This is a suit for specific performance of a contract for the sale of residential real property. Defendant owners have moved for summary judgment dismissing the complaint. The decision turns on the meaning of an attorney review clause contained in the contract between the parties.
The property was listed for sale with a real estate broker. Plaintiffs made an offer that appeared to satisfy defendants. A contract was prepared by a broker by filling in blanks on a form supplied by the Middlesex County Multiple Listing System. It was then signed by all of the parties. Paragraph 8 of the contract said:
ATTORNEY REVIEW: If BUYER or SELLER elects to consult an attorney, this contract shall be subject to such attorney's review of all of its terms and conditions within three (3) business days (exclusive of Saturdays, Sundays and
legal holidays) from the date of the delivery of the signed contract to the BUYER and SELLER. If neither BUYER nor SELLER exercises the right to have an attorney review this contract within the time permitted, this contract will be legally binding as written. If the attorney for the BUYER or SELLER disapproves of this contract he must notify the Broker(s) and the other parties named in this contract within the time permitted, otherwise this contract will be legally binding as written. An attorney's notice of disapproval shall be served upon the Broker(s) either by certified mail or telegram, effective upon sending, or by personal delivery, effective upon receipt. The parties may agree in writing to extend the time for attorney review.
It is recommended that the Broker(s) be immediately informed of any revisions suggested by the attorney(s).
Within three business days, the seller consulted an attorney who disapproved of the contract and so notified plaintiffs and the broker within the time permitted. He gave no reasons for his disapproval. Defendants subsequently agreed to sell the property to codefendants at a greater price.
Plaintiffs argue that the purpose of the attorney review clause is to permit consultation on the technical terms and details of a contract and not to create a time-out period to accommodate a rethinking of the whole deal or the receipt of a better offer. Defendants contend that the language of the clause is very broad, that it does not call for any explanation of reasons for disapproval, and that its purpose is best served by the most liberal of readings.
There is a history of tension between attorneys and brokers over the drawing of real estate sales contracts. The battles have historically been fought over charges of unauthorized practice of law against brokers who drew contracts. See N.J. Bar Ass'n v. N.J. Ass'n of Realtor Boards, 186 N.J. Super. 391 (Ch.Div.1982), aff'd 93 N.J. 470 (1983); State v. Bander, 56 N.J. 196 (1970); N.J. Bar Ass'n v. Northern N.J. Mortgage Associates, 32 N.J. 430 (1960); N.J. Bar Ass'n v. Northern N.J. Mortgage Associates, 22 N.J. 184 (1956). What is at stake is apparent. Brokers wish to be able to put together binding deals while the parties' momentum is in that direction. They fear that the doubts that afflict people entering substantial transactions may unravel perfectly good deals while the lawyers pick nits. Lawyers
believe that some brokers are inclined to push the parties toward deals that may be against their interests. They believe that lawyers offer valuable advice to people entering real estate transactions. They are frustrated by the limitations on the role they can play if their clients appear for the first time with binding agreements in their hands.
One solution to the problem is the attorney review clause. The one used here was created in a recent statewide settlement of differences between lawyers and brokers that was judicially approved in N.J. Bar Ass'n v. N.J. Ass'n of Realtor Boards, supra 186 N.J. Super. at 391. Changes in the clause were made by the Supreme Court, subject to the parties' consent, to conform to the Plain Language Law, ...