Attorney Review – When signed contract are not binding

In this state, especially in the Northern part, it is very common for all property offers to be in the form of a signed contract; i.e.: Buyers will sign a contract of sale when making their offer. The Seller will then countersign the contract if they accept the Buyer’s offer. This process is counter intuitive to many first time Buyers (“why should I sign a contract when the Seller can just reject my offer?”), but it is the common practice. A good realtor will explain this to their clients, but too often I have found that Buyers confused as to what they are signing and think they brought a property, even though their offer has been rejected! However, it is only after the Seller countersigns the contract do the parties have a signed contract, but this is not the end.

As with the title of this post, a signed contract is different than a binding contract. After the parties have a signed contract for sale, the transaction and property is considered under contract. At this point, the contract goes for what is known as Attorney Review.

After a property is under contract, the Buyer has 3 days in order to have an attorney review the contract and make any changes. While 3 days seem like a reasonable amount of time to a Seller (who wants to get the transaction done as soon as possible), it can seem lighting fast to a Buyer (who wants to review every term when making the largest purchase of their lives). The good news, or bad news, is that the 3 day review period is almost never actually 3 days. As soon as a Buyer’s attorney receives a contract, they will normally send a letter rejecting the terms of the contract and state it is now under attorney review.

It is during this time that the contract terms are negotiated by the Buyer’s and Seller’s attorneys. These negotiations can take anywhere for a week to several months, depending on the terms being disputed. It is only when the contract is out of attorney review do the terms become binding and the Buyers can proceed with getting a property inspection, title insurance, etc.

Hopefully this has provided some clarity to this often misunderstood part of buying/selling a home in New Jersey. If you are in the process of purchasing a home and need a contract to go through attorney review, the Law Office of Howard B. Tat is ready to help you through this and the entire process of buying and selling a home in New Jersey.