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CERTIFIED MAIL? Superior Court says fax or email sufficient to cancel residential real estate contract.

UNDER CONTRACT?

In NJ, realtor prepared contracts for the purchase of residential real estate contain a three day attorney review provision requiring that the contract be cancelled or amended prior to the third business day.  The “attorney-review clause” stems from a 1981 suit filed by the State Bar Association, claiming that realtors engage in the unauthorized practice of law when they prepare home sales contracts. The parties reached a settlement allowing realtors to continue preparing sales contracts if the three-day attorney-review clause were inserted into each such contract. The Supreme Court adopted those terms in New Jersey State Bar Association v. New Jersey Association of Realtor Boards, 93 N.J. 470 (1983). The ruling required that all real estate contracts prepared by realtors specify that rescission notices must be made by certified mail, telegram or personal delivery, and those modes are specified at N.J.A.C. 11:5-6.2(g)(2).

In practice however, the concept of sending “certified mail, telegram or personal delivery” is antiquated and quite cumbersome and most practitioners have dispensed with this requirement in favor of an acknowledged e-mail or fax as sufficient.   Recently, a Superior Court judge has brought up to date the 30-year-old New Jersey Supreme Court ruling by acknowledging the existence of fax and email which was not prevalent at the time of the prior ruling in 1983 and approving these forms of communication as proper under certain circumstances.

The ruling came in Conley v. Guerrero, a case of would-be home buyers whose sales contract was cancelled when the seller received a better offer.  Seller executed a sales contract but shortly after the contract was signed, additional offers for the property were received and a bidding war ensued.  During the attorney-review period, Seller’s attorney notified the initial Buyer that their current offer was no longer acceptable. They acknowledged receiving notice in a hand-written letter they sent in response.  The attorney also notified their attorney and realtor by a letter that was both faxed and e-mailed that the contract was rescinded.  The jilted Buyers claimed that the contract was not properly cancelled for lack of “certified mail, telegram or personal delivery” and brought suit to enforce the contract.

The Court found for the Seller and dismissed the claim.  The Judge stated in his opinion that the purpose of the attorney-review clause, 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.  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.”  The essential purpose of the notice provision is to ensure actual notice and that was accomplished here,” he said.

In practice, when in doubt mail it out but in reality, a confirmed email or fax will most often be sufficient.