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What Can Go Wrong in Attorney Review

Last updated on: November 8, 2023

Navigating the intricate landscape of real estate transactions can be a daunting task, with the attorney review process being one of the most critical phases. The process involves a comprehensive review of various documents and contracts linked to the transaction, ensuring they are legally sound and in the best interest of the client. However, this vital step is not immune to potential pitfalls. From overlooked liens to inaccuracies in contract drafting, several issues can arise during the attorney review process, leading to significant legal complications and potentially derailing the entire transaction.

In this complex scenario, a proficient New Jersey real estate attorney can be an invaluable ally. At The Matus Law Group, attorney Christine Matus and our team of New Jersey real estate lawyers can help you navigate potential challenges and ensure a smooth review process. By meticulously examining every aspect of the documents involved, our team can help identify potential issues before they escalate into substantial problems. Contact us today at (732) 281 – 0060 to schedule a consultation.

Understanding the Attorney Review Process in New Jersey

The Attorney Review process is a stipulated period during which a real estate contract, once signed by both parties, is reviewed by the attorneys representing the buyer and the seller. This process is typically set for three business days in New Jersey, although the period may be extended by mutual agreement.

During this time, either party’s attorney can disapprove of the contract, propose changes, or terminate it altogether. If no disapproval or modifications are expressed within the review period, the contract becomes legally binding. The attorney review is not limited to just the purchase agreement but extends to other associated documents, like the home inspection report and the title search.

The Importance of Attorney Review in Real Estate Transactions

The Attorney Review process plays a vital role in New Jersey real estate transactions. It provides an opportunity for the attorneys to spot potential legal issues that may affect the transaction and address them before it’s too late. For instance, the attorney might identify any ambiguous language in the contract that could lead to disputes or spot liens on the property that were previously overlooked.

The Attorney Review process also allows the parties to negotiate further conditions of the sale, such as contingencies related to inspections or the buyer securing a mortgage. In essence, it is an opportunity to fine-tune the contract to protect the rights and interests of both the buyer and the seller.

Steps Involved in the New Jersey Attorney Review Process

The Attorney Review process in New Jersey follows several key steps. Once the buyer and seller have both signed the contract, the three-day review period begins. The attorney will carefully review the contract, looking for any terms or conditions that could potentially harm their client.

  • Beginning of the Review Period: Once the real estate contract is signed by both parties, the three-day attorney review period commences.
  • Contract Review: During this period, the attorneys representing both parties meticulously review the contract and all relevant documents. They are tasked with looking for any potentially problematic terms or conditions that could be detrimental to their client.
  • Disapproval or Modification: If an attorney identifies any issues, they will draft a letter of disapproval that outlines the specific problems and suggests changes. This should be done within the review period.
  • Communication: The attorney sends the letter of disapproval to the other party’s attorney, who will then review the proposed changes.
  • Negotiation: If the other party agrees to the changes, the contract is revised accordingly. If they disagree, negotiations take place to resolve the issues.
  • Resolution or Termination: If the disputes are resolved, the contract moves forward. If an agreement cannot be reached, either party can choose to terminate the contract without incurring any penalties during the review period.
  • Completion of Review Period: If no disapproval or modifications are expressed within the review period, the contract becomes binding and the real estate transaction proceeds towards closing.
Steps Involved in the New Jersey Attorney Review Process Description
Beginning of Review Period Commences after the real estate contract is signed by both parties. It lasts for three days.
Contract Review Attorneys for both parties carefully review the contract and relevant documents for potential issues.
Disapproval or Modification If issues are found, the attorney drafts a letter of disapproval and suggests changes within the review period.
Communication The attorney sends the letter of disapproval to the other party’s attorney for review.
Negotiation Negotiations occur to resolve any disagreements on the proposed changes.
Resolution or Termination If disputes are resolved, the contract moves forward; otherwise, either party can terminate the contract without penalties.
Completion of Review Period If no disapproval or modifications are expressed within the review period, the contract becomes binding, and the transaction proceeds towards closing.

Common Issues That Arise During Attorney Review

During the attorney review process in real estate transactions, a multitude of potential issues can emerge. Some of these issues are more common than others, and they can significantly impact the progression and finalization of the transaction. 

Contract Misinterpretation

One common issue that arises during the attorney review process is the misinterpretation of contract terms. Contracts in real estate transactions are often filled with legal jargon and complex terms that can easily be misunderstood by those not familiar with real estate law. For instance, a term such as “contingencies” can have specific legal implications that might not be obvious to the layperson. Misinterpretations can lead to disputes between the buyer and seller and can stall the transaction process.

Attorneys play a crucial role in identifying and clarifying any ambiguous terms to prevent misinterpretation. They interpret the contract’s language, ensuring that both parties understand their obligations and the contract’s terms. If a term in the contract is unclear or could lead to disputes, the attorney might suggest changes to clarify the language and avoid potential legal issues down the road.

Unresolved Property Liens

Another common issue that can come up during the attorney review process is the discovery of unresolved liens on the property. A lien is a claim made on a property as security for a debt. If the previous owner of the property had unpaid debts, the creditors could place a lien on the property, which can complicate the sale.

During the attorney review process, a thorough search is conducted to identify any existing liens. If a lien is discovered, it must be resolved before the property can be sold. Resolving a lien typically involves paying off the debt or negotiating with the creditor to remove the lien. The discovery of a lien can delay the transaction and may even lead to its cancellation if not properly addressed.

Disputes over Property Boundaries

Disputes over property boundaries are another common issue that can arise during the attorney review process. These disputes can occur due to inaccurate or outdated property descriptions, discrepancies in property surveys, or encroachments by neighbors.

During the review process, the attorney will usually review a survey of the property to verify the boundaries. If a boundary dispute is discovered, it needs to be resolved before the sale can proceed. This can involve obtaining a new survey, negotiating with neighbors, or even going to court to settle the dispute. Such disputes can significantly delay the transaction and add to the costs of the sale.

Issues with the Property Title

One of the most critical issues that can arise during the attorney review process involves problems with the property title. The title is the legal document that indicates the ownership of the property. Issues with the title can include errors in the deed, undisclosed heirs, omissions in the public record, or fraud.

During the attorney review process, a title search is performed to uncover any potential issues. If a problem is found, it can be a significant obstacle to the sale of the property. Resolving a title issue can be complex and time-consuming, often requiring legal action or extensive negotiations.

The attorney review process is a critical stage in real estate transactions, especially in New Jersey where it is a mandated part of the process. The attorneys representing both the buyer and seller have the responsibility to ensure all documents and contracts associated with the transaction are legally sound and protect the interests of their respective clients. However, mistakes can occur, and when they do, they can have serious legal implications for all parties involved. These issues can potentially lead to significant consequences for buyers and sellers and can impact the overall real estate transaction.

Buyers face several potential legal consequences due to issues in the attorney review process. One of the most significant is the potential loss of their earnest money deposit. If a contract is signed without an adequate review and the buyer later backs out due to an issue that was overlooked, the seller may be entitled to keep the deposit.

Buyers may also face lawsuits for breach of contract if they attempt to back out of a deal due to an issue that was overlooked during the attorney review. In extreme cases, they may be compelled to complete the purchase or pay damages to the seller.

Furthermore, if there are issues related to property liens or title issues that are not discovered during the attorney review, buyers may find themselves responsible for resolving these issues after the purchase. These can be costly to resolve and may also affect the buyer’s ability to sell the property in the future.

Sellers, too, face potential legal consequences due to issues in the attorney review process. If a seller fails to disclose known issues with the property or if the contract contains inaccurate information, the buyer may be able to sue the seller for misrepresentation or breach of contract.

Sellers may also face legal issues if they do not properly address liens or encumbrances on the property. For instance, if a seller promises to pay off a lien as part of the sale but fails to do so, the buyer may have legal grounds to sue the seller for breach of contract.

Moreover, if a seller tries to back out of the sale due to an issue that was not properly addressed during the attorney review process, the buyer could potentially sue the seller for breach of contract or specific performance, compelling the seller to proceed with the sale.

Consequences of Issues Found to the Real Estate Transaction

Issues in the attorney review process can significantly impact the overall real estate transaction. Here are some of the effects that issues during the attorney review process can have on the overall real estate transaction:

  • Delays: Issues found during the attorney review process can lead to significant delays. These can occur as parties work to resolve the issues, which can involve negotiation, document revision, and in some cases, legal action.
  • Increased Costs: Mistakes during the review can result in increased costs. These might be from additional legal fees required to rectify the situation or costs associated with resolving issues like property liens or title problems.
  • Transaction Cancellation: In some severe cases, if the issues are too significant or cannot be resolved to the satisfaction of both parties, the real estate transaction may be canceled altogether.
  • Legal Consequences: Issues can expose both buyers and sellers to potential legal consequences. This could range from lawsuits for breach of contract to being held liable for undisclosed property issues.
  • Damage to Relationships: Mistakes during the attorney review can cause stress and strain on the relationship between the buyer and seller. This can make the transaction process more difficult and can potentially sour future dealings between the parties.
  • Loss of Future Opportunities: Significant issues that lead to the cancellation of a transaction can result in the loss of future opportunities. For instance, a buyer may miss out on their dream home, or a seller may lose a lucrative sale.
  • Reputation Damage: For professional real estate buyers or sellers, issues during the attorney review can harm their reputation in the real estate market. This could potentially affect their future transactions.

These potential effects underscore the importance of a thorough and accurate attorney review process. By ensuring that all aspects of the contract and associated documents are properly reviewed, parties can mitigate these risks and ensure a smoother transaction.

Preventing Common Attorney Review Problems

In the realm of real estate transactions, the attorney review process plays a pivotal role in protecting the interests of all parties involved. However, this process is not without its potential pitfalls. Contract misinterpretations, unresolved property liens, disputes over property boundaries, and issues with the property title are among the common problems that can arise during attorney review. The good news is that there are strategies that can be employed to prevent these issues from derailing the transaction.

Importance of Clear Communication

Clear and ongoing communication is the cornerstone of preventing many common problems in the attorney review process. This is particularly relevant in the relationship between the attorney and their client. The attorney should ensure that their client has a clear understanding of all aspects of the contract and the implications of each clause. This involves explaining in plain language the meaning of complex legal terms and the effects they can have on the transaction.

Additionally, clear communication between the buyer’s and seller’s attorneys can help avoid misunderstandings and facilitate negotiations. This can be especially helpful in resolving disputes over contract terms or property boundaries. By maintaining open lines of communication, potential issues can be identified early and addressed before they escalate into bigger problems.

Thorough Property and Title Investigations

Thorough investigations of the property and its title are crucial in preventing common problems during the attorney review process. A proper investigation involves a comprehensive search for any existing liens on the property and a detailed review of the property’s boundaries based on its survey.

A title investigation is equally important. This involves checking the title for any issues, such as errors in the deed, undisclosed heirs, omissions in the public record, or fraud. By conducting thorough investigations, potential issues can be identified and resolved before the transaction proceeds.

In the case of boundary disputes, a new survey may be necessary to determine the accurate boundaries of the property. If liens are discovered, they must be resolved before the sale can proceed, which may involve negotiating with the creditor or paying off the debt.

Ensuring Accurate Contract Drafting and Review

Accurate contract drafting and meticulous review play a significant role in preventing common attorney review problems. Errors or ambiguities in contract language can lead to misinterpretation and disputes. Therefore, the contract must be drafted with precision, clarity, and comprehensiveness.

During the review process, the attorney should scrutinize each clause in the contract, ensuring that all terms and conditions are fair to their client and comply with all relevant laws. If any issues are identified, the attorney should negotiate for changes to the contract.

How to Choose the Right Attorney for Property Transactions in New Jersey

Choosing the right attorney for your property transactions in New Jersey is a crucial decision that can significantly influence the success of your real estate dealings. The attorney’s role is pivotal in navigating complex legal processes, ensuring all documentation is correct, and protecting your interests. Below we discuss the essential traits to look for in a competent real estate attorney and the key questions to ask prospective attorneys.

Key Characteristics of a Competent Real Estate Attorney

A proficient real estate attorney should possess certain key characteristics that ensure they can handle the intricacies of property transactions effectively.

Experience: An attorney with an extensive background in real estate law and a track record of successful property transactions is essential. The nuances of real estate law can be complex, and having someone who knows the landscape can make a significant difference.

Local Knowledge: Real estate laws and processes can vary greatly by location. Therefore, it’s beneficial to have an attorney who is well-versed in New Jersey’s property laws and familiar with local real estate practices.

Strong Communication Skills: Real estate transactions involve extensive documentation and negotiation. A good attorney should be able to clearly explain legal jargon, keep you informed about the progress of your transaction, and advocate effectively on your behalf.

Attention to Detail: Real estate contracts are often dense and filled with legal terms. An attorney must be meticulous, ensuring all documents are correctly drafted, and potential issues are identified during the review process.

Questions to Ask When Hiring a Real Estate Attorney

When hiring a real estate attorney, it’s important to ask the right questions to determine if they’re a good fit for your needs.

  • What is your experience in real estate law? This question helps gauge their expertise and track record in handling property transactions.
  • Are you familiar with New Jersey’s property laws and local real estate practices? This will ascertain their local knowledge, which is crucial in navigating the transaction smoothly.
  • How do you communicate with clients? Their answer will give you an idea of their communication style and whether it aligns with your expectations.
  • Can you provide references from past clients? References can provide first-hand information about the attorney’s competence and reliability.
  • What are your fees? Knowing about their fee structure can help you budget appropriately and avoid any unexpected costs.

Working with a New Jersey Real Estate Attorney

As we’ve explored throughout this article, the attorney review process in real estate transactions, though essential, is fraught with potential pitfalls. Misinterpretations, oversights, and omissions can lead to significant delays, unexpected costs, and even the cancellation of the transaction. 

It underscores the importance of having a skilled New Jersey real estate attorney by your side. A skilled attorney can mitigate these risks, ensuring that your interests are well-represented and protected. At Matus Law Group, our team of New Jersey real estate attorneys can guide you through the complexities of the attorney review process, identify and address potential issues early, and strive to ensure a smooth transaction. Contact us today at (732) 281 – 0060 to learn more about how we can help. 

Christine Matus

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