Ever since New Jersey State Bar Association v. New Jersey Association of Realtor Boards, 93 N.J. 470 (1983), residential real estate contracts prepared by realtors have been required to have language permitting a party to rescind the contract during the three day attorney review period if notice is given by certified mail, telegram, or personal service. See also N.J.A.C. 11:5-6.2(g)(2). Recently, the Chancery Division in a case captioned Conley et al. v. Guerrero et al., SOM-C-12005-14 (Ch. Div. March 14, 2014), had reason to look again at the above notice requirement, but with a modern twist.
In Conley, it was undisputed that a written letter rescinding the contract was sent, received, and was timely. The problem was, the notice was sent by e-mail rather than certified mail, telegram, or personal service. An aggrieved party sued claiming that as the notice provision was not strictly complied with, the purported termination was invalid. Relying on equitable principles, and in particular a truism of equity that equity looks to substance rather than form, the court approached the matter analogizing it to the doctrine of substantial compliance.
The Chancery Division found that although there had been a breach, such breach was minor. The court further found that the letter provided did satisfy the purpose of the attorney review provision, and that it was undisputed because the letter was sent and received, all were on actual notice of the termination. The parties were further represented by counsel and counsel were actually consulted. The essential purpose of the notice requirement was therefore satisfied. As a result, the court ruled that the contract was property terminated.
The court went on to observe that the methods for conveying notice established in the early 1980s have been "significantly transformed" since. The court questioned whether telegraphs are used anymore, noting the prevalence in modern communication of e-mail, facsimile, and text messaging. The court concluded by suggesting it may be time to amend the "dated notice provisions contained as boilerplate within nearly ever residential real estate contract" in the State.