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NJ Justices Update Real Estate Contract Cancellation Rules

Posted by Walter Stringer | Apr 04, 2017 | 0 Comments

The New Jersey Supreme Court ruled Monday that an attorney may void a real estate contract on behalf of a client by fax or email, updating a 1983 ruling that said contracts had to be voided by certified mail, telegram or personal delivery.

What matters most, wrote Justice Lee Solomon for the unanimous court in Conley v. Guerrero , is that the affected party receive actual notice, and not the method of delivery.

"It appears that fax and email have become the predominant, customary methods by which professionals in the industry communicate," Solomon said.

In 2014, a trial judge updated the court's ruling in New Jersey State Bar Association v. New Jersey Association of Realty Boards that allowed broker-drafted residential real estate contracts to be rescinded during a three-day attorney-review period. The court specified that rescission had to be communicated by certified mail, telegram or personal delivery.

But Somerset County Superior Court Judge Edward Coleman ruled that parties can send notice by means of communication that were virtually unheard of in 1983, such as fax or email. Coleman said it "may now be time to amend the dated notice provisions contained as boilerplate within nearly every residential real estate contract in New Jersey."

Monday's ruling involved a case of would-be homebuyers whose sales contract was canceled when the seller received a better offer. Mona Guerrero, owner of a condominium in Bernards Township, executed a sales contract with plaintiffs Michael Conley Jr. and Katie Maurer on Jan. 14, 2014. But shortly after the contract was signed, additional offers for the property were received and a bidding war ensued.

During the attorney-review period, Guerrero's lawyer notified Conley and Maurer orally that their current offer was no longer acceptable. They acknowledged receiving notice in a handwritten letter they sent in response. He also notified their attorney and realtor by a letter that was both faxed and emailed that the contract was rescinded.

Guerrero signed a contract to sell the property to Brian Kraminitz and Michelle Tanzi. On Jan. 31, jilted buyers Conley and Maurer filed suit against Guerrero, Kraminitz and Tanzi. After the plaintiffs' bid for a temporary injunction against the sale was denied, both sides moved for summary judgment.

Coleman said the purpose of the attorney-review clause, which is to protect parties from being bound by broker-prepared contracts without the opportunity to obtain protection of their interests, was served in the present case.

The Supreme Court agreed.

"We conclude that, because the buyers received actual notice of disapproval within the three-day attorney review period by a method of communication commonly used in the industry, the notice of disapproval was valid," Solomon said, adding that the use of telegrams was now "obsolete."

Guerrero's attorney, Martin Liberman, said the community of real-estate lawyers had been waiting for an update to the 1983 ruling. "The law has finally changed," said Liberman, who runs a firm in Morristown. "This was a perfect case for appellate review."

Conley's lawyer, William Kearns, of Kearns Duffy & Vaccaro in Liberty Corner, declined to comment.

***This article was written by Michael Booth of the New Jersey Law Journal**

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