Attorney Review: 3 seconds, 3 days or 3 Weeks?

There is some confusion about how long the Attorney Review process lasts.  New Jersey Realtors Standard Form of Contract is the primary contract used in New Jersey residential real estate transactions.  The contract itself encourages both the Buyers and the Sellers to consult an attorney.  Drafted in close association with the NJ State Bar Association, the contract is 14 pages long, includes 43 numbered Paragraphs or clauses and each line is numbered 1 – 770.  The Attorney Review Clause is found at the top of Page 13 in Paragraph 35 and lets all parties know that the contract “will be legally binding unless an attorney reviews and disapproves of the Contract.”

You may have heard the term “boiler plate” in relation to contracts.  Boilerplate is a common term used to describe stock language in a legal document that appears in all instruments of that type; general, standardized language in a legal instrument.  The NJ Realtors contract is standard and its provisions are mostly “boiler plate” in the sense that nearly all contracts use the same form.  There are, however, multiple places that require the transaction specific information such as price, dates for performance and special provisions.

The contract is the most important part of the transaction. It determines your rights, risks, and obligations. Signing the contract is a big step. A lawyer would review the contract, help you to understand it, and to negotiate its terms.

Let’s take a look at what the contract tell us regarding Attorney review:

35. ATTORNEY-REVIEW CLAUSE: (1) Study by Attorney. Buyer or Seller may choose to have an attorney study this Contract. If an attorney is consulted, the attorney must complete his or her review of the Contract within a three-day period. This Contract will be legally binding at the end of this three-day period unless an attorney for Buyer or Seller reviews and disapproves of the Contract. (2) Counting the Time. You count the three days from the date of delivery of the signed Contract to Buyer and Seller. You do not count Saturdays, Sundays or legal holidays. Buyer and Seller may agree in writing to extend the three-day period for attorney review. (3) Notice of Disapproval. If an attorney for the Buyer or Seller reviews and disapproves of this Contract, the attorney must notify the Broker(s) and the other party named in this Contract within the three-day period. Otherwise this Contract will be legally binding as written. The attorney must send the notice of disapproval to the Broker(s) by fax, e-mail, personal delivery, or overnight mail with proof of delivery. Notice by overnight mail will be effective upon mailing. The personal delivery will be effective upon delivery to the Broker’s office. The attorney may also, but need not, inform the Broker(s) of any suggested revision(s) in the Contract that would make it satisfactory.

In practice, most buyers and sellers are electronically signing the contract.  The Buyers real estate agent fills in the appropriate information in the contract (and in many cases autofills in their software program) and then sends to the Buyers for electronic signature.  The signed offer is then forwarded to the agent representing the Seller (the Listing Agent).  Once the Seller “accepts” the offer by signing the contract, the fully signed version is forwarded to the attorneys.

The confusion about how long the Attorney Review process comes from the language of the contract where it states that the contract will become legally binding “at the end of this three-day period unless an attorney for Buyer or Seller reviews and disapproves of the Contract.”  In daily practice, the attorney review process will end automatically after 3 days if neither attorney does anything, but most attorneys will send their letters quickly because it is in the best interests of their clients.  Attorney Review can be finished quickly or can take weeks, depending on the issues.

The main issue is that either party can terminate for any reason without penalty during the attorney review process.  Their attorney simply needs to communicate the termination pursuant to the Attorney Review clause.

Because the most commonly used contract form is a standard form, most real estate attorneys also use a standard attorney review letter that modifies or enhances certain of the boilerplate provisions of the standard contract depending on whether they are representing the Buyer or the Seller.  This is both good and bad.  It allows for a quick review letter, but often there are many provisions of an attorney review letter that don’t apply to the specific deal.  Additionally, not all agents know how to complete the standard form properly or thoroughly and that leaves gaps in the understanding of the parties.

At Lloyd Law Office, we’ve been working with the New Jersey Standard Form of Contract for nearly 25 years and have seen the form evolve through the years.  We’ve also seen a lot of situations arise that are not covered by the boilerplate language of the standard form.  This means that we learn from deals that have fallen apart and try to guard against such problems happening in the future.  Many times, the real estate agent wants the attorney review process to be completed as quickly as possible.  At Lloyd Law, we also want to move quickly but, more importantly, we want the attorney review process to bring clarity to the understanding of the parties and to guard against any problems that may arise during the course of the transaction.  So whether it is 3 seconds, 3 days or 3 weeks, we want our clients to know that we are looking out for their best interests and will ensure the contract protects them.

Most real estate agents have a few attorneys that they will recommend or refer to Buyers or Sellers.   It is important to remember that these are only recommendations.  Buyers and Sellers can choose to work with any attorney that they want.  We hope that you’ll decide to work with us!!