Selling Your Home? Five Tips for Avoiding Problems at Closing

By on April 22nd, 2003

Posted in New Jersey

Selling your home? Want to avoid some potential problems at closing?

Here are a few tips:

1. Check on Permits for Home Improvements: If you ever made home improvements to your residence, check to make sure building permits from your municipality were issued, when necessary, for repairs or improvements. If permits were issued, confirm that the work was subsequently inspected and approved. Often, homeowners believe that if they do the work themselves no permit is needed. This is not always the case. Buyers frequently require sellers to show that all necessary permits were obtained for repairs or improvements to the home and that the permits were “closed out”. If the homeowner didn’t obtain a permit and one was required, or if the work performed was not approved by the municipality, a new inspection by the appropriate municipal building code official may be necessary – and penalties may be imposed. Be aware, however, that sometimes completion of an improvement may cause an increase in the homeowner’s real estate tax assessment.

2. Obtain Certificate of Occupancy: Some municipalities, but not all, require a Certificate of Occupancy as a prerequisite to transfer title to a homebuyer. A municipal inspector will inspect the home and then issue a report. If the report indicates building code violations, the selling homeowner must correct them prior to transferring title. In certain situations, the buyer may be permitted to assume responsibility for correcting violations

3. Obtain Certificates for Smoke Detectors, Carbon Monoxide Detectors and Fire Extinguishers: Homeowners are required to have smoke detectors, carbon monoxide detectors and a portable fire extinguisher properly placed within the home prior to sale. Certificates from the municipality for each of these are required at closing. Proper installation of these devices and an early inspection will avoid any surprises right before closing. If a Certificate of Occupancy is required by the municipality in which the home is located, approvals for the smoke detectors, carbon monoxide detectors, and fire extinguisher will be contained in that certificate.

4. Terminate Draws on Homequity Loans/ Lines of Credit: Homeowners frequently forget that their homequity loan or line of credit is usually secured by a mortgage on their home. In order to properly transfer title of the home to a buyer, the homequity loan/line of credit must be terminated and the mortgage cancelled of record at closing. This means the homeowner should not draw on the line of credit immediately prior to closing because this may make it difficult for the lender to determine the outstanding balance .

5. Provide a Clean House for Buyer’s Final Walkthrough: Often overlooked, but significant, is the physical condition the seller leaves the premises when the seller vacates. If the seller runs short of time to clean, the seller may want to consider utilizing a cleaning service. Buyers viewing a clean home during their final walkthrough may be less inclined to find fault with the condition of the home and more likely to overlook one, if found. This type of last minute issue can sometimes be the cause of extended negotiations at the closing table.

These are just a few tips to help the homeowner prepare for a smooth closing. Frequently the homeowner’s real estate agent and/or attorney will assist the homeowner in addressing these issues.

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