NJ Supreme Court Brings Notice Rules on Cancelling Real Estate Contracts into 21st Century

Real Estate ContractsIn the age where almost everyone has email on their smartphone, is there any reason to maintain a rule that says legal notice must be given only by certified mail, personal delivery or telegram? The New Jersey Supreme Court considered this question in regard to the legal notice an attorney has to give to cancel a real estate contract on behalf of a client.

In New Jersey, when a real estate broker prepares a contract for sale of residential property, there is a three-day attorney-review period whereby either side can cancel the contract. This rule is in place to allow buyers and sellers to have their own real estate attorney review a broker-prepared contract to protect their rights. Sometimes, during this three-day period, sellers might obtain a higher bid or a buyer might change his or her mind about the contract. The old rule from a court case in 1983 said that if a seller or buyer wishes to exercise this right to recession during the three-day attorney-review period, he or she must do so only by certified mail, telegram or personal delivery. This rule was upheld as recently as 2014 by a trial judge.

In the recent case, the seller wished to cancel the contract during the three-day period. The attorney told the buyer orally, which was acknowledged by a personal letter from the buyer. The seller also gave notice of recession by fax and email. There was no question that the buyer received actual notice of the cancelled contract, but the buyer challenged the cancellation because the rule that notice must be given by certified mail, telegram or personal delivery was not technically performed.

Thankfully, the NJ Supreme Court recognized the antiquity of this rule and held that the buyer had received actual notice of the cancelled contract, which was really the point of the rule. Justice Lee Solomon, writing for the unanimous court, recognized that telegrams were now “obsolete.” The court held that fax and email are methods of communication commonly used in the industry, and therefore, those methods can rightly be used to offer actual notice of recession of real estate contracts.

The real estate attorneys at Garland & Mason represent buyers and sellers in residential and commercial property sales throughout New Jersey.



Tags:

Leave a Reply

Your email address will not be published. Required fields are marked *