by Patricia A. Kieck, Esq.
All residential real estate contracts and leases prepared by real estate brokers are subject to attorney review. This is mandated by caselaw and regulation. Both the Buyer and the Seller have the right to obtain their own counsel to review the Contract prepared by the real estate broker. The attorney can reject the contract, accept the contract or make changes to the contract. Before an attorney rejects or accepts a contract, the client should understand the ramifications of such action. If the attorney rejects the contract and proposes changes to the contract which are not accepted by the Seller or the Buyer you have no deal. If you accept the contract, but the client wasn’t sure or perhaps was waiting for another offer and the other party accepts the contract, you have a deal if the other party has not disapproved the contract. If a party does not retain counsel to review the contract, then the attorney review does not apply to that individual.
The attorney review period begins the day after delivery of the fully signed written contract to both the buyer and seller. Each of the parties has the same three-day period to accept, reject or make changes to the contract. Saturdays, Sundays and legal holidays do not count. The receipt of the contract must be to the parties and not their respective brokers. In Gordon Development Group, Inc. the Buyer contended that the Seller and the Buyer were entitled to separate review periods commencing when they each received the signed contract. This is not the case. The review period begins when they both receive the contract. Typically, the seller receives the contract when he/she signs off on the bid made by the Buyer. The Buyer will usually receive a fully signed contract after that and conceivably a day or two later.
The attorney review period ends at 5:00 p.m. on the third day if no changes are made by an attorney. The review period does not have to last the three full days if both the Seller and Buyer accept the broker prepared contract or agree to changes. In that case, the attorney review period ends by agreement.
If you intend to terminate the contract during the attorney review period, an attorney must send written notice not only to the attorney representing the other party, but also by certified mail, return receipt requested to the other party and the real estate brokers. If this is not done, the termination will be ineffective. This could be costly especially if you have signed another contract. You could be bound to purchase two homes or sell your home to two buyers.
i New Jersey State Bar Ass’n v. New Jersey Ass’n of Realtor Bds., 93 NJ 470 Modified, 94 NJ 449 (1983); NJAC 11:5-6.2(g) 1 and 2.
ii Gordon Development Group Inc. v. Peter Bradley, A-2309-01T3 (July 18, 2003)
iii Romano v. Chapman, 358 NJS 48 (App. Div. 2003) cert. denied.