ShareA New Jersey appeals court has recently considered whether delivery of signed purchase agreement to listing broker marks the beginning of the attorney review period.
Evelyn Wysocki, executrix for the Estate of Elma Pursell ("Seller"), listed for sale part of the estate's real property with Lisa Ellis ("Listing Agent"). Erik Peterson contacted the Listing Agent and told her of his interest in the property. Following negotiations, the Listing Agent told Peterson it would be in his interest to make his offer now so that the attorney review period required by state law would run before the weekend. The Listing Agent prepared a purchase agreement, which the seller signed, and faxed it to Peterson on Tuesday, September 21, 1999. Peterson executed and faxed the agreement back to the Listing Agent, who received it at 5:37 PM on Tuesday. The Listing Agent was not in the office at that time, and so the agreement was not faxed to the Seller's attorney, George Walton ("Attorney"), until Wednesday morning. Over the weekend, the Seller received a better offer for the property, and so on Monday morning, the Attorney cancelled the agreement, claiming that the three-day attorney review period did not begin until Wednesday morning. Peterson filed a lawsuit, seeking specific performance of the contract, basing his lawsuit on the allegation that the attorney review period began running when the Listing Agent received the agreement on Tuesday evening. Peterson also sought damages from the broker who brought in the successful offer for the property, claiming tortious interference with a contract. The trial court ruled against Peterson on all his claims, and Peterson appealed.
The Superior Court of New Jersey, Appellate Division, affirmed the trial court. The court first reviewed New Jersey law. In 1983, New Jersey's Supreme Court approved a settlement in New Jersey State Bar Association v. New Jersey Association of Realtor Boards, 93 N.J. 470 (1983), which created the requirement that all contracts prepared by real estate brokers in New Jersey must contain an attorney review clause, providing each party with a three-day period for each side's attorney to review the agreement and the power to cancel the agreement. The New Jersey Real Estate Commission subsequently enacted regulations which state that the review period begins running upon "delivery of the signed contract to the [b]uyer or [s]eller." The regulations also require the licensee to "promptly" deliver the agreement to the client, although, in this instance, the Listing Agent had received instructions from the Seller to deliver the agreement directly to the Attorney.
Under these facts, the court ruled that the attorney review period never began running because the Seller never received the contract. Further, the court stated it did not need to decide whether the Seller's instructions to deliver the agreement directly to the Attorney constituted a waiver of the delivery requirement because it ruled that the delivery of the contract to the Listing Agent did not commence the attorney review time period. The court based this ruling both on the explicit language of the Real Estate Commission regulations, requiring delivery to a party, and also by looking at the role of the real estate broker. The court stated that the role of the real estate broker is to bring the parties together and facilitate negotiations, and the role of the attorney is to protect the interests of the client. The court stated that it was unrealistic to place the broker in the role of a party or an attorney, and so delivery of the contract to the real estate licensee did not begin the attorney review period. Therefore, even if the attorney review period had started in this case, it would not have begun until Wednesday and so the Attorney's cancellation of the agreement on Monday would constitute a valid voiding of the agreement.
Next, the court considered the tortious interference claims. The court ruled that since Peterson could not enforce the purchase contract, he could not claim tortious interference with this agreement. Thus, the appellate court affirmed the trial court's rulings.
Peterson v. Estate of Pursell, 339 N.J. Super. 268, 771 A.2d 666 (N.J. Super. Ct. App. Div. 2001).