As a New Jersey real estate lawyer, I do lots of closings. It’s a big part of our business. Often times when we represent sellers and ask them for the documents from when they purchased the property we hear, “I have no idea where they are” or “I threw them out”. Not only is this bad practice for privacy and security concerns, but it can also impact a sellers ability to sell their home and sometimes cause the seller to come out of pocket several hundreds of dollars to rectify the same. For example, a title report run by the purchaser of the subject property might show that there are prior judgments against the previous sellers still listed against the property. As such, the purchaser’s title company will most likely ask for a copy of the sellers’ title insurance policy to see how these judgments were dealt with. If the sellers cannot locate the said policy, it can be an issue, because the sellers will have to either go back to the title company they used when they purchased the property or contact the attorney they used (if their present attorney did not handle the transaction) to see if they can provide them with a copy. Depending on when the transaction took place the title company or the attorney may have a copy of the policy, but it may be in storage. Consequently, the sellers may have to pay for their time as well as the copy.
A worse scenario happens if the attorney retires and the said title company is out of business, and never transferred their files. In such an event, the sellers may have to contact their lender to see if it has a copy of their owners and lenders policy, and if not, the sellers may have to look to the underwriting company for a copy of the same. This can take time (e.g., weeks), which cannot only delay the transaction, but risk losing it, as a purchaser may get aggravated and move on to another property.
Another reason to keep the documents has to do with taxes or losses when the seller or purchaser is filing there taxes. The closing statement (HUD) will most likely be needed by either the purchasers or the sellers’ accountant to determine any losses or gains with respect to the said transaction. If you cannot find the HUD, you may need to ask your attorney for another copy of the same, which also can take time and cost money.
In light of the above it is important to keep track of your documents from the transaction. If you are worried about the environment and printing too much paper or unnecessary clutter, a good alternative is to ask your attorney to provide you everything via pdf on a flash drive. The reason being is it is takes up much less space and (provided you do not lose it) you will be able to print out as many copies of the documents as you need.
* The information in this blog posting is for general information purposes only. Nothing in this blog or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. The information in this blog is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship.