Stressed Buy…, Home Buyer in Demarest, NJ

We were in multiple offer situation and told by seller's agent to submit Final offer ,but Our offer was

Asked by Stressed Buyer, Demarest, NJ Thu Sep 11, 2008

accepted 2days ago. Our agent received a contract with seller's signature on it this morning and brought it to our lawyer for reviewing. However, seller's agent called our agent this evening and saying that she has received a counter offer which is haiger price than our final offer. The contract states that "The contract becomes final and binding unless your lawyer cancels it within the following therr business day." Is it legal to canel the contract because they received the better offer? We thought best and final offer is FINAL. What should we do now?

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9
Scott Godzyk, Agent, Manchester, NH
Fri Sep 12, 2008
BEST ANSWER
Who says you cant learn something new everyday. This law is both good and bad depending on which end you are on. We do not have that here in NH. If the law is used the way it is intended to protecte tha parties, that ios great. But to use it to get a higher offer is just awful, unless you are the one getting money money i guess. I am sorry to hear what has happened, however the law is teh law nomatter how intended and if you really want it, you will need to take the higher counter offer.
Web Reference:  http://www.ScottSellsNH.com
1 vote
Donna Sauers…, , Ocean County, NJ
Fri Sep 12, 2008
In NJ the three day attorney review period allows either party to cancel the contract for any reason during that time period, no explanation required . If the seller gets another offer, they can kill the contract they have with you and just accept the other offer or they can ask both buyers to submit their best and final offer. I’ve lost deals in the attorney review period and understand how heartbreaking it can be when you have the rug pulled out from under you. I will say that in most cases my buyers have ended up getting a better deal on another home, some thing are just meant to be.

Best of Luck to you.
2 votes
Jeanne Feeni…, Agent, Basking Ridge, NJ
Fri Sep 12, 2008
It sounds to me as though you are in the period of attorney review and not yet under contract. During that period either party can walk away from the transaction. My advice to buyers is always, if you are satisfied with the terms of your offer, it is in your best interest to move through attorney review quickly so that you are under contract because then competing bids are held as back up. As all have said before me, you attorney is the source of the best answer but hopefully this helps you understand a bit of the stage of the process it sounds to me that you are in.

What you are discribing happened very recently to a buyer I was working with - they held on to the house but did have to pay a bit more for the privilege.

Good luck.

Best,
Jeannie Feenick
Search and connect at http://www.feenick.com
Web Reference:  http://www.feenick.com
2 votes
David Kim, , Newark, NJ
Fri Sep 12, 2008
Typically, there is a three day attorney review period where "legally" the attorney can reject the contract for any reason. I do not believe they have to disclose the reason, but if they know they can get a better price (whether actually receiving an offer or just from other data, such as appraisals or another comparable home that just sold), they can argue the attorney is advising them that they are getting short changed on this business transaction.

However, that said, the others are right. Consult your attorney, whom you've already paid. He/She will be able to read the entire contract for any contingencies for a way to keep the seller in the deal. I warn however, the boilerplate contract used in the State of NJ does not have anything I know of that would protect your interests in this case. It would've had to been a contingency/clause added to the contract by your agent/attorney.

Techincally, you made an "offer to purchase" that was accepted by the seller. That is a contract. It then goes through attorney review and upon both attorneys accepting the terms, it becomes a completed contract. During this Attorney review period, the contract terms can still be negotiated by both parties. There is a procedural part where the attorney "cancels" the offer to purchase contract then after all negotiations are done (or at the end of the three day period), they declare the contract valid in its final form.

The reason the contract isn't binding until the attorney reviews it (or the buyer/seller knowingly refuses attorney review) is because Real Estate Agents are not allowed to practice law, which includes writing up contracts. That is why there is a boilerplate contract for NJ (and most states) that was part of a big court case settlement between Lawyers and Real Estate Agents. Agents were allowed to use that contract drafted by the Bar Association, but had to disclose to their customers that they can have an attorney review the contract on their behalf. If they don't disclose that fact, there are legal ramifications against that agent/brokerage. It is up to the customer to seek an attorney in a timely manner and have the attorney response within that 3 day period.

I wish you luck in getting this deal completed if this is your dream home! At the very least, I hope you recover your expenses such as the legal fees from the seller. Let us know how this ends.

P.S. After typing all of this, I realized other people may flag me as I am not an attorney (I am a Realtor specializing in Bergen County), so I searched for a little bit on Google and found the following article by a NJ attorney regarding real estate contracts. It is essentially what I just said above. I hope this helps!
2 votes
Joan Prout, , Basking Ridge, NJ
Fri Sep 12, 2008
That language is required by NJ State LAW on any contract drawn up by a real estate licensee. We refer to it as the Attorney Review Notice. Both parties have the right to have the contract reviewed by their attorneys. Your residential real estate contract is NOT binding until you and the seller have had 3 business days (minimum) to have an attorney review it. You could cancel if you got cold feet or found another house you like better and the seller could cancel if one of the other bidders out bids you or another buyer comes forth with an offer the seller likes better.

This is protection that the State gives you. In many states, only attorneys can draw up a contract to purchase real estate. You could pay quite a bit to your attorney to draw up a contract that may not be accepted -- say you were in bidding on 3 houses, none of which were successful. NJ recongizes that those contracts are fairly standard and allows real estate agents to "fill in the blanks" on boilerplate contracts for condos, and 1-4 family houses, and have both parties sign them. THEN, you have the contract reviewed by your attorney, who iron out any contract related details BEFORE the contract becomes binding on the parties.

What generally happens is that each attorney sends a letter to the other party's attorney that says "I disapprove of this contract unless the following changes are made..." Attorney review period remains open until either the attorneys sign off, or they cancel the deal.

While it does mean your deal isn't final yet, its important to have this review for your protection. Your best and final offer may not change, but the details of the contract need to be pinned down. Agents aren't lawyers and IMO, you should have the document reviewd by someone who will make sure your legal interests are protected.

It's a good thing.

Joan Prout, MBA
Broker Associate
RE/MAX Villa REALTORS
Jersey City, NJ
mailto:Joan@JoanProut.com
800-671-0596x1


Ask your agent to explain further.
Web Reference:  http://www.JoanProut.com
1 vote
Dallas Texas, Agent, Dallas, TN
Thu Sep 11, 2008
You have an attorney who represents you direct your question to his attention. Not having the contract to read and etc, any answer could be a disservice to you. However if you have an executed contract and registered with title company, option and earnest money paid, then other offer should be consider as a back up DISCLAIMER: based on your author statement AND assumption only.
http://www.lynn911.com http://www.homes-for-sale-dallas.com
Web Reference:  http://www.lynn911.com
1 vote
Sharon Kozinn, Agent, Hillsdale, NJ
Fri Sep 12, 2008
Your attorney is the one that should be handling this for you. If you want to make a higher offer on the house, they should present it to the seller. In the attorney review period showings and offers still occur, and you need to be aware of that. If you truly want this house, now is the time to talk to your lawyer and and have them work it out for you.
Good Luck,
Sharon Kozinn
Web Reference:  http://sharonkozinn.com
0 votes
Laura Gianno…, Agent, Manahawkin, NJ
Fri Sep 12, 2008
As stated standard sales contracts in NJ require a 3 day attorney review period during which time either party may cancel the contract. No reason needed. And as already stated, this question deals with contract particulars and as real estate agents we are prohibited by NJ law from offering legal opinions.
0 votes
Patrick Beri…, Agent, Seattle, WA
Thu Sep 11, 2008
The answer will be found in the terms of your contract. While Trulia is a great site, it is not the place to find the answer to your question.
0 votes
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