A trial judge presiding over a disputed real estate transaction has ruled that a seller can waive a long-standing provision of New Jersey real estate law: the three-day attorney review period.

The attorney review clause need not be included in the sales contract for a buyer of property at an auction who receives the contract terms in advance and has sufficient time to seek attorney review, a Superior Court judge has ruled in a case of first impression. The judge rejected the would-be homebuyer's claims that the contract should be voided due to her limited grasp of English and her assertion that her husband signed her name to various paperwork, according to the June 26 ruling by Superior Court Judge Fred Kumpf of Somerset County.

The decision is significant because lawyers and realtors have a long history of conflict over the role of nonlawyers in real estate transactions, according to Randall Peach of Woolson Anderson Peach in Somerville, the lawyer for MengXi Liu, who submitted a bid on the property at auction. Peach said he intends to appeal Kumpf's ruling.

“For years, lawyers have been complaining about brokers preparing these contracts and telling buyers you don't need an attorney,” Peach said. “People are afraid there will be a chipping away of the consumer's right to attorney review,” he said.

Kumpf's creation of special rules for closing home sales that took place at auctions is “a red herring” and infringes on the Supreme Court's sole authority to regulate the practice of law, Peach added.

The dispute arose when the owner of a 4,300-square-foot home on 5 acres in Bernardsville listed the property for sale with Max Spann Real Estate & Auction Co. in August 2016. At an October 20, 2016, auction conducted by Max Spann, Liu submitted a high bid of $1.21 million. She paid a deposit of $121,000 on the property but was unable to arrange financing, and the sale fell through. The Bernardsville property was sold again to another buyer in March 2017 for much less—$825,000. But Max Spann refused to refund Liu's $121,000 deposit.

The sellers of the Bernardsville property, the Sylvester Sullivan Retained Income Trust and trustee John Sullivan, sued Max Spann Real Estate & Auction and Liu in December 2017. The suit claimed the sellers were entitled to Liu's entire $121,000 deposit plus additional damages from Spann for its handling of the sale.

Kumpf's ruling split the $121,000 deposit evenly between the sellers and Max Spann. Other claims in the case were dismissed.

The three-day attorney review period was mandated by the Supreme Court in a 1983 case pitting the New Jersey State Bar Association against the New Jersey Association of Realtors. The bar association claimed that real estate brokers who fill out home sales contracts were engaging in the unauthorized practice of law. The court ultimately allowed brokers to prepare sales contracts only if they include a provision giving the parties three days to consult an attorney and cancel the contract.

The lawyer for the sellers of the Bernardsville property, Bonnie Birdsell of Wilentz, Goldman & Spitzer in Woodbridge, declined to comment on the ruling.

The lawyer for Max Spann Real Estate & Auction, Kevin Benbrook of Benbrook & Benbrook in Clinton, did not return a call about the case.