By: Susan Marra
You have reached an agreement to buy or sell at a particular price. In most cases, there is a real estate agent involved, and the agent prepares a contract for signature by both parties. If there is no real estate agent involved, we urge you to consult us before you sign any document. In New Jersey, broker-prepared contracts are subject to review and modification by an attorney. Other contracts may not be, and once they are signed, they may not be changed to properly protect the parties.
After the broker-prepared contract is signed by all the parties, each party then retains an attorney to review it and ensure that it adequately protects their interests. The attorney has three business days, beginning from the date of the last signature on the contract, to either accept the contract, reject it, or try to agree with the other attorney to modify it. This three-day period is called the attorney review period. If three days are not enough to review the contract, the attorneys may agree among themselves to extend the attorney review period. The attorney does not have to give a reason in order to reject a contract during the attorney review period. Thus, if after having received the benefit of legal counsel a client decides to change his or her mind and cancel the contract, he or she may do so by instructing the attorney to cancel it on his or her behalf. Typically, certain revisions to the contract are negotiated during the attorney review period, and a rider to the contract is prepared and executed by the buyer and seller incorporating these changes.
Once the attorney review period expires, the buyer and seller are now legally obligated and bound by the terms of the contract. Typically, these terms include conditions that must be met before closing occurs, such as a satisfactory inspection of the property, and the buyer being able to obtain a mortgage for a specific amount. If these conditions are not met, then the contract may be canceled even after the expiration of the attorney review period, but within certain time frames. It is extremely important for both buyer and seller to note and comply with all time frames in the contract. Failure to comply with the time frames may result in the party waiving his or her rights.
This publication is intended for general information purposes only and does not constitute legal advice. The reader should consult legal counsel to determine how the law may apply to specific situations.