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Bassford v. Trico Mortgage Co.

Decided: April 12, 1993.

HARRY BASSFORD, PLAINTIFF,
v.
TRICO MORTGAGE CO., INC., DEFENDANT.



Francis

Francis

FRANCIS, J.S.C.

This case of first impression arises out of cross motions for summary judgment. The issue raised in both motions is whether or not a contract executed at an auction of real property is binding on the purchaser where the attorney review clause has been intentionally deleted.

I. STATEMENT OF FACTS

The facts in this case are not in dispute. A private auction for real property was held on March 29, 1992. On that date, plaintiff bid on and subsequently contracted for the purchase of property located at 107 West Popular Avenue, Wildwood, New Jersey.

Prior to the private auction, defendant mailed to plaintiff information explaining the auction process, including but not limited to descriptions of all property to be auctioned and copies of the forms that were used on the auction date to effect a sale of property, and a copy of "The Contract for Sale of Real Property". This form was blank in the material terms of date of sale, buyers name, property location, purchase price, payment of purchase price and financing terms. The contract did not include an attorney review clause. However, prominently worded on the top of the contract was the following language: This is intended to be a legally binding contract once it is signed by both parties. Buyer may want to have this contract reviewed by buyer's attorney before buyer signs it."

At the auction, plaintiff voluntarily bid on the subject property. Plaintiff paid $5,000 toward the purchase price and simultaneously signed a "Contract for Sale of Real Property." The purchase price was $59,725.00. Before signing, the material terms of the sale, which were included in the contract, were discussed by plaintiff and a representative of defendant. No real estate broker was involved in this transaction.

Plaintiff herein petitions this court to declare the contract void for lack of an attorney review clause. Defendants seek to enforce the contract since plaintiff was on notice that the contract was prepared by seller's attorney and it was intended to be legally binding once it was signed by both parties.

II. RELEVANT LAW

A. Attorney Review

On the date of the public auction, the contract that was executed between defendant and plaintiff was a real estate sales contract. Attorneys have argued that legal representation is vital at time of contracting while brokers have refuted that claim. Trenta v. Gay, 191 N.J. Super. 617, 619, 468 A.2d 737 (Ch.Div.1983). The attorney review clause is rooted in the decision of State v. Bander, 56 N.J. 196, 265 A.2d 671 (1970), in which defendant, real estate broker, prepared a real estate sale contract. The case came to the Supreme Court as a result of its constitutional authority over the practice of law. N.J. Const. art.IV, § 2, P 3. The Supreme Court in Bander did not reach the question of whether defendant's action constituted the unauthorized practice of law, rather suggested a remedy:

As to that issue it is suggested that an answer might be obtained in a separate suit for an injunction against the type of acts undertaken by defendant or for a declaratory judgment. In this manner a complete and detailed record could be made disclosing, inter alia, the extent, the length of existence, effect and result of the performance of similar acts by real estate brokers generally and the public need for such service.

[State v Bander, supra, 56 NJ at 202-03]

Acting on that suggestion, the New Jersey State Bar Association filed suit against licensed realtors as a class, seeking a ruling that the preparation of real estate sale contracts by realtors constituted the unauthorized practice of law. State Bar Association v. Jersey Association of Realtor Boards, 93 NJ 447 (1983). In Chancery, a settlement was reached whereby it was agreed that realtors could prepare certain real estate contracts and leases, provided that an ...


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