New Jersey State Bar Ass'n v. New Jersey Ass'n of Realtor Boards

remandment— and reversal For SCHREIBER, CLIFFORD, WILENTZ, Justices Justice Chief MATTHEWS Judges GARIBALDI SULLIVAN FRITZ —7.

For reversal —None. ASSOCIATION, NEW JERSEY STATE BAR A CORPORATION OF JERSEY, PLAINTIFF, THE STATE OF NEW v. NEW JERSEY BOARDS, ASSOCIATION OF REALTOR A CORPORATION OF JERSEY; BROUNELL, THE STATE OF NEW D. T/A LEWIS KRAMER; WILSON, JR.; BROUNELL AND HARRY A. VIN CAPOBIANCO; CONNOLLY, CENT R. HERBERT T/A RAY CO.; HOMER; MOND CONNOLLY OLIVER W. L.D. EDWARDS AGENCY, INC., A CORPORATION OF NEW THE STATE OF JERSEY; SUMMERILL, JR., WILLIAM W. T/A THE SUMME CO.; REYNOLDS, RILL REALTY NANCY F. T/A F. NANCY ROGGE, REYNOLDS AND A. ASSOCIATES JOHN T/A WALK CO., ER-ROGGE DEFENDANTS. June 1983.

DECISION AND ORDER Modifying Approving Judgment Consent proceedings applica- These upon joint are before the Court tion of the parties, Jersey New Bar and New State Association Jersey Boards, Association Realtor who seek approval Court, Judgment Final Consent Superior entered in the Chan- cery Division, Sullivan, serving Justice Mark A. retired

by temporary assignment. judgment consent was entered 5,1982, May on pursuant to a decision issued Justice Sullivan 30,1982. on April 186 N.J.Super. 391. We applica- consider this tion under our powers constitutional governing practice of VI, II, 3; law. N.J. (1947) Const. Art. par. see R. 1:21 § (regulation law). judgment review,

The consent under appendix included as an hereto, provides generally that licensed real estate brokers and salespersons shall be prepare certain types of residential sales and agreements lease if agreements these con- specified tain provisions. Further, the consent judgment con- prohibitions tains against such real salesper- estate brokers or sons engaging in the drafting, preparation or completion types other of residential real estate agreements. sales or lease Additional of the consent judgment protect the right of party to such authorized real estate contracts or leases to obtain proposed review of the agreement prohibit and waiver, disclaimer, relinquishment abridgement of that right. parties The agreed by have judgment this consent that its terms and conditions shall become only upon effective approval of this Court.

The Final Consent Judgment that we are approve asked to the result of prolonged and difficult proceedings. The back- ground history and are recapitulated in opin- Justice Sullivan’s ion. 186 N.J.Super. at 392-94. This lawsuit followed upon the decision of Bander, this Court in State v. (1970), 56 N.J. 196 which left question unresolved the of whether the particular actions of a real estate broker constituted the unauthorized practice of law to contrary N.J.S.A. 2A:170-78. In this action the plaintiff initially sought a judicial declaring order various activities of the licensed real estate brokers and sales- persons constituted the practice unauthorized Following of law. joinder of trial, issues and the commencement of embarked upon extensive and constructive negotiations that led to an of adjustment dispute. their Since consensual resolution of the controversy necessarily question would of implicate the whether particular conduct would to by be considered this Court law, practice constitute the unauthorized it was clear that approval required. fact, would be Recognizing this Jus- tice hearings Sullivan discontinued the trial and public scheduled proposed on settlement with pursu- notice to class members 4:32-4, general ant to R. to bar public. public and hearings with the trial served testimony combined evidence develop adequate purposes discharge record for regulatory responsibility practice this Court’s over the of law rule-making and its authority pursuant to the Constitution. It responsibility authority is this that are invoked application approve judgment. the consent supports record below the conclusion reached Justice settlement, herein, protect that the as Sullivan modified will public interest and can be approved by Court. Justice Sullivan observed in his opinion that basic is how is the interest best In the sale or lease [t]he question served. of residential real the functions of realtors and property attorneys overlap. give in connection with business advice and Many their non-lawyers, activities, things do which have this does consequences. However, necessarily engaged mean that are in the law. In the instant case unlawful they practice assert defendants without contradiction that State in the has “[n]o Country completing Brokers with from form contracts in connection residen- prohibited Mtg. tial sales.” Bar v. Jacobs, Justice N.J. Ass’n North N.J. property Assocs., (1960),

32 N.J. 430 noted that: litigation It but clear that the of law is not confined to is, course, non-litigious extends to activities in fields which entail many specialized knowledge [Citing and such Oftentimes the line between ability. cases]. activities and is business and activities permissible professional by non-lawyers (Ch.1947), indistinct. See Auerbacher affirmed 142 v. 599 Wood, N.J.Eq. (E. A.1948). 484 & In the Justice Heher noted that Auerbacher case N.J.Eq. what constitutes “to law does not lend itself precise all-inclusive definition” and that some “in some fields areas” properly the law. overlap [at 437] (or selling leasing) A falls into realtor’s function residential real property area. The evidence at trial showed most contracts that, New Jersey, originally the sale of residential are property realtors who prepared by negotiated the sales. among also showed proofs widespread practice including realtors of an review clause in such contracts. option settlement accommodates proposed interests of realtors and attorneys by allowing the realtor to consummate the contract of the with phase transaction, handling the actual transfer attorneys of title. Most it however, importantly, serves to making subject interest protect public the contract by prompt review if either or seller so desires. at buyer [186 N.J.Super. 396]. We approval conclude of this settlement appropri is that ate. The activities to be pursuant undertaken realtors to the settlement agreement will not transgress unduly upon the prac tice of law. To the extent there is an inevitable or overlap unavoidable between the realty legal professions, public’s safeguarded through the interest settlement’s review and the continuing Court’s supervi sory control. significance We find in the fact that the settle ment implicates and addresses concerns that go beyond the direct and immediate interests the primary professional asso ciations, who are parties to the litigation and have consented to the judgment of settlement. In addition to all interested mem bers of the class having been proposed settlement, advised of the others have been to participate in its adoption. Both Attorney General and Advocate, the Public whose sole concerns in this matter protection are the public, of the have recognized that public welfare can be reasonably accommo dated and safeguarded through agreement settling the mat ters in dispute (although each would have preferred certain additional modifications or changes). We are satisfied that questions of the interpretation, application, general adher ence to or enforcement of the settlement approved by this judgment that may arise and affect the interest will be dealt with the courts in the most appropriate manner under given includes, course, circumstances. This the further possible modification present pursuant accord to the n exercise of the Court’s constitutional rule-making authority over the practice of law.

475 One additional aspect of the settlement requires our attention. During the course process of the review proposed Judgment, Final Consent we received comments relat ing to the conformance of aspects certain of the settlement to requirements Law, of the Plain Language N.J.S.A. 56:12-1 to -13. This a particular was concern the Public Advocate and the State Bar Language. Association’s Committee on Plain It was the intent of and the court to adhere enactment, standards of this which calls for the expression of clear, “simple, consumer contracts in a understandable easily way.” readable N.J.S.A. 56:12-2. compliance Such give this matter will further assurance that the interests of public will be properly through served the effectuation of the settlement. Accordingly, Paragraphs and 2 the Final Consent Judgment are as modified follows:

1. Real estate brokers and salespersons licensed the New Jersey Real Estate Commission shall be prepare for contracts the sale of containing residential real estate one- dwelling to-four units the sale of vacant one-family lots they interest, transactions in which have a commission or fee PROVIDED that such contract every conspicuously shall contain top at the page of the first the following language: THIS AIS LEGALLY BINDING CONTRACT THAT WILL BECOME FINAL WITHIN THREE BUSINESS PERIOD DAYS. DURING THIS YOU MAY CHOOSE TO AN CONSULT ATTORNEY WHO CAN REVIEW AND CAN- CEL THE CONTRACT. SEE SECTION ON ATTORNEY REVIEW FOR DETAILS. following shall also contain the language within the text of every such contract:

ATTORNEY REVIEW:

1. Study Attorney Buyer the Seller to have an attorney study choose consulted, contract. If an attorney must complete his her review of the contract within a three-day period. This contract will legally binding at the end of this period Buyer for the or the

three-day attorney unless an Seller disapproves reviews and contract. the Time Counting

2. days delivery count the three from the date of You You do count signed Buyer contract to the and the Seller. Sundays Buyer or The and the Seller Saturdays, legal holidays. writing period for attor- may agree three-day to extend the ney review. Disapproval

3. Notice of Buyer reviews and attorney If an or Seller contract, attorney notify Bro- must disapproves of in this contract within ker^) party and the other named legally contract will be bind- three-day period. Otherwise this disapprov- send the notice of ing attorney as written. The must mail, Broker(s) by by telegram, by deliver- al to the certified telegram letter will be personally. it The or certified ing personal will be effective upon sending. delivery effective also to the Broker’s office. should upon delivery Broker(s) in the contract any suggested revisions inform satisfactory. it that would make New by the salespersons 2. Real estate brokers and licensed prepare Jersey Real Estate Commission shall dwelling year for a of one or more residential leases term fee have a they in which commission units transactions interest, conspicuous- such shall contain PROVIDED that leases following language: ly top page at the of the first FINAL A THAT WILL BECOME IS LEGALLY BINDING LEASE THIS MAY DAYS. PERIOD YOU WITHIN THREE BUSINESS DURING THIS REVIEW AND CAN- TO ATTORNEY WHO CAN CHOOSE CONSULT AN DE- REVIEW FOR THE SEE ON ATTORNEY CEL LEASE. SECTION TAILS. within the text following language shall contain the also every such lease:

ATTORNEY REVIEW:

1. Study Attorney The Tenant or the Landlord choose to have an attorney study this lease. If an consulted, the attorney must complete his or her review of the lease within a three-day period. This lease will be legally binding at the end of this three-day period unless an for the Tenant or the Landlord reviews and disapproves of the lease.

2. Counting the Time

You days count the three from the date delivery signed lease to the Tenant Landlord. You do not count Saturdays, Sundays legal holidays. The Tenant and the agree Landlord writing three-day extend the period for attorney review. Disapproval

3. Notice of attorney If an or the Landlord reviews and Tenant lease, disapproves notify Broker(s) of this must and the named in lease party three-day other this within period. legally binding this lease will be as written. Otherwise disapproval The must send the notice of to the Bro- mail, kers) it by telegram, by delivering person- certified ally. telegram upon or certified letter will be effective sending. personal delivery will be delivery upon effective to the Broker’s office. The also inform the should Broker(s) any suggested revisions in the that would lease satisfactory. make it Judgment,

It our decision that the Final Consent as modi- decision, Notwithstanding approval. fied merits our judgment form only fact below has been modified its substance, the expression and manner of rather than in given opportunity judgment shall be a further to consent to the consent, Upon being as modified. the Court advised of that judgment proceedings shall become effective and the within dismissed. Ordered.

So joint the on the Court being brought before matter

This Weiss, corpora- Rosen, a professional & Gelman application of attor- appearing), Haley, Esqs., Jill and (George B. Gelman tion Greenbaum, Greenbaum, Rowe & and neys plaintiff, Zurofsky, and Bennet D. Smith, (Arthur M. Greenbaum Esqs. defendants, the Court and attorneys for the appearing), Esqs., orders herein, pretrial the filed having pleadings reviewed 1982, 10, and 2, February and 1975 dated, respectively, October the trial briefs parties; of the and the having Court entered an on 17, order February 1982 certifying this action as a class action as to all real estate brokers and salesmen licensed by New Jersey Commission, Real Estate and due notice thereof published having been in accordance with the order and the Court; of Rules and the trial of the having action commenced 22, before the sitting Court without a jury on March 1982 and 25, been having recessed on March pending entry of this Judgment; Final Consent and the Court having heard statements of support counsel in of the resolution of the issues in controversy in entry this action of this Final Consent Judgment, subject approval to the of the Supreme Court of New forth; Jersey as hereinafter set and the being of the opinion that the terms and conditions of this Final Consent Judgment represent just balancing reasonable and of respective parties interests of the and will inure to the benefit of the public-at-large;

It day May, is on this 5th ORDERED AND ADJUDGED AS FOLLOWS: 1. Real estate brokers and salesmen licensed the New Real Jersey Estate Commission shall to prepare contracts for the sale residential real estate one- containing dwelling to-four one-family units and the sale of vacant lots interest, they transactions which have a commission or fee every PROVIDED that such contract conspicuously shall contain at top page following of the first language: IS A

THIS LEGALLY BINDING CONTRACT TO REVIEW BY AN SUBJECT ATTORNEY OF YOUR IF YOU WITHIN THE CHOICE, SO TIME ELECT, SET FORTH BELOW. following and shall also contain the within the language text every such contract: ATTORNEY REVIEW. If this Seller elects to consult an Buyer attorney, subject contract shall be all such review of of its terms attorney’s (3) (exclusive

conditions within three business days Saturdays, Sundays legal holidays) signed date from the contract the Buyer delivery right neither Seller. If nor Seller exercises the to have Buyer legally review this contract within the time will be contract permitted,

binding of this or If the Seller disapproves as written. Buyer attorney Broker(s) this contract contract the and other named in he must party notify binding legally will as contract within the time otherwise this be permitted, Broker(s) the written. notice of shall be served An upon attorney’s disapproval sending, telegram, or either certified mail or effective upon by personal by agree writing to extend effective in delivery, upon receipt. parties may time for review. attorney Brokers) of revi- It is that the be informed immediately any recommended attomey(s). suggested sions by the New by 2. Real estate brokers and salesmen licensed prepare Jersey permitted Estate shall be to Real Commission dwelling year leases more for for a term one residential in have a or fee they units transactions which commission interest, conspicuous- leases shall contain PROVIDED such following ly top page language: at the of the first BY AN THIS IS A LEGALLY BINDING LEASE SUBJECT TO REVIEW THE TIME ELECT, ATTORNEY OF YOUR IF YOU SO WITHIN CHOICE, SET BELOW. FORTH language the text of following and shall also contain within every such lease: If or Landlord elects consult an ATTORNEY REVIEW. Tenant to attorney, subject this review of all of its terms lease shall be such attorney’s (3) (exclusive of

conditions within three business Sundays days Saturdays, signed holidays) the Tenant from the date lease to delivery right If neither Tenant nor Landlord exercises the to have Landlord. legally this lease within the time lease will be review this permitted, binding If the the Tenant or Landlord as written. for disapproves Brokers) lease this he must and other named in this lease notify party binding legally written. within this lease will be as the time otherwise permitted, Broker(s) An be served either notice of shall upon by attorney’s disapproval sending, telegram, certified mail or effective delivery, upon by personal agree writing time for effective to extend the receipt. parties may upon review. Brokers) It is revi- recommended that the informed immediately attomey(s). suggested sions the New 3. Real estate brokers and salesmen licensed Jersey prepare Estate Commission shall be Real dwelling year leases term less than one residential for a or fee they units in in which have commission transactions required being interest to include in such leases without Paragraph to in 2 of Final Consent language referred Judgment.

481 1, 4. Except as set paragraphs forth in 2 3 and of this Final Judgment, Consent all real estate brokers and salesmen licensed by the New Jersey Real Estate perma- Commission are hereby nently enjoined and drafting, filling restrained from in blanks or preparing contracts for the sale of residential real estate con- taining units, dwelling one-to-four contracts for the sale of one-family lots, vacant and residential dwelling unit leases with a term of year one or more. The or drafting preparation of any sales contracts for residential containing real estate one-to-four dwelling units or vacant one-family lots or leases for residential dwelling except units as provided herein shall constitute the unauthorized of law.

5. right Seller, of Buyer or Landlord and Ten- ant, any under contract for the sale of real estate or lease (subject provisions to the paragraphs of 1 and respectively, of this Final Consent Judgment) to obtain attorney review of the contract of waived, disclaimed, sale or lease shall relin- quished abridged, or and real estate brokers and salesmen li- censed by Jersey the New Real Estate Commission are perma- enjoined nently and restrained from preparing assisting in any in instrument, manner the preparation any written waive, disclaim, intended effect of which be to relinquish would or abridge right to such contract of sale or lease to obtain attorney review thereof. Nothing

6. Judgment contained in this Final Consent shall require compel any public-at-large member of the to employ, utilize or seek the assistance of an in connection with sale, purchase or lease of residential real estate.

7. The required language set forth in 2 Paragraphs this Final Judgment Consent is declared adjudged to be requirements accordance with the Jersey New Plain Law, Language seq. N.J.S.A. 56:12-1 et 8. The terms Judgment and conditions of this Final Consent upon shall become approval by effective Supreme Court time, as place and manner Jersey the State of New at such Supreme Jersey of New shall direct. the New Jersey

9. The State Bar Association and New give this Final Jersey Association of Realtors shall notice of cooper- Judgment respective Consent to their members and shall joint familiarize sponsoring programs ate and seminars to Final Consent memberships their with the Judgment. Mark A.

/s/ Sullivan Sullivan, Mark A. J. (Temporarily Assigned) to Consented to as

substance and form George

/s/ B. Gelman Gelman,

George Esq. B. ROSEN, GELMAN & WEISS Attorneys Plaintiff

/s/ Arthur M. Greenbaum Greenbaum, Esq.

Arthur M. GREENBAUM, GREENBAUM, & SMITH ROWE Attorneys the Defendants for

SCHREIBER, J., dissenting. of law realtors whose sanctioning practice by the Court aby will not have been reviewed member conduct in most cases occurs, have had parties of the that the will never bar. When consequences provisions on to legal advice the attorney’s agreed legal consequences which or on the they have protection. needed their failure have included public the in- Court-approved settlement disserves Because the terest, I must dissent. Bander, (1970), questioned

In 56 N.J. 196 this Court State v. a broker, filled in and added few whether estate who a real sale of had Blumberg property, form for the real clauses to a of law. It concluded that practice unauthorized engaged in the not be ramifications that it could problem many “the has so 483 intelligently considered the present on record.” Id. at 202. The Court suggested might that an answer a separate obtained in suit so “a complete that and detailed record could be made alia, extent, existence, inter disclosing, length the effect and result of performance similar acts real estate brokers generally and the public need for such at 202-03. service.” Id. This action was instituted response suggestion. to that Rath- er than resolving posed issue Bander in manner suggested, a entered into with far settlement broad- ramifications, er on approval. conditioned this Court’s

This in approving gone Court far beyond settlement has the issue stated in Bander. Now realtors only fill in form, negotiate but also and draft entire contract for the sale of residential any property up and including four-family houses well as as leases duration for units. residential implicitly Court acknowledges that the realtors will be law, practicing as well it must. Cape May Cty. See Bar Ass’n v. Ludlam, 121, 124 (1965); 45 N.J. New Bar v. Jersey State Ass’n Assocs., (1960). Northern N.J. Mtge. N.J.

This settlement countenances law those not qualified lawyers. approving as In settlement ignores ensuring only practi- interest in licensed provide tioners privilege advice. Admission to the bar is a granted public in the “the purpose protecting interest for the of unwary ignorant at of persons from the hands injury Jersey unskilled or unlearned in the law.” New Bar Ass’n State 184, 195 Mtge. Assocs.,22 (1956). v. N.J. N.J. Northern [T]he licensing of practitioners law is not designed give to rise right a professional monopoly, public to but rather to the serve protection against to unlearned and unskilled advice and service in to the of v. relating matters science the law.” Auerbacher Wood, (E. 142 N.J.Eq. A.1947). 486 & upon puts imprimatur settlement which this Court its the protection clashes with to which the is entitled. I do the accept underlying assumptions the in the settlement that npt provisions few to be inserted some residential sales lease that safeguard are of interests the

agreements adequate an protect. should seek to a top page party of that warning A written at the the first choose to an who can review cancel “may consult safeguard. scarcely adequate serve as an the contract” can need contain that lan- year Leases of less than one not even appears, where what guage.1 language In those situations the will read purchaser assurance is or seller the there that parties? read to the contract or that the realtor will that advice earning making The realtor is the sale and his interested It for him to his customer’s confi- gain commission. is natural sign trust to the con- encourage dence and and to lay an person tract. It is also to assure the that easy an buyer needed and the seller or should avoid unneces- that Indeed, arrange will sary frequently cost. the realtor lending that institution’s financing, advising purchaser will interest. his protect to our rule today uniformly Until we have almost adhered law in he is person practice that this unless shall State “[n]o year requiring leases units for one 1Because the Court is that of residential agree provision, Public Advocate that or more contain I would with the this proviso should inserted in all written leases. He writes: be view, year legal point preparing if a realtor’s a one lease is From a of law, potentially practice against consumers need unauthorized of which judgment lawyer, protected by opportunity interpose of a to be to concluding a basis for realtor’s there seems be no rational preparation is not lease or a month to month lease also a six-month Many potentially law. tenants residential live unauthorized years leases under month-to-month leases. These often the terms of highly disadvantageous illegal to the contain that are ten- lawyer opportunity such a lease becomes ant. to consult before advantageous prospective faced effective would to a rentor with a lease. month-to-month or short-term that, availability prepaid growing noting It is worth with plans, prospective have service more rentors will access to more and lawyers just type “preventive at modest cost for law” consultation. availability The increased of these means that extension services protections likely practical ... leases is have value. to shorter-term attorney, holding a plenary practice license to in this State ” R. l:21-l(a). .... exceptions have been limited to states, R. 1:21-2 and R. members of the bar other l:21-3(d), year and to third law students and law graduates serving school society, a aid legal services project, agency R. municipal, county or government. l:21-3(c). state In each areas, of these limited legal practice the or activity is carried on by person a with substantial legal training supervision under the of a member good standing. of the bar in supervision is Such nonexistent this settlement. say

This is not to may that under some it circumstances be practical and feasible for the prepare realtor to some documents incident to real estate at request transactions the of his custom- However, ers. it should be remembered that the contract with its many terms and is probably important conditions the most document the entire point transaction from the of view of the If parties. a line must be may drawn within which realtors law, it appropriate would seem that on depend it subject acts, matter of the advice and the nature of the realtor’s rather type than the of structure to conveyed. be

Furthermore, as settlement, set forth in the the attorney is one only who can cause the revocation of contract or Why lease. attorney, and not party, given should be power Vesting unclear. rather than the power individual with the of revocation means that when a party changes engage his mind about a transaction must he lawyer. protection Thus only of unilateral will rescission available those individuals who are and can willing pay Moreover, attorney. afford to hire an there is merit in the Inc., of Legal Jersey, comment Services of New when it writes: seems to of decision on the entire burden “Attorney disapproval” place highly which would be as a and undesirable attorney, questionable ethically matter. The are practical loose, think certain unwise unwilling rigid but for number of reasons be to take a stand of disapproval. making Since the client should be the one the ultimate it would be decision, rejection better have the client, the communication in terms of expressed rather than .... disapproval by is unclear as to whether Indeed, right clause If that reason, any. if attorney’s depends upon revocation from the desire to withdraw may simply be the client’s reason transaction, engage the individual why must the instru- clear on the face of that not be made why should law may practice which realtors line within ment? The drawn interests of by the economic to have been determined seems interests. Those rather than societal attorneys, realtors are of law practice the unauthorized subject who will be buying mostly low who are and moderate income individuals However, financial stakes are only when the leasing homes. replaced by step the realtor aside to be higher to be must likely attorney. trial. The record during day the third This case was settled That called for has not been made. opinion which the Bander should determine completed. record be should of law in the unauthorized interdicted as conduct interest, in the acquiescing rather than light of controversy. settlement of the WILENTZ, and Justice affirmance as modified —Chief For CLIFFORD, HANDLER and POLLOCK —4. Justices Dissenting SCHREIBER —1. —Justice McALESHER,

IN THE MATTER J. OF ROBERT AN ATTORNEY-AT-LAW. July 1983.

Case Details

Case Name: New Jersey State Bar Ass'n v. New Jersey Ass'n of Realtor Boards

Court Name: Supreme Court of New Jersey

Date Published: Jun 28, 1983

Citation: 461 A.2d 1112

Court Abbreviation: N.J.