Attorney Review is one of the most important early stages of a residential real estate transaction in New Jersey. After the buyer and seller sign the initial contract, their attorneys generally receive a limited period to review its terms, propose revisions or disapprove the agreement.
This process can be confusing because buyers and sellers often believe that an accepted offer or signed contract means the transaction is immediately final. In a typical New Jersey Realtor-prepared residential contract, however, the agreement remains subject to the Attorney Review clause.
What Is Attorney Review in New Jersey?
Attorney Review is a period during which the buyer’s and seller’s attorneys examine a signed real estate contract before the parties become fully committed under its final terms.
The New Jersey Department of Banking and Insurance explains that when a contract of sale is prepared by a real estate licensee, it must contain an Attorney Review clause. You can read more in the state’s consumer guide to buying a home in New Jersey.
During Attorney Review, a lawyer may approve the contract as written, disapprove it or propose an attorney-review letter containing changes and additional protections.
When Does Attorney Review Begin?
Attorney Review generally begins after the contract has been signed by both the buyer and seller and the fully executed contract has been delivered as required by the agreement.
It does not ordinarily begin merely because a buyer submitted an offer or because the parties reached a verbal agreement. The specific starting point should be confirmed by the attorneys involved because contract delivery and timing can affect the deadline.
Offer Submitted
The buyer submits a written offer containing the proposed price and transaction terms.
Contract Signed
The buyer and seller sign the contract and the executed agreement is delivered.
Attorneys Review
The parties’ lawyers review the agreement and may approve, revise or disapprove it.
How Long Does Attorney Review Last?
The Attorney Review clause commonly found in New Jersey residential real estate contracts provides an initial review period of three business days. Saturdays, Sundays and legal holidays are generally not counted as business days.
New Jersey Realtors also describes Attorney Review as a three-day period in its overview of the New Jersey homebuying process.
Three business days does not always mean the entire review will be completed in exactly three days. When an attorney sends a timely disapproval letter containing proposed revisions, negotiations may continue until:
- The buyer and seller accept the revised terms.
- The attorneys confirm that Attorney Review has concluded.
- One party terminates the transaction in accordance with the contract.
- The parties are unable to agree upon the proposed changes.
What Do Attorneys Review?
A real estate attorney does more than verify the buyer’s name, the seller’s name and the purchase price. Attorney-review letters frequently address substantive rights, deadlines and contingencies that can affect whether a party may proceed with or terminate the transaction.
| Contract Issue | What the Attorney May Review |
|---|---|
| Purchase price and deposit | The total purchase price, deposit amount, deposit deadline and handling of escrow funds. |
| Mortgage contingency | Financing type, loan amount, application deadline, commitment date and buyer protections if financing is denied. |
| Inspection rights | The inspection period, permitted inspections and procedures for requesting repairs, credits or cancellation. |
| Appraisal provisions | What happens when the property appraises below the contract price and whether an appraisal contingency applies. |
| Closing and possession | The estimated closing date, possession date, use-and-occupancy terms and consequences of delays. |
| Included property | Appliances, fixtures, window treatments, equipment and other items included or excluded from the sale. |
| Title and property issues | Requirements involving clear title, liens, judgments, permits, certificates, easements or other property restrictions. |
Can the Buyer Cancel During Attorney Review?
A buyer’s attorney may generally disapprove the contract during the Attorney Review period by following the notice requirements contained in the agreement. The attorney does not necessarily need to identify a home-inspection defect or mortgage problem before issuing a timely disapproval.
Buyers should nevertheless speak directly with their attorney before assuming they have been released from the transaction. The proper notice must be issued within the applicable time and in the required manner.
Can the Seller Cancel During Attorney Review?
The seller’s attorney may also disapprove the contract during Attorney Review. This means a signed contract may still be terminated before Attorney Review concludes.
Competing offers can create a complicated situation. A seller who receives another offer during Attorney Review should obtain legal guidance before attempting to cancel the existing agreement or accept a different offer.
A signed contract is not the same as completed Attorney Review
Buyers should avoid making nonrefundable moving arrangements, terminating a lease or assuming the home is secured until their attorney confirms that Attorney Review has concluded. Sellers should likewise avoid treating the sale as final before receiving confirmation from counsel.
What Is an Attorney-Review Letter?
An attorney-review letter is a written notice sent by one party’s attorney during the review period. It commonly disapproves the contract in its existing form while proposing amendments under which the party is willing to proceed.
Common proposed changes may include:
- Revised inspection deadlines and procedures.
- Additional mortgage or appraisal protections.
- Clarification of items included in the sale.
- Requirements involving permits or certificates.
- Changes to the closing or possession date.
- Sale-of-home or other transaction-specific contingencies.
- Limits on representations, warranties or seller obligations.
The other side may accept, reject or negotiate those proposed modifications. Attorney Review ends when the attorneys confirm that the parties have reached agreement or when the transaction is terminated.
What Happens After Attorney Review?
Once Attorney Review is completed, the transaction proceeds under the contract as modified by the attorneys’ letters. The buyer and seller must then comply with the agreed deadlines and contingencies.
The next stages commonly include:
- Payment of the additional contract deposit.
- Home, structural, environmental and other inspections.
- Mortgage application and underwriting.
- Property appraisal when required by the lender.
- Title search, survey and municipal due diligence.
- Negotiation of inspection-related requests.
- Final walkthrough and closing.
After Attorney Review, neither party should assume that the contract can be canceled simply because they changed their mind. Any right to terminate will generally depend upon the contract, an applicable contingency, the other party’s default or another recognized legal basis.
Does Attorney Review Mean the Attorney Negotiates Inspection Issues?
Attorney Review and the home-inspection period are usually separate stages. Attorney Review focuses on the language and legal terms of the contract. Inspections generally occur after Attorney Review has concluded, subject to the inspection deadlines established in the final agreement.
The attorneys may later communicate about repair requests, credits or cancellation rights arising from the inspection results. The precise roles of the attorneys and real estate licensees can vary depending upon the transaction and the nature of the issues.
Do Buyers and Sellers Need Separate Attorneys?
Buyers and sellers ordinarily retain separate attorneys because their interests are different. The buyer may need protections involving financing, inspections, title and appraisal. The seller may need protections involving closing obligations, property condition, possession and the buyer’s performance.
A real estate agent can explain the transaction process and communicate factual information, but a licensee does not replace independent legal counsel or provide legal advice.
Practical Tips for a Smoother Attorney Review
- Select an attorney promptly. Waiting until after the contract is signed can consume part of the review period.
- Use an attorney familiar with New Jersey real estate. Residential contract customs and procedures are state-specific.
- Send the complete contract immediately. Include all addenda, disclosures and supporting documents.
- Explain unusual terms. Tell your attorney about occupancy agreements, appraisal waivers, home-sale contingencies or excluded fixtures.
- Remain available. Attorney Review can require quick decisions when the other side proposes changes.
- Obtain confirmation. Ask your attorney to confirm when Attorney Review has officially concluded.
Attorney Review Is a Critical New Jersey Transaction Safeguard
Attorney Review gives New Jersey buyers and sellers an opportunity to have a lawyer evaluate a Realtor-prepared contract before the transaction proceeds under its final terms. Although the standard initial period is commonly three business days, the process may continue longer when the attorneys exchange and negotiate proposed modifications.
The safest approach is to retain counsel promptly, provide all transaction documents and avoid assuming the sale is final until the attorney confirms that review has concluded.
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Explore ListOneNJFrequently Asked Questions About Attorney Review
Is Attorney Review required in New Jersey?
When a New Jersey real estate licensee prepares a residential contract of sale, the contract must contain an Attorney Review clause. Other types of contracts or transactions may be handled differently, so the parties should consult their attorneys about the agreement being used.
Does Attorney Review include weekends?
The standard review period is generally measured in business days. Saturdays, Sundays and legal holidays are ordinarily excluded. The attorneys should confirm the exact deadline based on the contract, signing and delivery dates.
Can Attorney Review last longer than three business days?
Yes. An attorney may issue a timely disapproval letter proposing changes. The attorneys can then continue negotiating until the parties agree upon the revised terms or the transaction is terminated.
Can a buyer or seller cancel during Attorney Review?
Either party’s attorney may generally disapprove the contract during the Attorney Review period by following the contract’s notice requirements. A party should not assume the agreement has been canceled until receiving confirmation from legal counsel.
What happens when Attorney Review ends?
The contract becomes binding under its approved and modified terms. The transaction normally proceeds to deposits, inspections, mortgage processing, appraisal, title work, the final walkthrough and closing.
This article provides general educational information about New Jersey real estate transactions and is not legal advice. Contract rights, deadlines and procedures can vary. Buyers and sellers should obtain advice from a qualified New Jersey attorney regarding their specific transaction. All real estate commissions are negotiable in New Jersey. ListOneNJ programs are subject to service-area, transaction and eligibility requirements.