Notice of Disapproval of a Residential Real Estate Contract May Now be Given by Facsimile and Electronic Mail

Conley v. Guerrero, ___ N.J. ___ (2017).  Today’s decision in this case, written by Justice Solomon for a unanimous Court, largely affirmed the ruling of the Appellate Division, reported at 443 N.J. Super. 62 (App. Div. 2015), and discussed here.  The case proceeded from the resolution of New Jersey State Bar Ass’n v. New Jersey Ass’n of Realtor Bds., 93 N.J. 470 (1983), mod., 94 N.J. 449 (1983).  That case required contracts for the sale of residential real estate to contain a “three-day attorney review” clause, which allows either side to disapprove the contract during that period.

Today’s decision addressed the question whether the attorney review provision in a standard form contract of sale that provided that notice of disapproval of a contract of sale must be communicated “by certified mail, by telegram, or by delivering it personally” must be strictly enforced.  The facts were that on the day before the attorney review period expired, counsel for the defendant seller sent a letter of disapproval to the plaintiff buyers’ attorney by fax and e-mail.  In the interim, the sellers accepted a higher offer.

Plaintiffs sued for specific performance, alleging that because the attorney review period had elapsed without any notice of disapproval having been sent in any of the ways specified by the contract, defendant was required to sell to them.  Both courts below rejected plaintiffs’ position, granting summary judgment for defendant.  Those courts found that since plaintiffs had received the notice of disapproval within the three-day period, the purpose of the attorney review clause was satisfied.  The Supreme Court, applying de novo review, agreed.

Justice Solomon traced in detail the history of the attorney review clause, highlighting the 1983 Bar Ass’n case and citing subsequent cases as well.  Though there was “no directly controlling precedent,” the Court found the purpose of the attorney review clause– “protecting consumers’ rights”– called for affirmance.  Justice Solomon did not “glean from the Bar Ass’n opinion an intent that strict adherence is necessary, so long as the interests of the consumer are protected.”  Post-Bar Ass’n cases of the Appellate Division, he said, have similarly “honored effectuating the purpose of the attorney-review clause above all else.”  Plaintiffs’ position here “would elevate form over the protective purpose” underlying the attorney review clause.  The Court declined to adopt that position.

The Appellate Division had been asked to endorse a revision of the standard language to permit notices of disapproval to be sent by modern methods such as facsimile and e-mail.  That court would not go that far.  The Supreme Court, however, exercising its power to alter the Bar Ass’n settlement, took up that invitation.  Observing that “notice by telegram is obsolete,” and that “fax and e-mail have become the predominant, customary methods by which professionals in the industry communicate,” Justice Solomon announced that notice of disapproval may now be given by “fax, e-mail , personal delivery, or overnight mail with proof of delivery.”  Notice by overnight mail will be effective upon mailing.

With this decision, the Court has done justice and brought the Bar Ass’n settlement into the twenty-first century.

 

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