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  • Writer's picturePeter Lamont, Esq.

NJ Trial Judge Rules Against 3-Day Attorney Clause in Auction Sales

Updated: Sep 11, 2019

Every realtor and attorney worth their salt understands the importance of the 3-day attorney review period, which, has been part of NJ Real Estate Law since the early 1980s. In fact, even most first-time homebuyers are aware of the attorney review clause. Most home buyers know that if they don't get the contract reviewed within the 3-day time frame, they could be bound by the terms of the contract, despite it needing modification. Obviously, in many residential closings, the race to get the contract reviewed by an attorney is one of the most stressful parts of the deal for the homebuyer, especially first-timers. So is it possible that a Judge could ever overturn such an important and well-known rule in real estate law?

In a recent decision, Somerset County Supreme Court Trial Judge, Hon. Fred H. Kumpf, J.S.C., ruled that Real Estate Auction Sales contracts do not need to contain a 3-day attorney review clause in situations where (1) the contract is provided to the bidder/buyer with enough time before the auction for him/her to seek attorney review and, (2) where a notice is provided to the bidder/buyer recommending or suggesting that the contract be reviewed by an attorney. This ruling marks the first time in 30 years that a judge has found against the attorney review standard.

According to Randall Peach of Woolson Anderson Peach in Somerville, the lawyer for MengXi Liu, who submitted a bid on the property at auction, he intends to appeal Kumpf's ruling. According to Peach, the Judge's ruling and his creation of "special rules" for auction sales infringes on the Supreme Court's sole authority to regulate the practice of law. It will be interesting to follow the expected appeal and see how this plays out.

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