askinlawsliderimage2vibrantMost people in the process of buying or selling a home typically work with their real estate agent to either make or accept an offer on a home and sign a contract.  This is because every contract contains a mandatory attorney review provision that provides that each party has three days to have their own attorney review and either (1) approve the contract or (2) disapprove the contract and propose edits that would make it acceptable. If the three-day review period passes without an attorney review, the contract becomes final and enforceable.

Most real estate form contracts also contain an outdated provision that the attorney review letter must be sent by certified mail, telegram or personal delivery to the realtors; however, no delivery method is typically prescribed for notice to the receiving parties’ attorney.  The realtor delivery provision was recently challenged in court.

Contract Termination During 3-Day Attorney Review Period Confirmed Even if Notice to Realtor Was Defective

The New Jersey Appellate Division recently affirmed a trial court’s ruling that a residential seller effectively terminated her sale agreement with buyer during the agreement’s three-day attorney review period, even though the notice of cancellation was not sent by certified mail or personal delivery to the real estate agent.  Conley et al. v. Guerrero et al., App. Div. (Ostrer, J.A.D. )

In this case, the seller’s attorney sent the disapproval letter by facsimile and email to the buyer’s attorney and by email to the realtor, a dual agent. It was undisputed at trial that the realtor, the buyer’s attorney, and the buyers received actual notice of the disapproval. Moreover, the realtor did not complain about the method of delivery.

Nonetheless, buyers in this case, who were dissatisfied with the disapproval and cancelation attempted to enforce the realtor’s right to notice of cancelation by the contract’s prescribed delivery methods.  The Court refused to elevate form over substance in this matter, and held that substantial compliance sufficed, especially since the buyer did not dispute actual notice of the cancelation.  The Court went one-step further and also held that enforcement of the method-of delivery requirement would result in a disproportionate forfeiture of the seller’s right to disapprove the contract.

Askin & Hooker, LLC has experience in all aspects of real estate transactions, from negotiating the contract to closing the deal. If you have questions about your transaction, please do not hesitate to contact us 973-729-7711.