Your Complete
NJ Home Buying
Guide
Understand the purchase contract, attorney review period, buying timeline, and everything in between — in plain English.
What Is a Purchase Contract?
So you're buying a home in New Jersey. At some point, someone is going to slide a document across the table called the Purchase Contract — and expect you to sign it.
A purchase contract is a legally binding agreement between a buyer and a seller that spells out the terms of a real estate transaction. Once both parties sign it and all contingencies are met, both sides are committed.
Think of it as the rulebook for the whole deal. New Jersey uses a standardized form called the NJAR Form 118 — every licensed NJ real estate agent uses this, regardless of which brokerage they work for.
The contract covers:
New Jersey is one of the few states that has an Attorney Review Period built directly into the purchase contract. This is a big deal — and gets its own section in this guide. Don't skip it.
The Key Players
Before we get into the contract sections, let's make sure everyone's on the same page about who's who in a New Jersey real estate transaction.
Buyer
The person (or people) purchasing the property. If you're financing, your lender is also very much in the picture, even if they're not literally at the table.
Seller
The current owner. They've agreed to sell — but nothing is final until both sides sign the contract.
Buyer's Agent
The real estate agent representing the buyer. Legally required to act in the buyer's best interest. This is Sweta's role when she represents you.
Listing Agent
The real estate agent representing the seller. Same professional obligations — but for the other team.
Attorneys
In NJ, both buyer and seller almost always hire their own real estate attorney. This is strongly recommended and standard practice. Your attorney reviews the contract during Attorney Review.
Title Company
Researches the property's ownership history to make sure the seller actually has the legal right to sell it and that there are no outstanding liens or claims on the property.
Lender / Mortgage Company
If the buyer is financing the purchase, the lender has to approve the loan before closing. They're not a signer on the contract, but they control whether the deal actually closes. As a licensed mortgage broker, Sweta can assist with both your real estate and mortgage needs — giving you a single trusted point of contact throughout the entire transaction.
The Main Sections of the Contract
The NJ Form 118 has a lot of sections. Click each one to expand and learn exactly what it means — and what to watch for.
The Attorney Review Period
This is the most important NJ-specific thing in this entire guide. Read it twice.
Once both buyer and seller have signed the contract, the Attorney Review Period begins. Both parties have 3 business days to have their attorney review the contract.
During Attorney Review, either party can:
Both attorneys sign off and the deal moves forward with no changes.
Either party can walk away with deposits fully returned — no penalty.
Send a disapproval letter with counter-proposals. This is what usually happens.
What can be changed during Attorney Review:
Until Attorney Review is complete, you don't technically have a done deal. Don't book movers. Don't give notice on your apartment. Wait for the all-clear from your attorney.
The Full Timeline
Here's a realistic picture of what happens between making an offer and getting the keys. Click any step to learn more.
Typical Total Timeline
Terms You'll Hear
Real estate has its own language. Here's a plain-English translation of the terms you'll encounter during your NJ home purchase.
Escrow
A neutral holding account where deposits are kept until closing. Neither buyer nor seller can touch this money without both agreeing.
Contingency
A condition that must be met for the deal to go through. If the condition fails, the buyer can usually exit without penalty.
Earnest Money
The deposit that shows the buyer is serious. Usually 1–10% of the purchase price. Goes toward the purchase price at closing.
Clear to Close
The lender's green light that the mortgage is approved and the loan is ready to fund. This is the signal that closing can proceed.
Title
The legal ownership of the property. 'Clean title' means no one else has a claim on it.
Lien
A legal claim against the property, usually for unpaid debts. A contractor you didn't pay, for example, can put a lien on your home. Liens must be cleared before selling.
Appraisal
An independent estimate of the property's market value, ordered by the lender. If the home appraises for less than the purchase price, the lender won't loan more than the appraised value.
Pro-rations
At closing, some costs (like property taxes) get split between buyer and seller based on who owned the home for what portion of the year.
Deed
The legal document that transfers ownership from seller to buyer. Signed at closing, recorded with the county.
Mortgage Commitment
A formal letter from the lender saying they've approved the loan. This is different from pre-approval — it's the real deal.
Attorney Review Period
A 3-business-day window (NJ-specific) after contract signing where both parties' attorneys can review, modify, or reject the contract with no penalty.
NJAR Form 118
The standardized NJ Statewide Residential Contract of Sale used by all licensed NJ real estate agents. The official purchase contract form in New Jersey.
Inspection Contingency
A clause that gives the buyer the right to have the home inspected and to negotiate repairs, credits, or walk away if issues are found.
Financing Contingency
A clause that protects the buyer if they cannot obtain mortgage approval. The buyer can exit the contract and get deposits back if financing falls through.
Title Insurance
Insurance that protects against hidden title issues (unpaid liens, ownership disputes) that may surface after purchase. Lender's policy is required; owner's policy is highly recommended.
Radon
A naturally occurring radioactive gas that can accumulate in homes. NJ has elevated radon levels in many counties — always get a radon test during inspection.
Underground Oil Tank
Older NJ homes may have buried oil tanks that can leak and cause environmental liability. Always inspect for these during the due diligence period.
Seller's Disclosure
A document where the seller lists known material defects about the property — water damage, structural issues, environmental hazards, etc.
Common Mistakes to Avoid
Most deal problems are preventable. Here are the ones that come up over and over — and how to avoid them.
#1Making Big Financial Moves During the Transaction
Could lose mortgage approvalDon't open new credit cards, change jobs, or make large purchases while your mortgage is processing. Lenders re-check your credit before closing. Even a small change can jeopardize your loan approval.
#2Skipping the Inspection
Could inherit costly problemsEven in a competitive market where waiving inspections is tempting, you're taking on unknown risk. At minimum, negotiate an informational inspection so you know what you're buying. In NJ, always test for radon and check for underground oil tanks.
#3Not Hiring a Real Estate Attorney
Could miss critical protectionsNJ is an attorney state. Yes, you can technically skip it. No, you shouldn't. Attorneys catch issues your agent won't and negotiate language that protects you — especially during the Attorney Review Period.
#4Assuming Verbal Agreements Are Binding
Could lose promised itemsIf it's not in the contract, it doesn't exist legally. If the seller promised to leave the washer and dryer, the dining room chandelier, or the outdoor furniture — get it in writing. Verbal promises are unenforceable.
#5Missing Deadlines
Could forfeit your depositThe contract has hard deadlines — for the mortgage commitment, the inspection, the deposits. Missing them can put you in default. Put every date in your calendar the moment you sign, and set reminders a few days in advance.
The Bottom Line
A purchase contract is a serious legal document. Read it. Ask questions. Hire an attorney. Use the Attorney Review Period. The whole system exists to protect you — but only if you actually use it.
Work With Sweta
Ready to find your home in New Jersey? Sweta Patel is here to guide you through every step of the process.
Sweta Patel
Broker Associate
RE/MAX First Realty