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Residential Real Estate Contract Can Be Cancelled By Email and Fax, Says NJ Supreme Court

As technology changes the law must adapt. The New Jersey Supreme Court now recognizes that email and NJ Real Estate Contract Termination by Emailfax are each acceptable means of terminating a residential real estate contract within the 3-day attorney review period. Conley v. Guerrero (A-65-16)(April 6, 2017) [1].

In Conley the New Jersey Supreme Court had to revisit its earlier precedent established in 1983 before the Internet existed, New Jersey State Bar Ass’n v. New Jersey Ass’n of Realtor Boards (Bar Ass’n), 93 N.J. 470, 476-477, modified, 94 N.J. 449 (1983). The settlement in the 1983 case authorizes real estate brokers and salespersons to prepare contracts to sell or lease real property, so long as a standard form is used that includes a three- day period for attorney review. If, during this review period, an attorney disapproves the contract, he or she must notify the other party and the other party’s real estate agent or broker. If no notice of disapproval is sent within the three days, however, the contract becomes enforceable. The standard attorney review provision specifies that notice of disapproval must be transmitted to the real estate agent or broker by certified mail, telegram, or personal service.

In Conley, during the 3-day attorney review period the seller’s attorney faxed and emailed a notice of cancellation to the buyer’s attorney and real estate agent. The buyer rejected the cancellation by claiming the method of delivery of the notice – email and fax – was not permitted under the express terms of their contract. The buyer then sued for specific performance to enforce the contract with the seller.

The buyer lost at the trial and initial appellate level, and the NJ Supreme Court affirmed. Because the buyer’s attorney had actual notice of the contract cancellation during the attorney review period the notice was deemed valid notwithstanding that its method of delivery deviated from the contract’s requirements. Ironically, the initial acceptance and delivery of the contract occurred by fax and email.

“In fact, it appears that fax and e-mail have become the predominant, customary methods by which professionals in the industry communicate. Thus, amending the Bar Ass’n settlement is necessary to acknowledge customary procedure in the profession and to recognize advances in technology.” Conley, * 24.

In so ruling, the New Jersey Supreme Court emphasized form over substance in recognizing that when it comes to residential real estate transactions brokers and attorneys frequently communicate by email and fax.

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