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Apr
18

IMPORTANT Update on Attorney Review: Conley v. Guerrero

Executive Summary:  In a recent case published on April 3, 2017, Conley v. Guerrero, the New Jersey Supreme Court ruled on a crucial part of the attorney review clause. Specifically, the case allows notice of disapproval by a party’s attorney to be forwarded by “fax, e-mail, personal delivery or overnight mail with proof of delivery,” with the overnight delivery being effective upon mailing. The Court also directed the New Jersey Real Estate Commission to modify N.J.A.C. 11:5-6.2(g) accordingly.

Background:  Conley involves buyers Michael Conley and Katie Maurer, Plaintiffs/Appellants, who made an offer to purchase a condominium from the seller, Mona Guerrero, Defendant/Respondent. The offer was accepted and a contract signed, however, prior to the expiration of the three day attorney review, seller’s attorney forwarded via email and fax, a notice of disapproval to the buyer’s attorney and their agent. Buyers sued sellers for specific performance claiming the notice provided by the seller’s attorney was insufficient as it was not certified mail, telegram or personal service pursuant to the 1983 consent judgment in NJBA v. BOR. In the meantime, Guerrero accepted a higher offer from Brian Kraminitz and Michelle Tanzi and the property was sold.

After a summary judgment motion was granted at the Superior Court level, Plaintiffs appealed to the Appellate Division. The case was affirmed and the Plaintiffs again appealed to the New Jersey Supreme Court.

The seller argued that it is not logical to allow the contract to be provided to all parties via fax and e-mail, but not allow service of disapproval in this fashion. The New Jersey Supreme Court determined the disapproval was valid because the seller’s attorney’s notice was, in fact, done in a manner “commonly used in the industry” (e-mail and fax). In its ruling, the Court concluded “fax and e-mail have become the predominant, customary methods by which professionals in the industry communicate.” In addition, the court specifically pointed out the fact actual notice was given to the attorney for the buyer was not in dispute. The court also placed great weight on the purpose of the three day attorney review: to protect consumers and give them an opportunity to have the contract reviewed by an attorney before the contract became enforceable.

This case changes in the notice required in the Attorney Review period in that notice of disapproval by a party’s attorney can now be forwarded by “fax, e-mail, personal delivery or overnight mail with proof of delivery”  with the overnight delivery being effective upon mailing. The Court also directed the New Jersey Real Estate Commission to modify N.J.A.C. 11:5-6.2(g) accordingly.

The Court’s opinion can be found here: Conley v. Guerrero

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