by Barbara Strapp Nelson, Esq.
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 properly issued for the 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 proper permits were obtained for repairs or improvements to a home and that the permits were "closed out". In Princeton Township, a homeowner can request a Construction Records Clearance Certificate to determine if there are any open permits. If a homeowner failed to obtain a permit when 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 required –– and penalties could be imposed. Be aware that sometimes completion of an improvement may cause the municipality to increase a 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 home buyer. 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 in the home prior to sale. A certificate from the municipality confirming that these items are properly within the home is required at closing. Proper installation of these devices and an early inspection will avoid any surprises at closing. If a Certificate of Occupancy is required by the municipality, approval for the smoke detectors, carbon monoxide detectors, and fire extinguisher will be included with that certificate.
4. Terminate Draws on Home equity Loans/ Lines of Credit: Homeowners frequently forget that their home equity loan or line of credit is secured by a mortgage on their home. In order to properly transfer title of the home to a buyer, the home equity loan/line of credit must be terminated and the mortgage cancelled of record at closing. The homeowner should refrain from drawing on the line of credit immediately prior to closing, because this may make it difficult for the lender to determine the correct outstanding balance which is to be paid off at closing.
5. Provide a Clean House for Buyer’s Final Walkthrough: Often overlooked, but of importance, is the physical condition a 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 professional 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. Large amounts of refuse left at curbside also creates a poor impression when a buyer does a pre-closing walkthrough. These appearance issues can sometimes be the cause of extended negotiations at the closing table.
These are just a few tips to help a homeowner prepare for a smooth closing. Frequently the homeowner’s real estate agent and/or attorney will assist the homeowner in addressing these issues as well as others which may arise prior to closing.
Barbara Strapp Nelson is a Shareholder and member of Stark & Stark’s Real Estate Group, where she concentrates her practice in residential real estate transactions. Visit www.stark-stark.com.