Attorney review defined
Every time you enter into a contract for real estate in the State of New Jersey, you will find an attorney review clause. If you are an out of state residence, and purchasing a home for the first time in New Jersey, this clause may be new to you, and it is important for you to understand it.
Most folks think that once both sides of a transaction have signed a contract, it is binding….pretty logical assumption. BUT this is the state of New Jersey, and we like to make things a little more interesting. As with everything that is overseen by a governmental body, good intentions meet complications.
Once a real estate contract is signed, the contract is NOT valid until three days have passed since the fully executed document was received by both parties. The three day period gives both parties time to have their attorneys review the contract and make comments and changes. If no changes are made, the contract is firm after the three business days pass. This almost never happens. Everyone uses attorneys in this slice of the world, and attorneys love to make comments.
Once either of the attorneys makes a comment, the three day period is thrown out of the window and the contract is not valid until there is agreement between the parties on the revised language. Essentially, the attorney making the first change disapproves of the contract, but will approve it if the other party agrees to the revisions. This can result in a bit of a ping-pong match between attorneys, and can last an indefinite period of time. There have been instances where attorney review lasts weeks. Conversely, review can end PRIOR to the three day period if both attorneys agree to the revised language quickly.
To add to the potential delays in this design, some folks do not want to sign a contract until they have their attorney review it…meaning that attorney review can’t start until the attorney reviews it prior. I have never understood this though process, as the contract that they sign is not binding anyway…at least until their attorney reviews it…but somehow it brings comfort to some buyers or sellers.
This is a dangerous market to have delays in the contractual process. Homes are selling fast, and while a buyer may want to exercise caution prior to signing a contract, they may find that someone comes along and brings in a competing offer while attorney review languishes. In a fast paced market, it makes sense to fully understand the attorney review process, utilize it, and speed it along!