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The Telegram Has Gone the Way of the Horse & Buggy In Residential Real Estate Transactions

The New Jersey Supreme Court last week dragged residential real estate contracts out of the dark ages when it ruled that an attorney’s notice of disapproval of a real estate contract may be transmitted by fax, e-mail, personal delivery, or overnight mail with proof of delivery. Noticeably absent from the modes of acceptable notice is that hoary method of reaching out and touching someone: the telegram.

The ruling in Conley v. Guerrero arose out of a dispute between home buyers Conley and Maurer and their seller Guerrero. Buyers signed a standard form residential real estate contract, which the Seller signed on January 14, 2014, and delivered the next day. Both offer and acceptance were transmitted via e-mail and/or fax. The contract contained the usual attorney review clause which gave the attorneys for the parties three business days to review the contract before it became legally binding. Any notice of disapproval had to be provided to the realtor and the buyers’ attorney by certified mail, telegram, or personal delivery.

As is wont to happen in a seller’s market, a bidding war erupted and the buyers got outbid by another couple. One day before the expiration of the attorney review period, seller’s attorney e-mailed and faxed a letter to buyers’ attorney killing the deal, and copied the realtor on the letter.

After the attorney review period passed, buyers’ attorney emailed the realtor and faxed seller’s attorney a letter declaring the contract to be in full force and effect. Buyers then filed suit demanding specific performance and requesting a temporary restraining order to block the sale of the property to anyone other than the buyers. Buyers took the position that seller failed to properly notify the buyers, their attorney, or the realtor and, therefore, the contract became effective after the expiration of the three day review period.

Both the trial and appellate courts ruled in favor of the seller. The Supreme Court affirmed, finding that because the buyers received actual notice of the disapproval within the three-day period, the notice of disapproval was valid. The Court also made clear that notice to the realtor may be transmitted by fax, email, personal delivery, or overnight mail with proof of delivery. Overnight mail is effective upon mailing.

Attorneys practicing in residential real estate typically employ the fax machine or email to transmit notices to attorneys and realtors. The strict notice provision pertaining to realtors is honored more in the breach than in the observance. It was only a matter of time before our courts recognized that reality. This case was the perfect opportunity for the Court to update the law.

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