Contracts and attorney review
The three-business-day review that makes New Jersey residential contracts different, which contracts need it, and how to count the days.
Sources: N.J.A.C. 11:5-6.2
Attorney review in one paragraph
Which contracts need attorney review
| Needs attorney review | Does not | |
|---|---|---|
| Sales | Licensee-prepared contracts for 1 to 4 family homes and vacant one-family lots | Commercial property, buildings of 5 or more units, contracts an attorney prepares |
| Leases | Licensee-prepared residential leases of 1 year or more | Residential leases shorter than 1 year |
| How the sale happens | Ordinary negotiated sales, including multiple offers | In-person absolute auctions without reserve (Sullivan, 2022) |
| Who prepared it | A licensee with a commission or fee interest | An attorney |
Attorney review: 4 rules to memorize
3 business days.
The contract becomes final at the end of three business days unless an attorney disapproves.
Weekends and holidays don't count.
Count Monday to Friday, skipping legal holidays.
1 to 4 family homes and one-family lots.
Plus residential leases of a year or more, when a licensee with a commission or fee interest prepares the document.
Either attorney can disapprove.
No reason is needed, and a timely disapproval cancels the contract.
Attorney review, explained
The first page has to say, in larger print than the rest: 'THIS IS A LEGALLY BINDING CONTRACT THAT WILL BECOME FINAL WITHIN THREE BUSINESS DAYS.' During those three business days, the buyer's attorney or the seller's attorney can approve the contract by doing nothing, disapprove it, or propose changes.
The clock starts once the fully signed contract has been delivered to both buyer and seller. Weekends and legal holidays are skipped, and the parties can agree in writing to extend the period. A notice of disapproval has to go to the brokers and the other party within the window, using a delivery method the contract allows.
Leaving the clause out is a serious problem. The Commission treats it as the unauthorized practice of law and grounds for discipline.
Attorney review comes from a 1983 New Jersey Supreme Court case, New Jersey State Bar Association v. New Jersey Association of Realtor Boards. The court let licensees prepare residential contracts without it being the unauthorized practice of law, as long as the contract gives both sides 3 business days to have a lawyer look at it. Only an attorney can disapprove during review. An agent cannot, and neither can a party acting alone.
Delivery means delivery to the buyer and the seller, not to a broker. In Peterson v. Estate of Pursell (2001), the Appellate Division held that handing the signed contract to the listing broker did not start the clock. The required clause says a disapproval notice goes to the broker or brokers by certified mail, telegram or personal delivery, and also to the other party.
Know the edges of the rule. It covers licensee-prepared contracts for 1 to 4 family homes and vacant one-family lots, and licensee-prepared residential leases of 1 year or more. It does not reach commercial deals, buildings of 5 or more units, shorter leases or contracts an attorney drafts. In 2022 the Supreme Court held it also does not apply to in-person absolute auctions without reserve.
How the exam tries to trip you up
- The question says the signed contract reached the listing broker on Monday and the seller on Wednesday. Start counting from delivery to the buyer and seller, not the broker.
- A buyer gets cold feet and phones the agent to cancel during review. That is not a disapproval. Only the buyer's or seller's attorney can disapprove, by notice delivered to the brokers and the other party within the 3 business days.
- Count only business days. Skip Saturdays, Sundays and legal holidays, and do not count the day of delivery. If a holiday falls inside the window, the period stretches.
- A 6-month lease or a 6-unit apartment building looks residential enough to trigger review. It does not. Leases need it only at 1 year or more, and sales only for 1 to 4 family homes and one-family lots.
Attorney review practice questions
How long is the attorney review period on a New Jersey residential sales contract prepared by a licensee?
Attorney review flashcards
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All 6 terms at a glanceShowHide
- Attorney review
- A three-business-day period for either party's attorney to approve, disapprove or propose changes to a licensee-prepared contract.
- Business day
- For NJ attorney review, excludes Saturdays, Sundays and legal holidays. Other laws use different definitions; TRID waiting periods generally count Saturdays.
- Notice of disapproval
- An attorney's notice, delivered within the review period, that cancels the contract.
- Unauthorized practice of law
- What the Commission treats leaving the attorney review clause out of a required contract as, and grounds for discipline.
- Absolute auction exception
- The 2022 Sullivan ruling that attorney review does not apply to in-person absolute auctions without reserve.
- Lease attorney review
- Required for licensee-prepared residential leases of 1 year or more, with the same 3-business-day period.
Attorney review: common questions
Sources and further reading
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