Any party to an agreement for the lease or purchase of real estate prepared by a realtor is entitled to have an attorney review that agreement for a period of three business days after that party’s receipt of a fully signed agreement. Every contract and lease prepared by a realtor must contain this clause, as a result of a settlement of a lawsuit brought many years ago by the New Jersey State Bar Association against the New Jersey Association of Realtors in which it was claimed that realtor preparation of such documents constituted the unauthorized practice of law.
During the attorney review period, your attorney can cancel the contract or lease for any reason or no reason, by expressing “disapproval” of that document. Often, the attorney will prepare a letter or rider containing proposed changes to the contract or lease, and providing that the agreement is disapproved if the changes are not accepted. The sending of the letter or rider will then extend the attorney review period until such time as the parties reach an agreement as to the changes or a party give notice that one or more changes are unacceptable and therefore the disapproval will stand. In the latter event, the contract or lease is considered to be cancelled and any deposit monies must be returned to the buyer or tenant.
There is typically a give and take as to the negotiation of the changes. This is also an opportunity for the attorneys to clarify and supplement terms of the contract or lease. For example, realtor prepared real estate contracts rarely contain any provision concerning the existence of underground storage tanks on the property. A good review letter prepared by a buyer’s attorney will address that issue by having the seller represent whether there is or ever was an underground tank on the property. That will allow the buyer to further investigate whether an existing tank is leaking, or whether a former tank was properly removed.
Attorney review is an important right to safeguard the interests of real estate buyers, sellers, lessors and lessees. It should be noted that if a party elects to proceed without an attorney, that party loses the right to have the contract or lease reviewed and modified by an attorney. A competent real estate attorney can help to protect your interest in what may be the most significant financial transaction in your life.