When you buy real estate in Hoboken, be it a condo or a house, there is a particular order of events that typically takes place. Basically, you get your pre-qualification letter from a mortgage broker or bank, find your dream home, the seller accepts your offer and your realtor, if he or she is a competent agent, prepares a sales contract for you to sign. Wait! Agent’s aren’t lawyers! True – but the NJ Association of Realtors provides a standard-form sales contract that realtors routinely use as the starting point for your deal.
You go home and celebrate and start making moving and decorating plans. But – after you and the seller have both signed the sales contract it gets circulated to your attorney and the seller’s attorney and what is called “attorney review” begins. What exactly does that mean? Read on.
Attorney review is a ‘time-out’ period of 3 days required by New Jersey law. During this time your lawyer will review and make changes to the sales contract by sending riders back and forth to the seller’s lawyer. It’s very important for you and your realtor to be copied on these riders so everyone knows what is going on. Remember, it’s your money being spent.
The attorney review period gives you (and the seller) a chance to “sleep” on your decision. If at any time during attorney review you change your mind you can simply walk away. No reason or explanation necessary. You get your $1,000 good faith deposit back – no questions asked. It’s similar to when you join a health club and the papers say that you have 24 hours to change your mind and can get your money back.
Remember, though, that the seller can also change his or her mind during attorney review. At the height of the market or on a hot property many buyers would go into attorney review thinking they’d bought a new condo. In the meantime, the seller would get a higher offer and cancel the contract with the first buyer. So buyer beware – until attorney review is over, except in very rare instances, the sales contract is not legally binding. Both parties should be prepared for the worst, even if it means 3 (or more) sleepless nights while waiting for attorney review to end.
Often, 3 days are not enough. What happens in a very busy real estate market like Hoboken is that the real estate lawyers are so busy doing closings that they can’t get to your contract within 3 days. They will agree with each other to extend the 3 days to 5 days or a week. When hiring a real estate lawyer, you would be wise to ask about schedule and availability. It would be a shame to lose the condo of your dreams because your attorney was too busy to get to your sales contract before the seller changed his mind.
So find a lawyer who has the time to focus on your deal. Don’t make any irrevocable plans until attorney review ends. And insist that your lawyer keep you informed of what is taking place during the attorney review period.