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Carmagnola v. Hann

Decided: June 12, 1989.

ANTHONY CARMAGNOLA AND THERESA CARMAGNOLA, PLAINTIFFS, AND NEW JERSEY REAL ESTATE COMMISSION, PLAINTIFF-INTERVENOR AND APPELLANT,
v.
RUSSELL J. HANN AND SANDRA HANN, DEFENDANTS-THIRD-PARTY PLAINTIFFS AND RESPONDENTS, V. HENRY D'ALLESANDRO, THIRD-PARTY DEFENDANT



On appeal from Superior Court of New Jersey, Chancery Division, Essex County.

Coleman and D'Annunzio. The opinion of the court was delivered by D'Annunzio, J.A.D.

D'annunzio

At issue is the validity of a regulation adopted by the New Jersey Real Estate Commission (Commission) requiring all licensee-prepared contracts subject to attorney review to contain an "Agreement to Honor" (ATH). The ATH purports to prohibit the seller of real property from showing the property or considering other offers during the three day attorney review period. The ATH also prohibits the buyer from submitting offers on other properties during the review period.

Pursuant to leave granted, the Commission, plaintiff-intervenor, appeals the grant of summary judgment in favor of defendants, Russell and Sandra Hann (Hann). The material facts are not in dispute. Hann and plaintiffs, Anthony and Theresa Carmagnola (Carmagnola), executed a contract for the sale of Hann's residence. The contract was on a realtor's form and contained the attorney review clause approved by our Supreme Court in New Jersey State Bar Ass'n v. New Jersey Ass'n of Realtor Bds., 93 N.J. 470 (1983), mod.,

94 N.J. 449 (1983). During the three day attorney review period the Hanns continued to show their residence, accepted a higher offer and, through their attorney, rejected the Carmagnola contract. Carmagnola commenced this action for specific performance.*fn1

The issue has its genesis in an action commenced by the New Jersey State Bar Association for injunctive relief and a declaratory judgment that the preparation of form contracts for the sale of real property by realtors*fn2 constitutes the unauthorized practice of law. The Bar Association's action was settled by the entry of a consent judgment, subject to approval by the New Jersey Supreme Court. New Jersey State Bar Ass'n v. New Jersey Realty Bds. Ass'n, 186 N.J. Super. 391 (Ch.Div.1982).

The Supreme Court approved the consent judgment with some modifications in New Jersey State Bar Ass'n v. New Jersey Ass'n of Realtor Bds., supra. The final judgment authorizes realtors licensed by the Commission to prepare contracts for the sale of certain residential real estate but requires every contract to contain the following language at the top of the first page:

THIS IS A LEGALLY BINDING CONTRACT THAT WILL BECOME FINAL WITHIN THREE BUSINESS DAYS. DURING THIS PERIOD YOU MAY CHOOSE TO CONSULT AN ATTORNEY WHO CAN REVIEW AND CANCEL THE CONTRACT. SEE SECTION ON ATTORNEY REVIEW FOR DETAILS.

The contract must contain language establishing a three day attorney review period and authorizing an attorney for the buyer or the seller to review and disapprove the contract.

In Levison v. Weintraub, 215 N.J. Super. 273 (App.Div.1987), certif. den., 107 N.J. 650 (1987), we held that there was no

enforceable contract because the sellers' attorney's disapproval occurred within the three day review period though another attorney had executed the contract on behalf of the sellers as their attorney-in-fact. In Levison, we also approved the Chancery Division's ruling in Trenta v. Gay, 191 N.J. Super. 617 (Ch.Div.1983), that the attorney review clause permits either party's attorney ...


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