NJSLAW CLE: Mortgage Contingency Clause and Ethical Issues in NJ Real Estate Contracts

Live Webinar on April 3, 2017 @ 3:00 PM. Register Here!

The mortgage contingency clause is one of the most important clauses in real estate contracts. However, many attorneys don’t bother to read it. This is a mistake since the terms of the clause, which may differ from contract to contract, can have an immense impact on your client.  

In this program, Alexander Novak and Kim Juhase, will provide an overview of this clause and will discuss the problems that could arise if the wrong language is used. In the second half of the program, they will discuss possible ethical problems that might arise in real estate transactions. They will also provide a brief overview of NY law for those who are dually admitted.

By the program’s end, Juhase and Novak will aim to answer the following questions:

• What are the best terms for the Buyer or the Seller?
• To whom must the Buyer apply for a mortgage loan and in what time period?
• Do conditional commitments satisfy the contract?
• What happens when a mortgage commitment is revoked by the lender?
• How can one avoid malpractice or a grievance complaint in real estate transactions?

Learning Objectives:

1. Understand how different terms on a mortgage contingency clause affect your client
2. Learn how to avoid ethical problems in real estate transactions

Click here to register!

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International Sale Of Goods Not Governed by the UCC

   Robert in New York receives a telephone call requesting he deliver a container of his pickles to Toronto from a buyer he never dealt with. Robert agrees and delivers the pickles. Shortly thereafter, the customer complains that the type of pickles he ordered was not delivered.  Robert wants to sue.  What law governs?

   

   While many businessmen (and a lot of lawyers) would say New York’s Uniform Commercial Code (UCC) governs, but they would be wrong.  Since 1988, sale of goods between the U.S. and most other countries have been governed by a treaty called the United Nations Convention on Contracts for the International Sale of Goods. Since it is a treaty, it overrides the law of all 50 states including the UCC. It has been acceded to by 83 countries including Canada, Mexico, Israel and most of Europe except for the United Kingdom.

Can One Word in a Contract Cost Over a $200,000?

Yes, sometimes a word or two,  even in a forty page contract can make a tremendous difference, and change the entire outcome of the case.  

We had a client's case that went up to the highest Federal court in New York and was then sent over to New York’s highest court in Albany, the Court of Appeals,  and a half of million dollar award was thrown out because of a few words.  In a case called Israel v Chabra (537 F.3d 86) the court held that the words  'provided that' "suggests a condition, and our conclusion in that regard is consistent with the punctuation and grammatical construction of the Guaranty's first paragraph.”   The entire argument the defense raised was the lack of notice of  default. Meaning,  the plaintiff, OUR CLIENT, who did not give the notice argued that the notice was not a big deal because the defendant knew about the default.  The lower court agreed with the plaintiff and awarded him over $330,000 and legal fees of $299,000.
This was all reversed on the two appeals.  This case wandered through three courts for as many years and each sides’ legal fees were well over $300,000.

In another matter, an employee was able to get his $150,000 bonus paid each year  of his three year employment  contract as apposed his employers offer of just one bonus for the first year.  Again, that was because of a change of just one word. 

Lawyers are not usually slow readers, we just have to think about how slight grammatical nuances can turn around a whole contract.  So that is how a word or two can cost or save you hundreds of thousands of dollars.

Alexander Novak, ESQ.
Partner, Novak Juhase & Stern

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