself to bid on the tax sale certificates (this is the document evidencing the taxes due and owing). The successful highest bidder then pays the outstanding taxes to the municipality and become the tax sale certificate holder. Then the holder records the tax sale certificate with the county clerk, who records the tax sale certificate as a lien against the property.

Purchasing the tax sale certificate is merely the first step. The tax sale certificate holder does not own the property, but merely has a lien against the property. The amount of the lien is the amount paid for the tax sale certificate plus interest (which normally accrues at a rate of 18%), costs and fees, including the certificate holder’s attorneys fees. The tax sale certificate holder must foreclose on the tax lien in order to become the owner of the property. The certificate holder has priority over any other liens against the property, including mortgages and other lien holders. The certificate holder must wait a statutorily proscribed period after the date of the sale of the certificate to initiate a foreclosure action. A municipality which purchased the certificate must wait six months; any other purchaser must wait two years.

Non-municipal tax sale certificate holders must provide thirty days written notice of their intention to foreclose before they can begin the foreclosure process on the certificate. This notice must include the amount which the delinquent property owner can pay to redeem the tax sale certificate and have the lien released. The notice must be sent by certified mail return receipt to all owners and to the municipal tax collector.

Then, if the property owner does not redeem the tax sale certificate within that 30 day period, the certificate holder is permitted to file its complaint for foreclosure. The complaint must name everyone who has a recorded interest in the property, which includes all mortgage and lien holders. The complaint must identify the property, the property owner and state the redemption amount. It must be served by certified mail return receipt. The property owner continues to have the right to redeem the tax sale certificate up until date of the final judgment. If the certificate is redeemed after a foreclosure action has been commenced, the property owner should file an Affidavit of Redemption and the foreclosure action will be dismissed by entry of an Order.
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