In NJ, there is a 3-day attorney review. During that time, an attorney that you hire and pay for can give you advice as to the legal implications of the contract. He can, if it seems desirable, reject the contract. Usually, if there is just some language and /or details that need changing, he can also state that it would be acceptable if the changes were made. The seller has the same right of review and the attorneys can negotiate the changes back and forth until both parties are satisfied.
If you did sign but did not consult an attorney for 3 days, you have a contract that you have agreed to by default and you should do what the contract says you promised to do. If you don't, the seller can void the contract. If he doesn't, you may go to closing without having done what you should. The total down payment will have to be made than and if the escrow is short of what it should have in it, you will have to make it up at the closing table.
Escrow. The word means putting funds in an account that holds them so no one can get them until one of three things happen. They are: that they come out at closing to complete the deal, they get returned to you or split up between the parties by agreement or if the parties do not complete and do not agree, by order of a court. Getting the court to decide who gets what costs money.
How much should the deposit be that will be held in escrow? There is no magic formula. The seller wants to be sure that it is not so small that you walk away and leave the deposit. Technically, he can't get the money without a court order, even if you do walk, and it will cost him to get it.
The decision about how much to put up as a deposit is really up to you. The seller, if dissatisfied, can always ask for more.
Non-interest bearing accounts are very common. Usually, the closing is not too far away in timing. Keeping the account in an interest bearing account can get complicated if the organization has more than one deposit in the account or more than one account. These days, with low rates of interest in saving accounts, most escrow holders just set up non-interest-bearing accounts for convenience sake.
Lots of luck with your deal.
You fill the blanks in with anything you want, including â€œ0â€! I'm not going to tell you that the seller will accept what you fill in but you can change it if they object. They can ask more than you want to give and you can negotiate the deal back and forth.
Now, a contract is a beautiful thing. Only attorneys can give you LEGAL advice about it. All any realtor can do is fill in the blanks. Now you may get some coaching from the agent but he's truly not supposed to do that.
Since you are so anxious and uninformed about what you are doing, in this case (and many others as well, believe me,) I strongly recommend a getting a good attorney, one who has experience in the real estate business to counsel you. That's why one of the names we call attorneys is "counselor."
Youâ€™re spending a great deal of money; perhaps more than you've ever spent before in your life. You will insure the house for casualty loss; why not insure the deal with legal advice that will probably cost you less than the house insurance?
The second thing that I disagree with is the use of the term "Normal and customary" in regard to deposits. Again, in this corner of the state, I have never heard any such term bandied about. As I explained, the seller is looking for a sum large enough to keep the buyer from just walking away from a deal he no longer wants, after the seller has taken his property off the market. I have often seen first time homebuyers, having very little cash and using an FHA mortgage where they were financing closing in the mortgage, have very little in deposit. What they had was needed for moving expenses.
Therefore, there are amounts that can be called "usual," adequate, or even, "what you would expect" but I would not categorize them in any special way or indicate that they had to be in a specific percentage range.
Realtors are forbidden to practice law (unless they are licensed attorneys) and I would NOT depend on anything a Realtor or other real estate agent tells me. The first clue would be that they would be breaking the law by telling you anything. Therefore, the clever answers is, once you get the contract signed and back in your hands, hire and pay for an attorney. There is just too much money involved and, as I have said, the seller has an attorney on retainer. Sometimes that attorney is not familiar with NJ laws and will advise his client to do things contrary to our laws, which differ in some respects from those of other states. Therefore, you should not accept anything that the seller or his attorney tells you with out consulting a NJ attorney. All NJ attorneys are not created equal and the lawyer who could get a criminal out on bail might not be experienced in dealing with real estate law or the misconceptions of out of state lawyers in that regard. Select your counsel carefully.
The short answer on the return of deposit is yes you can. The longer reality is that, once in escrow, it can be released only upon agreement from both sides, which should not be withheld. The further problem is that if the inspection turns up things you don't like, you can get involved in a dispute about the seller's proposed fixes and their adequacy and the quality of the work, should they agree to perform any repairs. While most banks do not wish to be bothered, each manager usually has some discretion and might offer and even insist that the repairs that they will make will keep the contract in full force.
Best wishes. I hope you get the home of your dreams.
I would also suggest that any deposit monies be kept in YOUR attorney's Trust Account and not in the Trust Account of the dual agent's broker or the sellers attorney.
Keller Williams Atlantic Shore
Will I able to get full amount of deposit back if there are major work required for the house during inspection stage?
While the Q & A here can be useful I highly advise your hire a real estate attorney to reiview your contract. This is the best way you know that your interests are being looked after. Contracts can be tricky. What you sign and agree upon can later be use against you. You say you are a 1st-time homebuyer. Real estate agents can't interpret contracts. That is not our expertise. Don't leave one of the most important financial decisions you will ever make to chance. Get a real estate attorney to assist you in understanding your agreement of sale.
Oh, by the way, 40 years ago, when you needed to have a 20% downpayment to buy a home, putting 10% in escrow at contract and the rest at closing, was what you had to do.
Good luck with your purchase. And don't be afraid to ask questions like this of your agent. Even if he or she is a disclosed dual agent, he or she will be happy to discuss the details of the contract-to-closing process. A dual agent has to keep your confidential information confidential.
Joan Prout, MBA
RE/MAX Villa REALTORS
306 Grove Street
Jersey City, NJ 07302
800-671-0596 x1 (direct)