How to Avoid NJ Attorney Review
Real estate buyers and sellers in New Jersey have come to dread the 3-day Attorney Review period. Although the rules requiring the review period were created to protect parties to real estate transactions, the review period has been abused as a way to artificially force changes in terms and it can result in huge delays in transactions.
New Jersey law mandates the review period in real estate contracts—except in certain cases. So how can you avoid the Attorney Review period? Here’s how to avoid that troublesome requirement.
What is the Three-Day Attorney Review Period?
The Attorney Review requirement was created to settle a dispute between lawyers and real estate agents. Real estate contracts are extremely complicated legal documents, and attorneys pointed out that when real estate agents prepare these documents, they are essentially practicing law without a license.
The compromise solution was to allow real estate agents to write up their own contracts (they use a standard form) but to require that buyers and sellers be given three business days to have the terms reviewed by an experienced real estate attorney to determine whether the provisions provide the right level of protection for the client.
The law does not require buyers or sellers to consult an attorney. It merely gives them time to do so. During that time, the contract can be canceled for any reason. The “three day” review process must start within three days of the signing of the real estate contract, but it can take much longer than three days to complete. Attorneys can request an extension for a variety of reasons, including simply being too busy to complete the review. Attorneys have been known to set aside all the arrangements worked out by buyers and sellers, destroying transactions and causing unproductive delays that last for months. But the problems with the review period run far deeper than that.
Abuse of the Attorney Review Period
Both buyers and sellers sometimes use the Attorney Review period as an opportunity to force last minute alterations in a contract or to shop for better deals. The New Jersey Supreme Court has interpreted the Review Period requirement as allowing a cancellation for any reason. This has allowed sellers to cancel if they receive a better offer in the interim or buyers to pressure for concessions after a seller has taken actions based on the expectation of a sale.
There is a Way to Avoid the Need for an Attorney Review Period
The requirement provides a loophole that can be advantageous to both buyers and sellers in New Jersey. Contracts only need to provide a three-day Attorney Review period if those contracts are prepared by a real estate agent rather than an attorney. If real estate agents are not involved in the transaction and a real estate attorney prepares the contract instead, as in an For Sale By Owner transaction, then the attorney can omit the Attorney Review period. This creates certainty and security for both parties and avoids the potential for unnecessary delays.
The Advantages of Having a Real Estate Contract Prepared by an Attorney Rather Than a Broker
When real estate agents write up contracts, they are simply filling in blank spots in a generic form prepared by a attorney for the Realtor’s association. The contract may lack critical terms that should be included to protect your interests based on the details of your unique situation. Or it may include terms that could harm your interests.
Working with an attorney when preparing your contact allows your legal advisor to consider the most advantageous terms for every single aspect of the contract. If you have looked at a real estate contract, you know that they cover quite a few issues, and many of those issues can come back to haunt you later if the provisions are not worded to your advantage. A real estate attorney can ensure that you understand each and every provision and that the whole agreement is crafted to ensure your protection in the transaction.
Avoid Attorney Review Problems with For Sale by Owner by the Galam Firm
Although an FSBO transaction may seem risky at first glance, when you work with a dedicated real estate attorney during the process, your interests can be better protected than if you worked with a real estate agent who lacks a full understanding of the law. At For Sale by Owner by the Galam Firm, we assist sellers in FSBO from the very start of the process. We can help with legally marketing, negotiation, contract terms, and much more—all for a flat fee. Take the risk out of your sale by working with For Sale by Owner by the Galam Firm.