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If you are
purchasing new construction, you should read all of the information
pertaining to purchase transactions. However, the purchase of new
construction does differ slightly from the purchase of a
pre-existing home. Please read the information provided below if
you are purchasing new construction, so that you will be well
prepared and informed.
What
will the closing date be for my new home?
That is the sixty
million dollar question! All new construction contracts provide
for a closing date, but those closing dates are merely target
dates. It is our experience that new construction transactions
hardly ever close on time, and in fact close many weeks or months
after the proposed closing date. It is important to keep
yourself apprised of the status of the construction so that you
will not be surprised by a closing date that is far off from the
target date. Our Firm will calendar the target date, but it is
your responsibility to keep us updated with regard to the status
of the construction.
We learn about
the closing date from a variety of sources. Sometimes, the
builder’s attorney will contact us, and sometimes our clients
will call us first and ask us to confirm a closing date. Either
method is appropriate. If you believe that your closing date is
approaching, please give us as much notice as possible, because we
will have to coordinate the closing with your lender and will need
to update the applicable title and judgment searches, if
necessary.
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Where
does the closing occur?
Almost all new
construction closings occur at the office of the builder’s
attorney. This is not law, but simply custom and practice in the
State of
New Jersey
. Please refer to your contract for the exact location of the
closing. Our office will of course confirm the time and location
of the closing prior to the closing.
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Certificate
of Occupancy?
When you purchase
new construction, you cannot close unless and until the builder
obtains, and provides us with a copy of, the Certificate of
Occupancy. Many times, a closing date is set, all of the parties
prepare and are ready for the closing, and at the last minute we are
told that there is a problem with the Certificate of Occupancy. In
that case, the closing must be postponed until the Certificate of
Occupancy is issued. You cannot close unless and until the
Certificate of Occupancy is issued. Therefore, it is sometimes
advisable not to set the closing date until issuance of the Certificate of
Occupancy is confirmed.
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If
the Certificate of Occupancy has not been issued, can we close and
hold an escrow until it is issued?
No.
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What
happens if there are some items in the home that are not complete
or that haven’t been installed yet?
It is typical
with new construction that the Certificate of Occupancy will be
issued even though there is some minor work to be done,
certain appliances to install, or outside grading or paving to complete. Prior to closing, the builder will do a walk-through
inspection with you and the parties will prepare a
“Punch-list”. It will provide that the builder will do certain
work or install certain items within a specified period
after the closing. Larger builders provide for multiple
post-closing punch lists.
Most contracts
provide that the builder will not permit the Buyer to hold an
escrow for the items set forth on the punch list. For this reason,
it is critical that you are comfortable with the builder’s
reputation, because usually, no money is held post-closing to secure
the builder's obligation, and your only recourse will be to sue
based on non-completion of punch list items.
Radon
Some contracts provide that you can perform a radon test either before or after the closing. Please remember to excerse this right in a timely manner.
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What
is a homeowner’s warranty?
Under New Jersey law, when you purchase new construction, the builder must pay for
and provide you with a new homeowner’s warranty. This warranty
is a 10 year warranty, but not all aspects of the home are insured
for the full ten year period. You can obtain information about this warranty and approved New Jersey Warranty companies from www.nj.gov/dca/codes
However, the warranty does not cover punch-list items, and if the
Seller does not complete punch-list items it is not appropriate to file
a claim under the homeowner's warranty program.
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Will
the builder let me occupy the property or store my belongings
prior to the closing?
Most builders do not permit this.
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