Southern New Jersey Overlook

According to our NJ Association of Realtors (NJAR), "The New Jersey Advisory Committee on Professional Ethics, appointed by the Supreme Court of New Jersey, recently issued Opinion 710 regarding the misrepresentation of purchase price or other material fact regarding a real estate transaction. As a result of the Opinion, attorneys may refuse to close on properties."

Click here for a downloadable copy of Opinion 710 (in PDF format).


This opinion, according to my understanding, deals with attorneys participating in schemes to inflate the sale price of property in order to get more mortgage money.

I would assume that this has more of an impact in North Jersey (vs South Jersey) where almost all real estate transactions involve legal representation in order to close.

Do anyone in AR have any legal and/or industry incite into the positive or negative ramifications of this opinion?



UPDATE: The chair of the New Jersey Advisory Committee on Professional Ethics, Melville D. Miller, Jr., Esq., issued the following clarification of Opinion 710 on December 22, 2006. Opinion 710 concerns the misrepresentation of purchase price or other material fact regarding a real estate transaction.

Clarification of Advisory Committee on Professional Ethics - Opinion 710:

In response to numerous inquiries concerning "seller's concessions," the Advisory Committee on Professional Ethics hereby clarifies Opinion 710, "Misrepresenting Purchase Price or Other Material Fact Regarding a Real Estate Transaction." The Opinion is based upon the particular facts submitted by the inquirer and recited in the Opinion. It addresses fictional and deceptive increases in purchase prices unrelated to the actual circumstances or costs of closing, and contrary to the expectations of the lender or the ultimate holder of the mortgage. As stated in the Opinion, a prohibited transaction is one that is not premised on "a legitimate charge against the seller on account of any actual costs assumed by it and otherwise payable by the buyer." Accordingly, the Opinion does not implicate a contract of sale that explicitly states that the seller shall provide the buyer with a credit against legal and legitimate costs or expenses related to the sale, which would otherwise be absorbed by the buyer, such as actual closing costs.

The clarification is available online at http://www.judiciary.state.nj.us/notices/2006/n061222a.htm.



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