(a) When
applied to rental transactions which are not exempt from this rule, references
to sellers and buyers, and to the various types of brokerage agreements and
business relationships mentioned throughout this rule should be construed as
indicating their appropriate counterparts in rental transactions. For example,
references to sellers should be read as lessors or owners and references to
buyers should be read as lessees or tenants, etc. As used in this rule, the
following terms or phrases shall have the following meanings:
1. "Brokerage agreement" means a written
agreement between a brokerage firm and a party describing the terms under which
that firm will perform brokerage services as specified in
N.J.S.A.
45:15-3. Brokerage agreements include, but
are not limited to, sale and rental listing agreements, buyer-broker,
lessee-broker, transaction broker, and dual agency agreements.
2. "Brokerage firm" means a licensed
corporate, partnership or sole proprietor broker, and all individuals licensed
with that broker.
3. Consumer
Information Statement" means the Consumer Information Statement on New Jersey
Real Estate Relationships as prescribed in (h) below.
4. "Informed consent to dual agency" means
the written authorization by a party for the brokerage firm which represents
them as their agent in a real estate transaction to also represent the other
party to that transaction as an agent. Informed consent can only be obtained
after the brokerage firm has disclosed to the consenting party all material
facts which might reasonably impact on that party's decision to authorize dual
agency, including the extent of the conflicts of interests involved and the
specific ways in which each consenting party will receive less than full agency
representation from the dual agent. In order to obtain informed consent it is
also necessary for the licensee to first advise the consenting party of the
other business relationships offered by that licensee and of those not offered
by that licensee, and of that party's right to consult an attorney.
5. "Party" shall mean actual or prospective
sellers, lessors, buyers or lessees of an interest in real estate.
6. "Short term rental" shall mean the rental
of a residential property for not more than the 125 consecutive day time period
specified in
N.J.S.A.
46:8-19 as constituting the "seasonal use or
rental" of real property, under the terms of an oral rental agreement or
written lease which contains a specific termination date. Month-to-month
tenancies are not considered short term rentals.
7. "Transaction broker" shall mean a
brokerage firm which works with both parties in an effort to arrive at an
agreement on the sale or rental of real estate and facilitates the closing of a
transaction, but does not represent either party, and has no agency
relationship with either party to the transaction. The New Jersey Real Estate
License Law,
N.J.S.A.
45:15-1 et seq., and the administrative rules
promulgated thereunder do not mandate that licensees must act as agents when
rendering real estate brokerage services.
8. "Business relationship(s)" means real
estate licensees working as a seller's agent; a buyer's agent; a disclosed dual
agent; or a transaction broker.
(b) Prior to acting as a dual agent, a
brokerage firm must have the written informed consent of the parties to the
transaction. Informed consent is not acquired through distribution of the
Consumer Information Statement on New Jersey Real Estate Relationships as
required by (e) and (k) below alone. At a minimum, licensees must also secure
the signature of the party on a separate writing which confirms the party's
informed consent to the licensee acting as a Disclosed Dual Agent for that
party. Such a writing may be part of, or an attachment to a brokerage
agreement.
(c) Licensees shall
supply information with regard to their working relationship with parties to
real estate transactions as provided in this section.
(d) Licensees shall comply with all
requirements of this section when involved in:
1. Transactions which involve the sale of
residential real estate containing one to four dwelling units or the sale of
vacant one-family lots;
2.
Residential lease transactions other than short term rentals. However, in
short-term rental transactions, licensees shall include in all leases prepared
by them a statement indicating that they are acting in the transaction either
as an agent of the landlord, an agent of the tenant, a disclosed dual agent or
a transaction broker; and
3. The
securing of brokerage agreements on residential properties, including rental
listing agreements on residential properties to be offered for short term
rentals.
(e) All
licensees shall supply information on business relationships to buyers and
sellers in accordance with the following:
1.
With respect to buyers:
i. All licensees
shall verbally inform buyers of the four business relationships described in
this section prior to the first discussion at which a buyer's motivation or
financial ability to buy is discussed.
ii. If the first such discussion occurs
during a business meeting on the buyer's real estate needs, licensees shall
deliver the written Consumer Information Statement to the buyers prior to such
a discussion. If the first such discussion is telephonic or in a social
setting, licensees shall, after having verbally informed the buyer of the four
business relationships, deliver the written Consumer Information Statement to
the buyer at their next meeting. However, if prior to their first business
meeting after such a discussion, any material is mailed, faxed or delivered by
the licensee to the buyer, the Consumer Information Statement shall be included
with such material.
iii. Where the
written Consumer Information Statement has not been delivered to buyers as
provided in (e)1ii above, licensees shall deliver the written statement to
buyers no later than the first showing and, if no showing is conducted, no
later than the preparation of an initial offer or contract.
iv. Those licensees who intend to enter into
a buyer-brokerage relationship with such persons shall deliver the Consumer
Information Statement no later than the commencement of their buyer-brokerage
agreement presentation.
2. With respect to sellers:
i. All licensees shall verbally inform
sellers of the four business relationships described in this section prior to
the first discussion at which the seller's motivation or desired selling price
is discussed.
ii. If the first such
discussion occurs during a business meeting on the seller's real estate needs,
licensees shall deliver the written Consumer Information Statement to the
sellers prior to such a discussion. If the first such discussion is telephonic
or in a social setting, licensees shall, after having verbally informed the
seller of the four business relationships, deliver the written Consumer
Information Statement to the seller at their next meeting. However, if prior to
their first business meeting after such a discussion, any material is mailed,
faxed or delivered by the licensee to the seller, the Consumer Information
Statement shall be included with such material.
iii. On unlisted properties where the written
Consumer Information Statement has not been delivered to sellers as provided in
(e)2ii above, licensees shall deliver the written statement to sellers no later
than their first showing of the property, and if no showing is conducted, no
later than the presentation of an initial offer or contract.
iv. Those licensees who intend to enter into
a listing or transaction brokerage agreement with a seller shall deliver the
Consumer Information Statement no later than the commencement of their listing
or transaction brokerage agreement presentation.
(f) The purpose of (e) above and
(h) below is to require licensees to provide basic and introductory information
to the public in a convenient and consistent manner, rather than a
comprehensive explanation of agency law.
(g) The statement as supplied by the
Commission shall be reproduced and delivered by licensees as required in this
section as a separate item, with no deletions or additions, other than the
optional additional text referred to in (g)1 and 2 below, and recited in (h)
below.
1. Brokerage firms may acknowledge
delivery of the Statement by procuring the signature of the party to whom it
was delivered and the date of delivery in the appropriate place at the bottom
of the Statement.
i. On transactions which
result in fully executed contracts of sale or consummated rental transactions,
copies of Consumer Information Statements on which receipt has been
acknowledged as set forth in (g)1 above, shall be maintained as business
records for six years in accordance with
N.J.A.C.
11:5-5.4(c).
2. Brokerage firms may also
indicate on the Statement the capacity in which they intend to work with the
party to whom they deliver the Statement.
3. Regardless of whether brokerage firms
choose to include on the Statement the additional information referred to in
(g)1 and 2 above, all brokerage firms, as is required by (i) and (j) below,
shall:
i. Indicate in all brokerage agreements
the business relationship they intend to have with the other party to the
agreement; and
ii. Indicate in all
offers, contracts, or leases prepared by licensees the business relationship
the firm has with respect to the parties named in those documents.
(h) The mandatory text
of the Consumer Information Statement to be delivered by licensees as provided
in (e) above is as follows:
CONSUMER INFORMATION STATEMENT ON NEW JERSEY REAL ESTATE
RELATIONSHIPS
In New Jersey, real estate licensees are required to disclose
how they intend to work with buyers and sellers in a real estate transaction.
(In rental transactions, the terms "buyers" and "sellers" should be read as
"tenants" and "landlords," respectively.)
1. AS A SELLER'S AGENT OR SUBAGENT, I, AS A
LICENSEE, REPRESENT THE SELLER AND ALL MATERIAL INFORMATION SUPPLIED TO ME BY
THE BUYER WILL BE TOLD TO THE SELLER.
2. AS A BUYER'S AGENT, I, AS A LICENSEE,
REPRESENT THE BUYER AND ALL MATERIAL INFORMATION SUPPLIED TO ME BY THE SELLER
WILL BE TOLD TO THE BUYER.
3. AS A
DISCLOSED DUAL AGENT, I, AS A LICENSEE, REPRESENT BOTH PARTIES. HOWEVER, I MAY
NOT, WITHOUT EXPRESS PERMISSION, DISCLOSE THAT THE SELLER WILL ACCEPT A PRICE
LESS THAN THE LISTING PRICE OR THAT THE BUYER WILL PAY A PRICE GREATER THAN THE
OFFERED PRICE.
4. AS A TRANSACTION
BROKER, I, AS A LICENSEE, DO NOT REPRESENT EITHER THE BUYER OR THE SELLER. ALL
INFORMATION I ACQUIRE FROM ONE PARTY MAY BE TOLD TO THE OTHER PARTY.
Before you disclose confidential information to a real estate
licensee regarding a real estate transaction, you should understand what type
of business relationship you have with that licensee.
There are four business relationships: (1) seller's agent;
(2) buyer's agent; (3) disclosed dual agent; and (4) transaction broker. Each
of these relationships imposes certain legal duties and responsibilities on the
licensee as well as on the seller or buyer represented. These four
relationships are defined in greater detail below. Please read carefully before
making your choice.
SELLER'S AGENT
A seller's agent WORKS ONLY FOR THE SELLER and has legal
obligations, called fiduciary duties, to the seller. These include reasonable
care, undivided loyalty, confidentiality and full disclosure. Seller's agents
often work with buyers, but do not represent the buyers. However, in working
with buyers a seller's agent must act honestly. In dealing with both parties, a
seller's agent may not make any misrepresentation to either party on matters
material to the transaction, such as the buyer's financial ability to pay, and
must disclose defects of a material nature affecting the physical condition of
the property which a reasonable inspection by the licensee would
disclose.
Seller's agents include all persons licensed with the
brokerage firm which has been authorized through a listing agreement to work as
the seller's agent. In addition, other brokerage firms may accept an offer to
work with the listing broker's firm as the seller's agents. In such cases,
those firms and all persons licensed with such firms are called "sub-agents."
Sellers who do not desire to have their property marketed through sub-agents
should so inform the seller's agent.
BUYER'S AGENT
A buyer's agent WORKS ONLY FOR THE BUYER. A buyer's agent has
fiduciary duties to the buyer which include reasonable care, undivided loyalty,
confidentiality and full disclosure. However, in dealing with sellers a buyer's
agent must act honestly. In dealing with both parties, a buyer's agent may not
make any misrepresentations on matters material to the transaction, such as the
buyer's financial ability to pay, and must disclose defects of a material
nature affecting the physical condition of the property which a reasonable
inspection by the licensee would disclose.
A buyer wishing to be represented by a buyer's agent is
advised to enter into a separate written buyer agency contract with the
brokerage firm which is to work as their agent.
DISCLOSED DUAL AGENT
A disclosed dual agent WORKS FOR BOTH THE BUYER AND THE
SELLER. To work as a dual agent, a firm must first obtain the informed written
consent of the buyer and the seller. Therefore, before acting as a disclosed
dual agent, brokerage firms must make written disclosure to both parties.
Disclosed dual agency is most likely to occur when a licensee with a real
estate firm working as a buyer's agent shows the buyer properties owned by
sellers for whom that firm is also working as a seller's agent or
subagent.
A real estate licensee working as a disclosed dual agent must
carefully explain to each party that, in addition to working as their agent,
their firm will also work as the agent for the other party. They must also
explain what effect their working as a disclosed dual agent will have on the
fiduciary duties their firm owes to the buyer and to the seller. When working
as a disclosed dual agent, a brokerage firm must have the express permission of
a party prior to disclosing confidential information to the other party. Such
information includes the highest price a buyer can afford to pay and the lowest
price a seller will accept and the parties' motivation to buy or sell.
Remember, a brokerage firm acting as a disclosed dual agent will not be able to
put one party's interests ahead of those of the other party and cannot advise
or counsel either party on how to gain an advantage at the expense of the other
party on the basis of confidential information obtained from or about the other
party.
If you decide to enter into an agency relationship with a
firm which is to work as a disclosed dual agent, you are advised to sign a
written agreement with that firm.
TRANSACTION BROKER
The New Jersey Real Estate Licensing Law does not require
licensees to work in the capacity of an "agent" when providing brokerage
services. A transaction broker works with a buyer or a seller or both in the
sales transaction without representing anyone. A TRANSACTION BROKER DOES NOT
PROMOTE THE INTERESTS OF ONE PARTY OVER THOSE OF THE OTHER PARTY TO THE
TRANSACTION. Licensees with such a firm would be required to treat all parties
honestly and to act in a competent manner, but they would not be required to
keep confidential any information. A transaction broker can locate qualified
buyers for a seller or suitable properties for a buyer. They can then work with
both parties in an effort to arrive at an agreement on the sale or rental of
real estate and perform tasks to facilitate the closing of a transaction. A
transaction broker primarily serves as a manager of the transaction,
communicating information between the parties to assist them in arriving at a
mutually acceptable agreement and in closing the transaction, but cannot advise
or counsel either party on how to gain an advantage at the expense of the other
party. Owners considering working with transaction brokers are advised to sign
a written agreement with that firm which clearly states what services that firm
will perform and how it will be paid. In addition, any transaction brokerage
agreement with a seller or landlord should specifically state whether a notice
on the property to be rented or sold will or will not be circulated in any or
all Multiple Listing System(s) of which that firm is a member.
YOU MAY OBTAIN LEGAL ADVICE ABOUT THESE BUSINESS
RELATIONSHIPS FROM YOUR OWN LAWYER.
THIS STATEMENT IS NOT A CONTRACT AND IS PROVIDED FOR
INFORMATIONAL PURPOSES ONLY.
(END OF MANDATORY CONSUMER INFORMATION STATEMENT TEXT)
...................
(OPTIONAL ACKNOWLEDGEMENT OF RECEIPT AFTER TEXT OF CONSUMER
INFORMATION STATEMENT.)
FOR SELLERS AND LANDLORDS
"By signing this Consumer Information Statement, I
acknowledge that I received this Statement from (Name of Brokerage Firm) prior
to discussing my motivation to sell or lease or my desired selling or leasing
price with one of its representatives."
FOR BUYERS AND TENANTS
"By signing this Consumer Information Statement, I
acknowledge that I received this Statement from (Name of Brokerage Firm) prior
to discussing my motivation or financial ability to buy or lease with one of
its representatives."
(OPTIONAL INDICATION OF IN WHAT CAPACITY FIRM INTENDS TO WORK
WITH RECIPIENT OF CONSUMER INFORMATION STATEMENT AS PERMITTED BY (g)2
ABOVE):
| I, .....................................,
as an authorized representative |
| of ..................., intend, as of this
time, to work with you as a |
| (indicate one of the following): |
| seller's agent only |
| buyer's agent only |
| seller's agent and disclosed dual |
| agent if the opportunity arises |
| buyer's agent and disclosed dual |
| agent if the opportunity arises |
| transaction broker only |
| seller's agent on properties on which |
| this firm is acting as the seller's |
| agent and transaction broker on other |
| properties |
(i)
In all brokerage agreements, brokerage firms must include the following:
1. A statement acknowledging receipt of the
Consumer Information Statement; and
2. A declaration of business relationship
indicating the regular business name of the broker and in what capacity the
licensee servicing the agreement and their firm will operate as real estate
licensees with respect to the other party to the brokerage agreement. The
declaration of business relationship in all brokerage agreements shall contain,
in print larger than the predominant size print in the writing, the following
language:
| I, ....................................., as
an authorized representative |
| of ..................., intend, as of this
time, to work with you as a |
| (indicate one of the following): |
| seller's agent only |
| buyer's agent only |
| seller's agent and disclosed dual |
| agent if the opportunity arises |
| buyer's agent and disclosed dual |
| agent if the opportunity arises |
| transaction broker only |
| seller's agent on properties on which |
| this firm is acting as the seller's |
| agent and transaction broker on other |
| properties |
3. Where
brokerage firms secure a written acknowledgement of receipt of the Consumer
Information Statement on the Statement itself as provided in (g)1 above and
include on the Consumer Information Statement a declaration of the business
relationship they intend to have with the other party to the brokerage
agreement as provided in (g)2 above, the attachment of a copy of the Consumer
Information Statement to the brokerage agreement and the inclusion of a
reference to the receipt of the Consumer Information Statement in the brokerage
agreement shall constitute compliance with this section.
(j) Licensees shall disclose to consumers
what type of brokerage services they will provide in the following manner:
1. Buyer-brokers shall verbally disclose to
sellers that they are acting on behalf of a buyer prior to their first
communication with the seller during which the seller's motivation to sell or
desired price is discussed.
2. All
offers, contracts or leases not exempt by this rule which are prepared by
licensees shall include the following statements:
"By signing below the sellers (or landlords as applicable)
and purchasers (or tenants as applicable) acknowledge they received the
Consumer Information Statement on New Jersey Real Estate Relationships from the
brokerage firms involved in this transaction prior to the first showing of the
property."
3. In all
offers, contracts, or leases, including leases for short-term rentals, prepared
by licensees as permitted by
N.J.A.C.
11:5-6.2(g), licensees shall
include the regular business name of the broker with whom they are licensed and
a declaration of business relationship indicating in what capacity they and
their firm are operating as real estate licensees in that real estate
transaction. The declaration of business relationship in all offers to purchase
or to lease property, including those made on contracts of sale or lease
documents prepared by licensees, shall contain, in print as large as the
predominant size print in the writing, the following language:
................... and .......................... as its authorized
(Name of firm) (Name(s) of licensee(s)) representative(s) are
working in this transaction as ..................... (indicate one of the
following):
| seller's agents |
| buyer's agents |
| disclosed dual agents |
| transaction brokers |
i. In
transactions in which more than one firm is involved, all licensee-prepared
offers, contracts and leases, including leases on short-term rentals, shall
contain, in the same size type and immediately following the declaration of
business relationship set forth above, the following clause:Information
supplied by.(Name of firm)...................................
(Name of firm)
has indicated that it is operating in this transaction as a
__ (indicate one of the following):
seller's agent only
buyer's agent only
transaction broker
ii. The requirement to include the clause
cited in (j)3i above in licensee-prepared offers, contracts and leases shall
not apply with respect to firms whose involvement in a transaction was limited
to merely referring a party to another firm.
(k) Licensees shall disclose to other
licensees what type of business relationship they have with the party with whom
they have a brokerage agreement, and with any other parties with whom they may
be working, in the following manner:
1. In
all written or computer generated notices directed to other brokerage firms
through a Multiple Listing Service or otherwise, the listing broker shall
indicate whether they are working as a seller's agent or as a transaction
broker. On listings where the listing broker is operating as a seller's agent,
such notices shall also state:
i. Whether
subagency is offered;
ii. Whether
the seller has authorized the sharing of the listing broker's compensation with
cooperating subagents and/or transaction brokers and/or buyer brokers;
and
iii. The amount of compensation
offered to cooperating subagents and/or transaction brokers and/or buyer
brokers.
2. When a
licensee with a listing broker receives an inquiry about a particular property
from any other licensee, the licensee with the broker shall, before providing
any information to the inquiring licensee beyond general information previously
circulated about the listing, verbally ascertain from the inquiring licensee
the capacity in which that licensee is operating or intends to operate
(buyer-broker, subagent, disclosed dual agent or transaction broker). Inquiries
from other licensees in the listing broker's firm shall also be responded to as
set forth in this subsection.
(l) In transactions where brokers seek
compensation for their brokerage services from a party to the transaction whom
they are not representing or working with, the business relationship with the
party they are representing or working with and the compensation arrangement
shall also be disclosed to both parties as required by
N.J.A.C.
11:5-7.1.
(m) Notwithstanding anything appearing in (g)
and (h) above to the contrary, where a brokerage firm is itself the owner of
the property being sold by individuals licensed through the broker-owner of the
property, a Consumer Information Statement, revised as provided in this
section, shall be delivered to prospective purchasers in accordance with the
provisions of this rule.
1. On the line
immediately below the title of the Consumer Information Statement, the
following text shall appear in print larger than the predominant size print in
the writing:
As the holder of a New Jersey real estate license, I am
required by law to inform you how I will operate in this transaction, should
you pursue it, and to provide this statement to you.
My employer is the owner of the property(s) in which you have
expressed an interest. For the purposes of its business relationship disclosure
rules, the New Jersey Real Estate Commission deems brokers selling property
they own and licensees employed or retained by such broker-owners to be
operating as seller's agents when they sell property owned by the broker. The
statements which follow with regard to licensees who act as sellers' agents
apply to me and other persons employed or retained by the owner, particularly
those statements concerning the obligation of sellers' agents to pass on to the
sellers all material information they obtain with regard to the buyers' ability
to pay.
