Escrow can feel like a black box when you are buying or selling in Pennington. You want to know who holds your money, what safeguards you have, and how long each step takes. This guide walks you through escrow in New Jersey, with a focus on Pennington and Mercer County, so you can move forward with confidence. Let’s dive in.
What escrow means in Pennington
Escrow is a neutral process that holds funds and key documents until all contract terms are met. In a Pennington sale, the purchase contract names the escrow holder and sets the rules for how money is managed and released.
- Who holds the earnest money: The contract typically names the listing broker’s trust account, a title or settlement company trust account, or a buyer’s or seller’s attorney escrow account.
- Why it matters: Funds in escrow are kept separate from operating accounts and accounted for under trust rules. You should receive a written receipt that shows who holds your deposit, the account name, and the date it was deposited.
- How it is used: Your earnest money is applied to your purchase price at closing or handled per the contract if the deal ends before closing.
Your escrow timeline at a glance
Every contract is unique, but most Pennington transactions follow a clear sequence. Dates in your signed agreement control.
Offer accepted and contract signed
- Earnest money is due on a short timeline, commonly within 24 to 72 hours. Your agent delivers the funds and obtains a receipt.
Attorney review period
- New Jersey commonly uses a three business day attorney review window. During this time, either party may propose changes or cancel through their attorney.
Inspection period
- Expect 7 to 14 days, depending on your contract. You order a general home inspection and any specialty inspections needed. You can request repairs or credits and negotiate terms.
Financing and appraisal
- Mortgage commitments are often due 30 to 45 days from contract. Your lender orders the appraisal, which must support the loan terms.
Title and municipal searches
- The title company or closing attorney runs a title search, orders Mercer County tax and municipal lien searches, and issues a title commitment. This starts early and continues alongside other steps.
Clear to close and final walkthrough
- Once lender conditions are satisfied, you conduct a final walkthrough, often 24 to 48 hours before closing.
Closing day
- You bring remaining funds by wire or certified check. The closing attorney or title company disburses funds, records the deed and mortgage with the Mercer County Clerk, and issues title insurance. Most financed deals close within 30 to 60 days of contract.
Earnest money basics
Your earnest money deposit shows good faith and is part of your total funds to close.
- Typical amounts: Amounts are negotiated. A common national range is about 1 to 3 percent of the purchase price, though local practice and market conditions influence what is customary.
- Documentation: Ask for a written receipt immediately after delivery, including the escrow holder and when the deposit was placed into the trust account.
- If the deal changes: Release of escrow follows your contract’s dispute resolution terms, which may require mutual agreement or legal action.
Key contingencies that protect you
Contingencies outline the conditions that must be met for the sale to proceed. They give you a clear exit or a path to renegotiate if issues arise.
Inspection contingency
Most buyers include a general inspection period, plus specialty inspections as needed. In this area, that can include radon, septic or well (if applicable), lead-based paint disclosures for homes built before 1978, and other targeted checks.
Financing contingency
If you are financing, your contract sets a deadline for a firm mortgage commitment. If the lender declines the loan within the agreed terms, you may have protections to cancel.
Appraisal contingency
The home must appraise to support your loan. A low appraisal can lead to renegotiation or cancellation if your contract allows for it.
Title contingency
The title commitment should show clear title with acceptable exceptions. The title company or closing attorney works to resolve liens, judgments, or other encumbrances before closing.
HOA or condo review
If the home is in an HOA or condominium, you will receive governing documents and resale information. These review periods are time sensitive and can affect your timeline.
Municipal and tax searches
Your team will order Mercer County and Pennington Borough searches to uncover open permits, municipal liens, and unpaid charges. These items are typically cleared by the seller before closing or handled through negotiated credits.
Who does what in escrow
A smooth Pennington closing relies on coordinated roles.
- Buyer’s agent: Helps you structure your deposit, tracks contingency dates, recommends inspectors, and confirms your deposit is placed and receipted.
- Listing agent: Ensures the deposit reaches the agreed escrow holder, coordinates access for inspections, and works with the seller’s side to address repair and municipal items.
- Buyer’s attorney: Reviews and negotiates the contract during attorney review, orders title, coordinates lender requirements, and reviews closing figures and documents.
- Seller’s attorney: Prepares seller documents, obtains mortgage payoffs, and resolves title or municipal issues.
- Title or settlement company: Issues the title commitment, coordinates recording with the Mercer County Clerk, prepares the closing statement, disburses funds, and issues title insurance.
- Lender and appraiser: Underwrite the loan and confirm value for financing.
Checklist: documents to track
Keep your file organized so you can meet deadlines and respond quickly:
- Executed purchase agreement and any addenda
- Earnest money receipt and escrow holder details
- Seller disclosures, including lead-based paint if applicable
- Home inspection report and repair or credit agreements
- Loan application, conditional and firm commitments, and appraisal
- Title search and title commitment, plus any cure documents
- Municipal lien and tax search results for Mercer County and Pennington Borough
- Payoff statements for existing liens or mortgages
- HOA or condo documents and resale certificate if applicable
- Closing statement with tax and utility prorations
- Deed, recorded mortgage, and title insurance policies after closing
Pennington municipal and title considerations
Local searches are designed to protect you from surprises after closing.
- Recording: Deeds and mortgages are recorded with the Mercer County Clerk in Trenton after closing. The title company or closing attorney handles this step.
- Municipal checks: Searches can reveal open permits, unpaid sewer or utility charges, or local assessments. These items must be addressed before or at closing.
- Certificates: Single family home sales in Pennington typically do not require a municipal Certificate of Occupancy. Requirements can vary by property type, so confirm what applies to your transaction.
Avoid delays and reduce risk
A few habits can keep your escrow on track and your funds safe.
- Confirm the escrow holder in writing and save the deposit receipt.
- Track all contingency dates. Many contracts define deadlines in business days.
- Engage a local real estate attorney experienced in Mercer County closings.
- Ask for early title and municipal search timelines so issues surface with time to cure.
- Verify all wire instructions by calling the closing attorney at a known number to prevent fraud.
- Choose inspectors with local experience and be prompt with scheduling and follow up.
What to expect on closing day
Plan to bring your remaining funds by wire transfer or certified funds, as instructed by your closing team. You will review and sign final documents, including the closing statement and loan package if you are financing. Once funds disburse, the deed and mortgage are recorded with Mercer County, and the title company issues your title insurance policies. You receive keys after recording or as agreed in your contract.
If you want a clear, step-by-step plan that fits your goals and timing, connect for guidance that keeps your escrow on track. Request a Personalized Consultation with Maura Mills.
FAQs
Who holds earnest money in a Pennington sale?
- The signed contract names the escrow holder, which can be the listing broker, a title or settlement company, or an attorney. Ask for a written receipt with the account details.
How long is New Jersey’s attorney review period?
- Many contracts use a three business day attorney review window, but your specific contract controls the exact timing.
What if my inspection finds major issues?
- You can request repairs, credits, or cancellation based on your inspection contingency and negotiated terms, with guidance from your agent and attorney.
What local items commonly delay closing in Pennington?
- Open permits, municipal liens, unpaid taxes or utility charges, and title issues uncovered in Mercer County or Pennington Borough searches can extend timelines.
How are taxes and utilities handled at closing?
- The contract and local custom govern prorations, but real estate taxes are typically prorated to the closing date and shown on the settlement statement.
What is the safest way to send closing funds?
- Most closings require a wire or certified funds. Always confirm wiring instructions by phone with the closing attorney using a known number to prevent fraud.
