BIDDER BEWARE: 3-Day Attorney Review Not a Guarantee in Real Estate Auctions

This year, a decision by the New Jersey Supreme Court clarified that the attorney review period, commonly assumed to be required in all real estate contracts, is not applicable to certain real estate auctions. Sullivan v. Max Spann Real Est. & Auction Co., 251 N.J. 45 (2022).

Normally, when purchasing real estate, the parties have a three-day attorney review period after execution to terminate the contract. This was confirmed in a 1983 New Jersey Supreme Court Decision which provided the authority for real estate brokers or salespersons to prepare a contract without a law license, as long as they included a three-day attorney review period N.J. State Bar Asso. v. N.J. Asso. of Realtor Bds., 93 N.J. 470 (1983).

However, the New Jersey Supreme Court determined in the Sullivan decision that certain real estate auctions are not held to the same standards as a typical property transaction. Specifically, the Court ruled that the exemption from the attorney review period only applied to specific types of auctions.

If you are in the process of or interested in purchasing a property, you should be aware of both the legal obligations and conditions of a transaction prior to entering into a contract. Please contact Diane Hoagland, Esq., Rajvir S. Goomer, Esq. and Shaun S. Peterson, Esq. or call us at 732-545-4717 for legal assistance with any of your real estate purchase needs.