Key Takeaways
- New Jersey contracts must meet all standard requirements including writing under the Statute of Frauds
- The attorney review clause gives both parties 3 business days to have an attorney review the contract
- During attorney review, either party can cancel or request changes without penalty
- Earnest money deposits are held in the broker's trust account or attorney escrow
- Time is of the essence provisions make contract deadlines strictly enforceable
New Jersey Purchase and Sale Agreements
Important: This content covers New Jersey-specific contract law. You should complete the National Real Estate Exam Prep first, as general contract principles are tested on the national portion.
Real estate contracts in New Jersey must meet all standard contract requirements plus New Jersey-specific provisions.
Standard Contract Requirements
For a valid New Jersey real estate contract:
| Requirement | Description |
|---|---|
| Competent Parties | Legal age (18+) and mental capacity |
| Offer and Acceptance | Meeting of the minds |
| Legal Purpose | Transaction must be lawful |
| Consideration | Something of value exchanged |
| Written Form | Statute of Frauds requires writing |
| Legal Description | Property must be identifiable |
The Attorney Review Clause
New Jersey has a unique attorney review provision:
Standard Attorney Review Period
| Element | Detail |
|---|---|
| Duration | 3 business days |
| Trigger | After contract signing |
| Who can use | Both buyer and seller |
| Purpose | Legal review of contract |
During Attorney Review
Either party's attorney may:
- Disapprove the contract entirely
- Request modifications to terms
- Approve the contract as written
- Let the period expire (contract becomes binding)
Key Points About Attorney Review
| Rule | Explanation |
|---|---|
| Business days only | Weekends/holidays don't count |
| Written notice required | Must communicate in writing |
| Either party can cancel | No penalty during this period |
| Modifications negotiable | Other party can accept or reject |
Exam Tip: The attorney review period is one of the most frequently tested New Jersey topics. Know that it's 3 business days and either party can cancel during this time.
Contract Contingencies
Common Contingencies in New Jersey
| Contingency | Description |
|---|---|
| Attorney Review | 3 business day review period |
| Mortgage/Financing | Buyer must obtain loan approval |
| Home Inspection | Buyer can inspect property |
| Appraisal | Property must appraise at value |
| Sale of Buyer's Home | Buyer must sell existing home |
Financing Contingency
The financing contingency protects buyers:
- Must apply for mortgage within specified time
- Must make good faith effort to obtain financing
- Can cancel if loan is denied
- Must meet lender requirements
Inspection Contingency
| Element | Standard Practice |
|---|---|
| Time period | Typically 5-10 days |
| Types | General, termite, radon, etc. |
| Buyer options | Request repairs, credit, or cancel |
| Seller options | Agree, counter, or refuse |
Earnest Money
Handling Requirements
| Requirement | Detail |
|---|---|
| Holder | Broker's trust account or attorney escrow |
| Deposit timing | As specified in contract |
| Documentation | Written receipt required |
| Disposition | Per contract terms or court order |
Earnest Money Disputes
When buyer and seller dispute earnest money:
- Broker/attorney holds funds
- Cannot release without agreement
- May require court determination (interpleader)
- Broker cannot make independent decision
Contract Termination
Ways Contracts Can Terminate
| Method | Description |
|---|---|
| Mutual agreement | Both parties agree to cancel |
| Contingency failure | Condition not satisfied |
| Attorney review disapproval | During 3-day period |
| Default/Breach | One party fails to perform |
| Impossibility | Contract cannot be performed |
How long is the standard attorney review period in New Jersey?
What can an attorney do during the attorney review period?