The New Jersey Supreme Court recently held in Conley v. Guerrero that the method of delivery requirements in the attorney review provision of a standard form real estate contract should not be strictly enforced. In what was an anticipated decision by lawyers and real estate professionals, the Court recognized that the delivery can be accomplished through email, facsimile and overnight delivery, in addition to the already sanctioned methods of certified mail, telegram (yes, telegram), and personal delivery.
In this case, the Seller prior to the end of the attorney review period sent Buyer’s attorney and realtor notice of disapproval of the agreement by email and fax; and not by any of the methods required in the contract. Buyer then sought specific performance claiming that the notice was ineffective due to the failure to comply with the terms of the contract as they related to the method of delivery. The trial court dismissed Buyer’s claims, concluding that Seller substantially complied with then notice provisions and the “interests of justice” required it to relax the strict delivery requirements of the contract. The Appellate Division affirmed.
Unlike most contractual disputes, this case involved a contract term which was reviewed and approved by the New Jersey Supreme Court in 1983 in New Jersey State Bar Ass’n v. New Jersey Ass’n of Realtor Boards. That case resolved a long running dispute between real estate professionals and lawyers with the result being a consent judgment requiring a three day attorney review period. That requirement was also codified in administrative regulations. At that time, over thirty years ago, facsimile was not a standard form of delivery and email as we now know it did not exist. Here, the Court focused on the overriding purpose of the attorney review provision, which was to protect consumers, and repeated that “when strict enforcement of a contract provision would frustrate the contract’s overarching purpose, the courts will intervene.” It chose to intervene (and ultimately affirm the lower courts) because the Buyer received notice and to strictly enforce the contract would undermine the purpose of the attorney review provision in the contract. The Court went a step farther and modified the 1983 consent judgment allowing for email and facsimile notice and removing telegram and certified mail as options. Instead, the sanctioned forms of delivery in the standard form real estate contract are now—fax, email, personal delivery, or overnight delivery (effective upon mailing).
There are a number of consequences to this ruling. First and foremost, in the residential home context, the standard form of contract has now been updated to recognize changes in standard delivery methods. Second, the Court affirmed that it will examine the overarching purpose of any contract in interpreting the terms of that contract. However, one should not overlook the specific terms of a contract as it applies to delivery methods, especially in the commercial real estate context. Compliance with those terms is always the safest course. And if those contracts are as outdated as the 1983 standard form of real estate contract here, then those contracts should be amended and future contracts revised to reflect the times.