Opinion ID: 1985228
Heading Depth: 2
Heading Rank: 4

Heading: Presence of PREDFDA's cancellation clause.

Text: We reject the notion that the presence of PREDFDA's seven-day cancellation clause in the contract remedied the absence of State Bar Ass'n's three-day attorney-review clause. We acknowledge, however, that State Bar Ass'n did not contemplate sales that are highly regulated by a statute whose purpose is to protect the buyer, a statute that specifically allows a prospective buyer seven days to cancel a real-estate contract for any reason. Commenting on whether residential leases involving a term of less than one year should be subject to attorney review, Justice Sullivan, temporarily assigned to the Chancery Division, stated in State Bar Ass'n that because legislative enactments extend broad protections to lessees of residential property, so that the form of leases used by realtors as well as attorneys is largely standardized, public interest does not require that such leases contain the attorney-review clause. 186 N.J. Super. at 397, 452 A. 2d 1323. The Senate, State Government, Federal and Interstate Relations and Veteran Affairs Committee Statement accompanying the PREDFDA bill noted that the cancellation clause purports to grant the purchaser a cooling-off period. Nothing in the legislative history or the legislation itself indicates that the PREDFDA clause exists to encourage attorney review of such contracts. Nonetheless, PREDFDA does facilitate some of the same objectives and offers some of the same protections to the buyer: a cooling-off period from a high pressure salesperson. The attorney-review clause, however, is more than a buyer's cooling-off period. Courts have long recognized that the complexity of real-estate contracts requires an attorney to review them. Id. at 403-04, 452 A. 2d 1323. For many people the purchase of a home will be the most significant financial transaction they will ever undertake. The attorney-review clause functions as an advisory that is intended first to inform the parties that they can have an attorney review the document and then to afford the attorney the opportunity of cancellation before the client is legally bound. Freedman, supra, 186 N.J. Super. at 405, 452 A. 2d 1323. For example, had Calvert discussed the contract with an attorney back in 1988, the attorney might have persuaded her not to sign the document or might have better accommodated her interests by suggesting the inclusion of a mortgage-contingency clause. Because the contract here failed to notify Calvert that it was a document subject to attorney review, it deprived Calvert of the benefits intended to be granted by State Bar Ass'n. That deficiency persists even though language in several documents apart from the contract suggested that Calvert seek legal counsel. This Court in State Bar Ass'n ordered brokers to insert specific language at the top of the first page of the contract. The contract, not the public-offering statement nor any other ancillary documents, which laypersons often fail to read, is the critical document fixing the duties and rights of parties to a real-estate transaction. We therefore hold that neither inclusion of the PREDFDA clause nor inclusion of non-conforming attorney-review language accomplishes State Bar Ass'n's aim of protecting the public. PREDFDA requires strict conformance of parties' Public Offering Statements with its requirements. We acknowledge that the required wording of the seven-day PREDFDA clause and the required attorney-review clause present a conflict. When we approved State Bar Ass'n, we did not specifically address that conflict. As the conflict now unfolds, we realize that the attorney-review clause must be clarified and adjusted for inclusion in PREDFDA contracts. Therefore, to comport with requirements of the Plain Language Act, N.J.S.A. 56:12-2, -6, and -10, and pursuant to our constitutional powers governing the practice of law, N.J. Const. art. VI, § 2, ¶ 3, we order that contracts governed by PREDFDA and by State Bar Ass'n contain at the top of their first page the following modification of the required PREDFDA and attorney-review clauses: Notice to the Purchaser: YOU HAVE THE RIGHT TO CANCEL A CONTRACT OR AGREEMENT BY SENDING OR DELIVERING WRITTEN NOTICE OF CANCELLATION TO THE DEVELOPER BY MIDNIGHT OF THE SEVENTH CALENDAR DAY FOLLOWING THE DAY ON WHICH IT IS EXECUTED. SUCH CANCELLATION IS WITHOUT PENALTY AND ALL MONIES SHALL BE PROMPTLY REFUNDED IN THEIR ENTIRETY. Notice to the Purchaser and Seller: WITHIN THE FIRST THREE BUSINESS DAYS OF THIS SEVEN-DAY PERIOD, YOU MAY CHOOSE TO CONSULT AN ATTORNEY WHO CAN REVIEW AND CANCEL THE CONTRACT. SEE SECTION ON ATTORNEY REVIEW FOR DETAILS. Under this modification, during the first three days after execution either the buyer's or seller's attorney may cancel the contract; during the next four days, only the buyer may cancel. The buyer will continue to have a full seven-day period in which to cancel the contract, regardless of whether he or she decides to consult an attorney. That modification comports with the purposes of both PREDFDA and State Bar Ass'n.