There’s a lot of money involved when purchasing or selling residential property. That’s why all parties must be aware and informed when it comes to agreeing to the terms of the purchase. A purchase agreement includes the purchase price, address of the property, deposits to be paid, closing date, and several other “material” (i.e., essential) terms.
Let’s look at, for example, the New Jersey Association of Realtors Standard Form Of Real Estate Contract. This basic contract is twelve pages long with about 43 clauses. However, the buyer and seller each has only three business days to review and/or cancel the contract (the “Attorney Review Period”) if the terms are not agreed upon. The three day period is held “open” once an attorney proposes changes on behalf of either the buyer and/or seller, until the parties agree on all changes.
If no action whatsoever is taken by either attorney during the Attorney Review Period, the contract becomes legally binding, and its terms must be adhered to or legal penalties will be incurred by the defaulting party. That is why when you have signed a contract to buy or sell a property, an experienced attorney is a must and can help review the contract to make sure it meets your expectations and legally protects your interests.
Understanding the review and cancel period
It is critical to understand that the Attorney Review Period applies, by law, ONLY to contracts which have been prepared by a licensed Realtor. Private contracts (those prepared by attorneys or the parties themselves) do not have a review period unless specifically stated in the contract itself. Hence, the parties are advised to NEVER sign a non-Realtor prepared contract until and unless advised to do so by their attorneys, unless the contract specifically contains a review clause.
When applicable, the three-day period begins on the day the fully signed contract (executed by all buyers and sellers) is signed by the LAST party AND is delivered to the buyer and seller. Saturdays, Sundays and holidays don’t count. If an attorney is consulted, the attorney’s review must begin the review and communicate, in writing, any proposed modifications or a cancellation within the three-day review period. However, the buyer and seller may agree, in writing, to extend the three-day period, if more time is required to complete the review for any reason.
Failure of buyer or seller to settle
Clause 25 of the New Jersey Association of Realtors Standard Form Of Real Estate Contract informs the buyer and seller what legal penalties will be suffered if the buyer or the seller fails to close the title to the property in accordance with a legally binding contract. The buyer or seller can seek legal or equitable action (i.e., a lawsuit) for economic damages suffered, if the contract is not followed (i.e., breached) by the other party.
The experienced real estate attorneys at Mariano & Coiro, P.C. are here to help you review your real estate purchase/sale agreement, and have been representing real estate clients for over 35 years. Contact us through our website or call 732-860-7620 to schedule a FREE and CONFIDENTIAL consultation with our trusted and experienced real estate team.