“But I want this house and I didn’t want to cancel! Why did my attorney issue a notice of disapproval?!”

Stay calm.

Part of your attorney’s job is to insure that a real estate contract provides you with the most protection possible. The printed forms used by Realtors tend to be somewhat generic, and for this reason, attorneys take this opportunity to suggest changes that would give you more protection than the printed forms provide. In order to make these changes, however, your attorney must first disapprove of the contract, and in all likelihood, the other party’s attorney will do the same. In fact, it would be extremely irregular for an attorney not to disapprove of a new contract and propose changes. So stay calm- this is part of the process.

What kind of changes can be made? Remember that the purpose of attorney review, as explained by the Supreme Court, is to provide a buyer or seller with the opportunity to consult with counsel before the contract is binding. After discussing the contract with a seller, his attorney may feel that the deposit amount inserted by the Realtor is insufficient. The buyer’s attorney may feel that the closing date is too soon. The buyer may recall a verbal agreement that certain appliances were included in the transaction, but notes that the Realtor did not write them into the contract. A seller might remember that he had intended to exclude certain window treatments from the transaction, but forgot to ask the Realtor to include such an exclusion. In short, anything can be changed. In addition, most attorneys have a standard group of clauses suggested for any contract.

You should be aware that after a notice of disapproval is issued by either attorney, there is no contract; a seller is perfectly within his rights to sell to someone else, and buyer can walk away with no penalty. This does happen from time to time, but it is certainly not the norm. It is interesting to note that some Realtors will include a provision in the original contract that the “property will not be shown during attorney review.” As initiation of attorney review cancels the contract, it also cancels that particular provision- so really, all bets are off. But again, this is all part of our process following the Supreme Court’s decision regarding Opinion 26.

It is also interesting to note that if a contract is drafted by an attorney and is signed by the parties without the participation of any Realtor, there is no attorney review. A client came to see me a few weeks ago about selling her home, and handed me a contract that the buyer’s attorney prepared, and both parties had signed. When she began discussing the changes she would like me to make in attorney review, I had to cut her off. Opinion 26 did not apply- and the contract was valid and binding from the time of execution. So be careful- you cannot depend on attorney review unless the contract is drafted by a Realtor!

But I digress. Following notice of disapproval, the attorneys will discuss their respective suggestions, consulting with their clients throughout the negotiations. When both attorneys find the modifications acceptable, all changes will be put before the buyer and seller for final approval. Remember that at this point, there is no contract and neither party has any obligation to accept the changes proposed by the other side. But if both parties do agree and sign the final addendum, attorney review will be complete, the contract is deemed reinstated, and we march forward once more into the breach.

Next Blog: Inspections- “My roof is at the end of its useful life!? What the heck does that mean!?”

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