(Understanding Attorney Review in New Jersey Real Estate Contracts)
You've just walked through the house of your dreams and can already envision yourself living there. The excitement is real, and the next step is to make an offer. But before you rush into signing a contract, it's crucial to understand the process—particularly the importance of attorney review in New Jersey real estate transactions. Here's what you need to know before you commit.
1. What Happens When You Sign a Contract?
In New Jersey, once you've found a home and negotiated the terms with the seller, both parties typically sign a purchase agreement (or sales contract). This document outlines the terms of the sale, including the purchase price, closing date, and any contingencies (such as securing financing or passing an inspection).
But here's where it gets important: signing the contract doesn't necessarily mean you're locked in immediately. That's where the attorney review period comes into play.
2. What is the Attorney Review Period?
New Jersey law provides a built-in attorney review period that gives both the buyer and the seller the chance to have an attorney examine the contract and propose changes. This period lasts three business days from the date the contract is signed by all parties. Either party can cancel or modify the contract during this time without penalty and for no cause.
This review period is essential because standard real estate contracts often favor the seller. An attorney can review the document to ensure your interests are protected and that the terms are fair.
CAVEAT: Keep in mind that the Attorney Review Clause is only applicable to Contracts prepared by a realtor. The three-day Attorney Review Clause does not apply to transactions where the attorneys are drawing up the Contract. Attorney prepared Contracts are binding as soon as they are signed by all parties, unless the terms of the Contract provides otherwise.
3. Why Should I Use an Attorney?
While it's not mandatory to hire an attorney for the review, it's highly recommended. Here's why:
- Customizing the Contract: Your attorney can negotiate more favorable terms, add protections (such as more detailed inspection contingencies), and clarify any confusing language.
- Resolving Disputes: If issues arise during prior to the closing, your attorney can help resolve them on terms most favorable to you. For instance, negotiating a repair credit for defects revealed during the home inspection. This credit alone may justify the cost of the attorney.
- Safeguarding Your Deposit: When you sign the contract, you'll likely make an earnest money deposit. Your attorney can ensure that your deposit is protected in the event of contract cancellation or issues with contingencies (like inspection or financing).
4. What Happens After the Attorney Review?
Once the three-day attorney review period concludes, and both parties are satisfied with the terms, the contract becomes binding. At this point, you'll be moving forward with the sale, including inspections, securing your mortgage, in applicable, and preparing for the closing date.
However, if issues arise during the attorney review, you can renegotiate or even cancel the contract altogether without losing your earnest money deposit.
Final Thoughts: Should You Sign?
If you've fallen in love with a house and are eager to make it your own, it's tempting to sign a contract right away. But it's critical to understand that in New Jersey, the attorney review process provides an essential safety net. Before you commit, make sure you have a legal expert by your side to protect your interests and ensure that you're making a smart, informed decision.
Take the time to review the contract carefully with your attorney—doing so will provide peace of mind and help you avoid potential pitfalls down the road. Only then will you be ready to confidently move forward and turn that house you love into your new home!
Comments
There are no comments for this post. Be the first and Add your Comment below.
Leave a Comment