Stuck & In Need Of Help! New Jersey Contracts!
Real Estate Investors · Springfield Gardens, NY · Member since 2015 · 15 posts · 0 votes
Hi BP Community!
I currently have two houses I'm working on in NJ. I have an investor who is looking for flips and rentals. My problem is that online most BP members are saying that they provided the Purchase and Sale contract. In NJ, the agent is providing us the contract. (Is this normal?) We were able to get over that. The real issue is that we must sign the contract before we get to modify it. (Assignment clause, deposit reimbursement, etc.) One house that I just received the contract on states that if the deal falls through, the agent gets our deposit (He originally asked us for 10% deposit - which i thought was quite excessive and worked him down to 3%)
Is it a must that we have to sign the contract before we get to modify it to our needs? When we told the agent that we wanted out lawyer to review it, they both stated that the lawyer can discuss negotiations during Attorney Review. However, we don't feel comfortable signing a document that we don't agree with.
Is there someone out there that has dealt with this type of situation in NJ or anywhere else?
Shana,
Yes, an agent providing the contract is normal. Typically, agents will use whatever contract their broker directs them to use. It could be one that was specifically designed/written for the brokerage; franchises as well as independent RE brokerages. Any contract CAN be used, BUT should be looked at by an attorney. Myself, as an agent, would be very wary of representing someone in purchase using a contract they designed without knowing it was created by an attorney.
You mentioned BP people using their own contracts. Many investors are purchasing property directly from sellers, especially when wholesaling. In this case, it is easier to have your own contract with all your own language and out clauses. I would think that most investors who use realtors to represent them in the purchase of properties use their broker's contract. That being said and as you mentioned, changes can be made.
You are protected by the attorney review period as @Gilbert Ross Jr stated. Just to clarify, attorney review is 3 days, NOT 72 hrs. The day the contract is signed is the 0 day. Attorney review begins the next day (day 1). When you count days in attorney review, you do not count weekends or legal holidays and attorney review can be extended if agreed to by both parties. Since weekends and holidays are not included the period can last far longer than 72 hours.
My broker does not allow agents to keep deposits. We believe we are in the business of closing deals not taking peoples money. We get paid when deals close. Your agent may have put the deposit clause in because he/she knows you are trying to wholesale from MLS or they are just trying to get over on you. I assume the agent you are dealing with is the listing agent? In a default on the non-refundable portion deposit, the money goes to the seller. Then according to the listing agreement, the seller may owe the broker/agent a portion of the forfeited deposit. That is the only way I have ever seen it but perhaps it is done differently in other areas and I'm not aware.
I would not sign the contract until it is to your satisfaction. If you sign it and it gets submitted, ALL changes must be initialed by both parties in order to have a full executed contract. This creates too much back and forth and messy document. I would advise you to strike (take out) anything you don't want, like the assignment clause and add the additional provisions, your outs, BEFORE signing.
I would be very careful with whomever you are dealing with...
Hope this helps!!
-Joe
No contract is binding for the first 72 hours and you can cancel the contract. Your attorney will have time to disapprove of any clauses during that time. You are not in danger of losing anything this point. I am not an attorney and would recommend you speak to your attorney on how to proceed. In my opinion you can sign the contract and be fine with making changes to it during attorney review.
Dont give them a deposit if your contract is not in order and youll have fear of losing it. Have all of your escape clauses in there.
Does anyone know if you can negotiate the contract yourself without technically hiring an attorney for the whole deal? (but more so just hiring the attorney for document review)
Shana,
Yes, an agent providing the contract is normal. Typically, agents will use whatever contract their broker directs them to use. It could be one that was specifically designed/written for the brokerage; franchises as well as independent RE brokerages. Any contract CAN be used, BUT should be looked at by an attorney. Myself, as an agent, would be very wary of representing someone in purchase using a contract they designed without knowing it was created by an attorney.
You mentioned BP people using their own contracts. Many investors are purchasing property directly from sellers, especially when wholesaling. In this case, it is easier to have your own contract with all your own language and out clauses. I would think that most investors who use realtors to represent them in the purchase of properties use their broker's contract. That being said and as you mentioned, changes can be made.
You are protected by the attorney review period as @Gilbert Ross Jr stated. Just to clarify, attorney review is 3 days, NOT 72 hrs. The day the contract is signed is the 0 day. Attorney review begins the next day (day 1). When you count days in attorney review, you do not count weekends or legal holidays and attorney review can be extended if agreed to by both parties. Since weekends and holidays are not included the period can last far longer than 72 hours.
My broker does not allow agents to keep deposits. We believe we are in the business of closing deals not taking peoples money. We get paid when deals close. Your agent may have put the deposit clause in because he/she knows you are trying to wholesale from MLS or they are just trying to get over on you. I assume the agent you are dealing with is the listing agent? In a default on the non-refundable portion deposit, the money goes to the seller. Then according to the listing agreement, the seller may owe the broker/agent a portion of the forfeited deposit. That is the only way I have ever seen it but perhaps it is done differently in other areas and I'm not aware.
I would not sign the contract until it is to your satisfaction. If you sign it and it gets submitted, ALL changes must be initialed by both parties in order to have a full executed contract. This creates too much back and forth and messy document. I would advise you to strike (take out) anything you don't want, like the assignment clause and add the additional provisions, your outs, BEFORE signing.
I would be very careful with whomever you are dealing with...
Hope this helps!!
-Joe
You have three days to get the contract into an attorney's hand otherwise the contract is binding.
That's what it states in the new NJAR statewide contract right on the top.
You submit the 1st offer with a signature, the seller either accepts as is or counters. You either counter back to accept the new terms of the seller.
Once negotiations are finalized a fresh offer is presented and the seller signs.
I find it easier to do it this way.