This is the first post in what I hope will be a series of short explanatory posts about real estate law.
In New Jersey, when you talk to a real estate agent, they might mention that a house is in attorney review, that a contract was terminated in attorney review or something similar. So you might ask, what is this attorney review thing?
Unlike New York and other states, the contract to purchase a house is drafted by a real estate agent in New Jersey (don’t worry, they all use a form supplied by the NJ Association of Realtors). This contract will include the basic terms of the deal and some boilerplate fine print. It has not, however, been reviewed by an attorney prior to signing. Once both parties sign, the contract is binding. The realtors like this system because they get people to sign quickly, but then many people have contracts they do not understand so what is a person to do?
Luckily, the form contract contains a provision (required by the NJ Supreme Court) allowing for a three day review period in which you show your contract to an attorney, who may accept or disapprove the contract. Usually, your attorney will write a letter to the attorney for the other side and say that the contract is disapproved, but can be reinstated with certain changes. At this point, the contract is no longer binding, and either side can walk away. The three day review period, and any time before the contract is abandoned or reinstated is referred to by the real estate agents as “in attorney review.”
Somethings to note: 1) You do not have to disapprove your contract, if you are happy with it and do not want to give the other side a chance to walk away, then have your attorney not disapprove the contract. 2) It may be psychologically harder to walk away during attorney review, but you have every right to, as if you had never entered into the contract, so if you are having second thoughts, you should not be afraid to take your deposit back. 3) Even after attorney review, contracts can fall apart depending on what contingencies are in the contract, consult an attorney. 4) Always get the contract to your attorney right away, as the three day period begins when both parties sign not when the attorney gets the contract.