The Appellate Division affirmed a trial court holding that the mandatory attorney review language in real estate contracts is not mandated where the information was made available to potential parties in advance. The New Jersey State Bar Association (NJSBA) submitted a brief in support of mandating such language in Sullivan v. Max Spann Real Estate & Auction Co., Docket No. A-5327-18T1, to preserve consumer protections in residential real estate auctions.
Interpreting the policy behind the contractual nature of residential real estate contracts in N.J.A.C. 11:5-6.2(g) and the mandatory three-day attorney review requirement, the Appellate Division held that the protections to the public, sellers and buyers in typical real estate transactions are not applicable to the “unique circumstances of private real property auction[s].”
“The seller has an interest to sell property in an expedient manner and liquidate their interest,” said the court in its opinion. “Potential buyers are encouraged to seek counsel before the auction is held and review their financial wherewithal.”
In Sullivan, the bidder registration form stated that the auction sale was “not subject to an attorney review period,” and that the prospective bidder agreed to “review the contract of the sale prepared by the seller’s counsel prior to the auction.” The bidder was a person who spoke limited English and claimed to be pressured into bidding on the property. The contract for sale was apparently prepared by a salesperson on a pre-printed template, which the bidder completed. The bidder was ultimately unable to obtain a mortgage and was declared in breach of the contract.
The NJSBA urged a reversal of the trial court decision to mandate the three-day attorney review clause consistent with its position that led to the mandatory language in the first place. The NJSBA was a party to a challenge to require the three-day attorney review clause in New Jersey State Bar Ass’n v. New Jersey Ass’n of Realtor Boards, 93 N.J. 470, modified, 94 N.J. 449 (1983); In re Opinion No. 26 of the Committee on the Unauthorized Practice of Law, 139 N.J. 323 (1995). The Supreme Court approved a settlement agreement that resulted from the litigation “because it resolved the question of realtors’ unauthorized practice of law, and most importantly it served to protect the public interest by making the contract subject to prompt attorney review if either buyer or seller so desires.”
In a dissent, the Honorable Jose L. Fuentes, P.J.A.D., supported the NJSBA’s position, pointing out the court’s history in sustaining the Supreme Court’s mandate to include this language. Reciting the litany of case law supporting the settlement mandating the language, Judge Fuentes pointed out the Appellate Division’s limited jurisdiction to enforce the Supreme Court’s mandate.
“In carrying out its role as an intermediate appellate court, the Appellate Division has remained persistently wary of treading upon the Supreme Court’s sole authority to alter the N.J. State Bar Ass’n mandate when occasionally pressed to do so,” said Judge Fuentes.
Declining to extend this language to private real estate auctions, the majority found “nothing repugnant about the auction process as conducted in the matter under review.” It did not find the matter to be against public policy, and instead found it consistent with “over thirty years of established real estate auction practice.”
NJSBA sounds off on expungements, DREs in marijuana roundtable discussion
NJSBA President Kimberly A. Yonta accepted an invitation to participate on the Roundtable on Marijuana Legalization & Social Justice to discuss the legal implications of legalized adult-use marijuana. Moderated by Senate President Steve Sweeney, the roundtable included legislative leaders and social justice advocates.
Yonta focused on the issue of expungements, calling for a simpler, streamlined process. She also took issue with drug recognition experts (DREs), pointing out that their accuracy and efficacy is being challenged in the matter of State v. Olenowski. A special master has been assigned to take testimony on the reliability of DRE testimony. The NJSBA has called into question whether DRE testimony would withstand the Frye standard, and has argued that DRE testimony should not be relied upon without such finding of reliability.
Yonta concluded her report with a promise to work with legislators on the expungement process.
This is a status report provided by the New Jersey State Bar Association on recently passed and pending legislation, regulations, gubernatorial nominations and/or appointments of interest to lawyers, as well as the involvement of the NJSBA as amicus in appellate court matters. To learn more, visit njsba.com.