Selling a property is a significant undertaking, and the process can become even more complex if your property is mortgaged. In New Jersey, there are specific steps and important considerations to keep in mind to ensure a smooth transaction. This guide will walk you through the process and highlight how professional assistance can simplify your experience. 

Steps to Sell a Mortgaged Property 

1. 1. Ensure that you have Clear and Proper title.   Are you the only owner? Is there an Estate?  Is ownership in question? Is the property owned in a business entity such as an LLC or Corporation? 

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1. 2. Review Your Mortgage Details. Begin by thoroughly reviewing your mortgage agreements. Understand any prepayment penalties or other terms that may impact the sale. In New Jersey only commercial mortgages can carry a pre-payment penalty. If you have a hard time understanding any specific clauses or conditions related to selling the property in the agreement, it is best that you consult a professional.  

Unless your prospective buyer will take the property subject to the mortgage or assume the mortgage you should request a mortgage payoff statement from your lender to determine the exact amount needed to satisfy the loan. A mortgage payoff statement is a document that provides the exact amount needed to pay off your mortgage in full, including any interest, fees, and penalties up to the payoff date. The payoff statement is usually sent to you, your closing agent or attorney, within two weeks upon request. 

Once you have reviewed your mortgage agreement and received the payoff statement, you can proceed with the sale of your property with a clear understanding of your financial obligations. This ensures that the mortgage will be properly settled, allowing for a smooth transfer of ownership. 

Keep in mind that if you owe more than the property sells for, you will need the approval of your mortgage holder or holders to conduct what is known as a short sale. 

1. 3. Prepare Your Property for Sale. First impressions matter. Identify areas for improvement and strategic repairs or upgrades that will enhance your property's overall value. Highlight your property's unique characteristics that meet market demands. A welcoming and visually appealing space resonates with buyers which increases your chances of a successful sale. The opposite is true a cluttered or poorly staged home can deter potential buyers and undermine your selling potential. 

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2. 4. Hire a Real Estate Agent. Select a knowledgeable real estate agent with experience in the New Jersey market. They will assist you in listing your property, setting a competitive price, and skillfully handling negotiations.  Law Offices of Michael Fourte, we offer comprehensive services for both residential and commercial closings. Our dedicated team will manage every aspect of your transaction, from listing your property to efficiently closing the sale, ensuring a seamless and hassle-free experience for you. 

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3. 5. List Your Property. Your chosen real estate agent will undertake the critical task of listing your property on a variety of real estate platforms. Fourte International Real Estate strategically leveraging platforms like the Multiple Listing Service (MLS) to maximize exposure to potential buyers, ensuring your property garners significant attention in the market. 

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4. 6. Accept an Offer. Once the listing generates interest and offers start rolling in, your agent will play a pivotal role in guiding you through the process. They'll assist in reviewing each offer meticulously, considering various factors such as price, contingencies, and terms. With their expertise, they'll negotiate on your behalf to secure the most favorable deal possible, ensuring that your interests are protected throughout the negotiation process. 

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5. 7. Provide Required Disclosures. Transparency is key in real estate transactions. Under the New Residential Off-Site Conditions Disclosure Act (N.J.S.A. 46:3C-1 et seq.), it is imperative to disclose all known latent issues and relevant information regarding your property's condition to prospective buyers. This ethical practice not only builds trust but also helps mitigate potential legal risks and liabilities in the future. As required by New Jersey law, buyers must be given ample opportunity to inspect the property. Law Offices of Michael Fourte will guide you in ensuring that all necessary disclosures are made in accordance with local laws and regulations. 

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6. 8. Open Escrow. Upon accepting an offer, the next step is to open an escrow account. An escrow account is typically managed by a neutral third party, where the buyer will deposit their earnest money. This earnest money demonstrates the buyer's commitment to the purchase and is held in escrow until the completion of the transaction. 

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7. 9. Coordinate with Your Lender. Communication with your lender is essential throughout the sales process. You'll need to inform your lender about the impending sale and collaborate closely with them to coordinate the mortgage payoff process with the closing agent. This ensures a seamless transition and timely fulfillment of all financial obligations associated with the property. 

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8. 10. Walkthrough. Allow the buyer to conduct a final walkthrough of the property to ensure it hasn’t changed materially from when they last inspected.  This is a good time to take note of the final meter reading for things like heating oil, water, gas and electric services that will no longer be your responsibility once title to the property is conveyed to the new buyer at settlement. 

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9. 11.Settlement. Normally, the buyer will hire a title company to conduct a title search in order to verify the property's ownership history and ensure that there are no outstanding liens, encumbrances, or legal issues that could impede the transfer of title. As the Seller you'll sign the necessary documents and officially transfer ownership of the property to the buyer, facilitated by the title company and/or the attorneys.  Beforehand you’ll need to draft a deed transferring the property, as well as other documents and forms required by the State Government, Federal Government, buyer’s Title company and the buyer’s lender. 

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10. 12. Pay Off the Mortgages. With the sale proceeds in hand, it's time to settle any outstanding mortgage obligations. Your lender will be paid off using the funds from the sale, and any remaining proceeds will be disbursed to you as outlined in the terms of the sale agreement. This final step brings closure to the transaction, allowing you to move forward with confidence knowing that all financial matters have been satisfactorily resolved. 

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11. 13. Post Closing.  This is a good time to cancel all utility services to ensure you are not overbilled.    You can expect that the deed you signed will be recorded in the County records by the Buyer or his title company within a few weeks of your closing.   Your lender should also record what is known as a satisfaction of mortgage which gives notice in the public records that your mortgage has been paid off.  You should also look for the same notice on your credit report.  Keep in mind that when you sell real estate for a profit the IRS and NJ Department of Taxation will be looking for a cut of the proceeds.  It is advisable to speak to your financial professional about the tax implications of the sale. 

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By Jerrom Abainza, 2026 JD Candidate, Legal Assistant 
and Michael W. C. Fourte, Esq 

Avoid the Hassle of Selling a Mortgaged Property 

Selling a mortgaged property can be complicated and time-consuming. Why deal with these challenges alone when you can get expert assistance? Whether you're buying or selling, let Fourte International Real Estate and Law Offices of Michael Fourt be your partners in achieving your real estate goals.  

Why Choose Us? 

• Expertise: With 20+ years of experience and a commitment to excellence, we are a team of real estate agents and legal professionals who have extensive experience in New Jersey and New York real estate markets. 

• Personalized Service: We tailor our services to meet your unique needs and preferences, providing attentive guidance every step of the way. 

• Transparency: We believe in open communication and full transparency, keeping you informed and empowered throughout the closing process. 

• Peace of Mind: Trust us to handle all legal and financial aspects with precision and care, giving you peace of mind during this important transaction. 

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Contact us today to learn more about how we can help you sell your property quickly and efficiently!