Let’s go over the three-day timing of Attorney Review.  First, the reference to three days is actually a reference to three business days.  You have three business days from the date on which both you and the Seller have each received a copy of the fully-signed Contract to have your attorney provide “notice” — in the form of a letter — to the Seller’s attorney that you either:

1.  wish to terminate the Contract and walk away from the deal altogether, or

2. “disapprove” of the Contract, as written, but wish to make modifications to it that would make the Contract acceptable to you.

Once this first letter is sent, the three-day rule is satisfied and the timing constraint on Attorney Review disappears.  Assuming you proceed with option #2 above, that first letter also triggers your ability to further negotiate the terms of the Contract with the Seller until a final, binding Contract is agreed-upon.  This back-and-forth negotiation of the Contract between the parties, by way of their attorneys, is known as “Attorney Review.”

How to Count the Three Days

The counting of the three business days begins on the first business day following the date on which you and the Seller have received a copy of the fully-signed Contract (excluding weekends and holidays).  The three-day period ends at the end (11:59 pm) of the third business day thereafter.

3-Day Timing Examples:

• Buyer receives the fully-signed Contract on Friday, the 3-day attorney review period begins on the next business day, Monday.  Monday is the first business day and the attorney review period expires at the end of the third business day, which is Wednesday. So, if your attorney does not send the first letter (“notice”) by the end of Wednesday, then the Contract becomes binding as written — meaning, the form Contract that you signed to make your offer becomes the binding Contract for the transaction, with no ability to modify or add to its terms.
• Buyer receives the fully-signed Contract on the Friday before Labor Day, the 3-day attorney review period begins on the next business day, Tuesday.  Tuesday is the first business day and the attorney review period expires at the end of the third business day, which is Thursday.
• Seller receives the fully-signed Contract on Wednesday but Buyer does not receive a copy of the fully-signed Contract until Saturday, the 3-day attorney review period begins on the next business day, Monday.  Monday is the first business day and the attorney review period expires at the end of the third business day, which is Wednesday.
• Buyer and Seller receive the fully-signed Contract on Tuesday, the 3-day attorney review period begins on the next business day, Wednesday, but Friday of that week is a holiday.  Wednesday is the first business day and the attorney review period expires at the end of the third business day (excluding weekends and holidays), which is Monday.

Note that typically, by custom and practice, your attorney (the Buyer’s attorney) will  be the one to send the first letter. But there is no hard and fast rule on this: the Seller’s attorney can also send the first letter, which would similarly satisfy the three-day rule.

To Terminate or Disapprove, that is the Question…

If you have second thoughts after your offer is accepted and decide that you don’t want to buy the home after all, you would have your attorney cancel (or “terminate”) the Contract within the three-day period (Option #1 above), i.e., before the Contract becomes binding as written at the end of the third day.

In that event, no explanation or justification is legally required to be provided to the Seller, and there is no penalty or breach of Contract associated with your decision to do so.  Any deposit monies you may have already put down (often referred to as an “earnest money deposit”) must be promptly returned to you.

Far more common is Option #2 — after all, most buyers actually want to proceed with purchasing the home they’ve just offered on.  To proceed with the negotiation of the Contract, a little song and dance needs to occur, using specific language that has legal effect: Your attorney will send a letter to the Seller’s attorney stating that s/he “disapproves” the Contract in its current form, and proposing changes to the Contract which would “make it acceptable.”

These changes to the Contract largely take the form of standard provisions that the bulk of attorneys use for every transaction, such as a clause stating that there are no liquidated damages under the Contract. Other changes to the Contract proposed by your attorney will concern the specific property you’re buying or your specific transaction. For example, if you agreed to give the Seller a Post-Closing Use & Occupancy of the property, then your attorney’s letter might flesh out some of the terms of that U&O.

In response to your attorney’s letter disapproving the Contract and proposing changes to it, the Seller’s attorney will send a response letter accepting, rejecting or modifying your attorney’s proposed changes and stating his or her own proposed changes to the Contract. (It goes without saying that the attorneys will always consult with their respective clients — you or the Seller — before sending a letter out.)

The negotiation of the Contract will continue back-and-forth this way until all terms of the Contract have been agreed upon. This can take a little as a day or as long as is necessary to sort out any issues specific to the given property.

In other words, there is no specific time limit during which the parties must complete Attorney Review.  There is only a time constraint attached to the sending of the first letter/notice which preserves the parties’ right to engage in the Attorney Review process.

As long as the first Attorney Review letter is sent within the three-day period following the receipt of the fully-executed Contract, Attorney Review can take as long, or as short, as the parties need.

HOWEVER, it is critical to note that it is usually in everyone’s best interests to complete Attorney Review quickly, since either party can terminate the Contract during Attorney Review for any reason (or no reason) whatsoever. Because there is no binding Contract until Attorney Review is concluded, you, as the Buyer, are vulnerable to the threat of other buyers swooping in with higher offers and/or the Seller’s change of heart, until Attorney Review officially concludes.

The Final, Binding Contract

Once all terms of the Contract have been agreed upon via letter, the attorneys for the parties will sign the last-in-time letter (on your and the Seller’s behalves) to conclude Attorney Review. This countersigning creates the final, binding Contract.

(Now that you have a binding Contract, you and Seller will proceed through the remaining phases of the closing process.)

Takeaways

To recap, the three-day rule for Attorney Review doesn’t mean you have to negotiate and finalize the Contract within three days.  Instead, you simply need to have your attorney send the first letter (or “notice”) terminating or “disapproving” the Contract (whichever the case may be) within the first three business days after you and the Seller have each received a copy of the fully-signed Contract.

If not, the realtor-prepared form Contract you signed becomes legally binding, and you lose your rights to make Contract modifications by way of the Attorney Review process.

Note also that if you signed a Contract for the purchase of a home without any licensed realtors involved (for example, you are buying a home from someone you know and neither of you are represented by a real estate agent, or it is a “for sale by owner” home and you negotiated directly with the Seller, etc.), then there will be no Attorney Review in the traditional sense, as the right to Attorney Review is a law in New Jersey specifically aimed at Realtor-prepared Contracts.

Instead, a fully-signed Contract of that nature, which was not prepared by a licensed Realtor, and which does not contain an express Attorney Review provision, is legally binding as soon as both parties have signed it.