Opinion ID: 1985228
Heading Depth: 2
Heading Rank: 1

Heading: The History of the Attorney-Review Clause

Text: In State Bar Ass'n, this Court approved a settlement reached between the New Jersey Bar Association (Bar Association) and the New Jersey Association of Realtor Boards (Association of Realtors). The settlement stemmed from State v. Bander, 56 N.J. 196, 265 A. 2d 671 (1970). In Bander, a licensed real-estate broker who had negotiated a real-estate sale between a buyer and a seller was charged with the disorderly person offense of having unlawfully engaged in the practice of law, N.J.S.A. 2A:170-78. Bander had prepared a form purchase agreement and submitted it to the buyer and the seller for their signatures. Although this Court held that Bander's conduct was not a disorderly-person offense under the statute, we reserved the question of whether the broker's acts constituted the unauthorized practice of law. We suggested that an answer might be obtained in a separate suit for injunction against the type of acts undertaken by the defendant or for a declaratory judgment. Acting on our suggestion, the Bar Association filed an action against licensed realtors as a class seeking a declaratory judgment and injunctive relief. The Bar Association sought a ruling that the preparation of contracts for the sale or lease of real estate by licensed real-estate brokers or salespersons amounted to the unauthorized practice of law. The Bar Association and the Association of Realtors finally agreed to a settlement that permitted licensed realtors receiving commissions for the sale of residential real estate to prepare the contracts for those sales provided that each contract contain a clause making the contract subject to review by an attorney for the buyer or seller at either party's option within three business days after execution. The Chancery Division accepted the settlement and entered a consent judgment. See 186 N.J. Super. 391, 452 A. 2d 1323 (1982). Exercising our constitutional powers governing the practice of law, N.J. Const. art. VI, § 2, ¶ 3, the Court approved the consent judgment. 93 N.J. 470, 461 A. 2d 1112. In so doing, we emphasized that the trial record supported the conclusion that the settlement would best serve the public interest. Id. at 473, 461 A. 2d 1112. We noted that to the extent that there is an unavoidable overlap between the realty and the legal professions, the public's interest would be safeguarded through the settlement's attorney-review provisions and our continuing supervisory control. Id. at 474, 461 A. 2d 1112. That safeguard is a necessary one. What is at stake is apparent. Brokers wish to be able to put together binding deals while the parties' momentum is in that direction. They fear that the doubts that afflict people entering substantial transactions may unravel perfectly good deals while the lawyers pick nits. Lawyers believe that some brokers are inclined to push the parties toward deals that may be against their interests. They believe that lawyers offer valuable advice to people entering real estate transactions. They are frustrated by the limitations on the role they can play if their clients appear for the first time with binding agreements in their hands. [ Trenta v. Gay, 191 N.J. Super. 617, 619-20, 468 A. 2d 737 (Ch.Div. 1983).] The State Bar Ass'n settlement thus represents a sensible accommodation of the interests of both realtors and attorneys. State Bar Ass'n, supra, 186 N.J. Super. at 398, 452 A. 2d 1323. Most importantly, what State Bar Ass'n sought to protect was not the private interest of lawyers but rather the public's right to be protected from inadequate information. Consulting an attorney helps a party to a real-estate transaction make choices that are in that party's best interests. Attorneys offer advice on a limitless range of matters. Clients rely on them not only for legal advice but also for emotional support, financial guidance and common sense. They do not often come to their attorneys with their deals all made, save only the limited contributions of the scrivener. For those reasons, there is nothing surprising about a contract provision that effectively creates a timeout period for discussion and advice from a trusted counsellor. [ Levinson v. Weintraub, 215 N.J. Super. 273, 278, 521 A. 2d 909 (App.Div.), certif. denied, 107 N.J. 650, 527 A. 2d 470 (1987) (quoting Trenta v. Gay, supra, 191 N.J. Super. at 621-22, 468 A. 2d 737).] This Court approved the State Bar Ass'n settlement because we recognized, as the Appellate Division has noted, that a party to a residential real estate sales contract must understand from the outset that the broker is neither by training, nor motivation, nor professional undertaking the advocate or counsel for the contracting party, and especially not for the buyer since the broker's agency relationship is ordinarily only with the seller. [ Freedman v. Clonmel Constr. Corp., 246 N.J. Super. 397, 403, 587 A. 2d 1291 (App.Div. 1991).] In deciding this case, we thus consider what result will best serve the public interest and comport with State Bar Ass'n.