All Forum Posts by: Earl White

Many great responses I won't reiterate. 

Of course it's reasonable to ask for proof of funds for the down-payment. Particularly in a multiple offer situation, buyer should be happy to prove they can complete the sale. As mentioned though, it is just a random PDF that could be doctored. If you really need to resolve this issue: (1) get on the phone with their lender to understand the situation; (2) cash deal - you could get something on letterhead from bank and call to confirm, or get an attorney representation for the same.

In my opinion, this issue can to some degree resolved by contract terms. If a buyer is coming down with a high-down payment and quickly making a large deposit into escrow fighting tooth and nail about proof of funds may be a red herring.

Credibility is also a factor here. If the buyer has proof of completing multiple projects and their real estate agent has a documented business history they are probably not wasting their time playing a game about a POF as failing to perform is just a waste of everyone's time (may have legal fees incurred as well).

If it's an unknown newly formed LLC, an offer with minimal cash to escrow, with a shady attorney and realtor, I'd then be taking a hard look at proof of funds.

Contact the local zoning department (construction, building, whatever designation the municipality uses). Explain to them your plan and see if it is something that would be entertained and if so what the process will be. You can even set-up an in person meeting or go down in-person. City staff normally has a good expertise on these issues and are helpful in my experience. If the project seems like it has potential, then follow the steps they give you. You could also contact a local attorney - but that is probably pointless early in the process if the city rules it out.

I highly doubt any institutional lender, big or small, will provide a loan without insurance. It is a written requirement in every mortgage I've ever seen. Also - you probably wouldn't want to close on the property without insurance as you would also lack protection.

What is the reason you can't secure insurance? The better question is to figure out how to get insurance and resolving the reason that is preventing it.

@Alexander F Pollock

You may lose a tax benefit of a stepped up basis for capital gains purposes transerring interest away from her parents.

Also consider conducting a judgment searches on all parties to the transaction to confirm there will be no title problems for would come up when the LLC sells in the future because you will not have title insurance to cover prior owner issues. Many people say "I know for a fact none of my family has judgments" but family members regularly do not discuss their financial problems with other family members, may be unaware of legal issues and their standing, and there also could be fraud.

You should also consider any prior spouses among the parties that ever lived at the property as a marital interest attachs regardless if they were on title unless resolved by express court decree (in which case former spouse should join the conveyance).

An attorney is not required - though you will need a properly drafted deed, GITREP form, and affidavit of consideration to record. Obviously, the deed has to be compliant.  Most people hire  an attorney to (a) save time; (b) trouble spot issues. For example, my client recently tried to do a deed transfer, and when I reviewed the deed history and names they were proposed on the transfer - there were discrepancies. Small issue - but one that could be impactful in the future whereby the chain of title could be broken if parties are not around anymore to issue affidavits to the error.

@Michael Chalke What city is this located in? The original post mentioned Passaic County - but rent control will vary per municipality. 

As far as not renting to Section 8 tenants, it goes beyond not renewing. Landlords in New Jersey cannot even decline a tenant due to Section 8 as a violation of anti-discrimination laws per Appellate Division:

, 157 N.J. 602, 618 (N.J. 1999) (“We affirm the Appellate Division's holding that a landlord's refusal to accept a Section 8 voucher violates both the letter and the spirit of N.J.S.A. 2A:42-100. 304 N.J. Super. at 589. The plain language of the statute, the legislative history, and our state's important policy of providing protection for low-income tenants all support the conclusion that the statute encompasses Section 8 vouchers. We find it highly unlikely that the Legislature, having demonstrated its strong commitment to the protection of tenants from unjustifiable evictions, would have intended to permit the eviction of an exemplary tenant solely for the reason that the federal government has found her qualified to participate in the Section 8 housing program pursuant to which the government pays a portion of her rent. ”)

@Patrick Scalici Avoid taking over any tenant owned properties. Removing tenants is a serious pain in New Jersey - though I realize those specific deals may be rehab and profit opportunities. If you're going under contract, make sure it is required to be delivered vacant of all tenants (and you'd probably save a good amount of time making that known upfront before entering contract negotiations). I see many times the deals get sent to the attorneys to "handle it" but this should be sorted out upfront whether tenant stays or goes.

In terms of having the tenant removed, there is no way to have them removed from the legal perspective if they are paying rent and you weren't going to move into the unit. There is a few other reasons to evict that are not applicable 99% of the time.

@Roy Kinzer Rent control in NJ can be a tough pill to swallow and unfortunately has caused many of my deals to fall apart quickly once buyers/future landlords realize how strict the controls can be. In Jersey City, it doesn't kick-in until 4-units - so for the smaller multis or single-units it is not a problem. The rent control in some cases is really unfair to the landlord as the percentage increases are virtually irrelevant when the rent is a small amount.

@Derrick E. NJ is very tenant friendly state on the legal side. Rent control obviously in the cities that have it. However, eviction must be by cause (i.e. you can never evict without a justifiable reason - so more or less you are stuck with a tenant unless they stop paying rent or breach their lease, or some other narrow units such as moving in or curing code violations - though then you have to pay relocation costs).

@Dustin Tucker You should expect 1-3 months for eviction timing. It could vary of course depending on the defenses of the tenant and if the court is presently backlogged.

Hello Shalini:

You would not need a license if the real estate entity owning the property management company also is the same entity that owns the real estate. "The provisions of this article shall not apply to any person, firm, partnership, association or corporation who, as a bona fide owner or lessor, shall perform any of the aforesaid acts with reference to property owned by him." N.J. Stat. § 45:15-4. 

You are not the entity itself - but the entity itself cannot take any real word action without a human (at least with technology today!) and so any interpretation that would require to get you a license to act on behalf of the owning company does not make sense to me. 

You also cannot act as a broker or advertise/represent yourself as a broker, without a license. ("No person shall engage either directly or indirectly in the business of a real estate broker, broker-salesperson, or salesperson, temporarily or otherwise, and no person shall advertise or represent himself as being authorized to act as a real estate broker, broker-salesperson, or salesperson, or to engage in any of the activities described in R.S. 45:15-3, without being licensed so to do as hereinafter provided.) N.J. Stat. § 45:15-1.

That said, if you are an employee of a company and don't collect compensation, and you do not hold yourself out as a broker in any fashion - there may be situations on case-by-case basis you may not need a license for some tasks. ("A real estate broker, for the purposes of this article, is defined to be a person, firm or corporation who, for a fee, commission or other valuable consideration, or by reason of a promise or reasonable expectation thereof, lists for sale, sells, exchanges, buys or rents, or offers or attempts to negotiate a sale, exchange, purchase or rental of real estate or an interest therein, or collects or offers or attempts to collect rent for the use of real estate or solicits for prospective purchasers or assists or directs in the procuring of prospects or the negotiation or closing of any transaction which does or is contemplated to result in the sale, exchange, leasing, renting or auctions of any real estate . . ." [N.J.S.A. 45:15-3]. However, I would not recommend relying on this - better to be on the safe side of legal compliance.

You can also submit grey area questions directly to the New Jersey Real Estate Commission.

That said, if a company owns real estate, and another company is the manager of real estate, and that manager company gets some time of compensation or arguably holds itself out as doing the business of a broker, you would need a license or should get one to be on the safe side. Being a member of two companies is not an exception. This would be an end-run around real estate agency licensing law.

For utilities, whenever there is separate meters for a unit (such as a single-family) tenant will handle those utilities. Multi-family without separate meters may need more unique billing arrangements such as passing the costs through to each tenant on a square footage basis.

As far as insurance, landlord will have to maintain their own insurance per mortgage requirements. Lease should make tenant secure renter insurance. You could make the tenant get property insurance - but customarily residential tenant will not pay for insurance.

@Eric Fernando My firm handles tenant disputes, including eviction, non-payment, etc. as part of our regular practice. We work across North Jersey - including Morris County. PM me if you still need help with this.