Chapter 3
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NJ State Law
When money is deposited in a client trust account, the deposit money must be promptly
returned to the buyer if the offer is not accepted.
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Making promises of a nature likely to persuade or induce a prospective buyer would NOT be a
cause for disciplinary action
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If the broker terminates employment of a salesperson he must immediately return the
salesperson’s license to the REC
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When there is a first violation of the licensing act, the REC is empowered to impose monetary
fines, revoke the license, suspend the license
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A broker’s records must be made available to members of the Commission without notice
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Fiduciary relationship refers to the position of trust between broker and his principal
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A broker incorporates his business and subsequently dies, and another person becomes the
broker for the corporation, contracts with principals do not terminate upon death of the broker
under these circumstances
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Newly licensed broker can maintain an office in his residence, provided that it is zoned for that
use, a commercial building, and a marina.
-He cannot have an office in a home of a salesperson in his employ
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When a license is guilty of violating the New Jersey Real Estate License Act or the Rules and
Regulations of the New Jersey Real Estate Commission, the Commission may for the first
violation impose a fine of not more than $5000
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Real estate broker typically can prepare a purchase and sale agreement
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Unless otherwise agreed to in writing, the employing broker must pay all commissions due a
salesperson within ten days after receipt by the broker
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After completion of the real estate license preparation course the applicant has 1 year to pass the
state examination and request issuance of his license
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Regarding a dispute between licensees concerning the division of commissions, the real estate
commission can demand and accounting (explanation)
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Real Estate licenses are renewed biennially on July 1st, in odd numbered years (KNOW THIS!!!)
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The salespersons license must be prominently displayed in the broker’s main office
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A salesperson may accept a commission from the employing broker
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The branch office must be open to the public during normal business hours
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Brokers real estate ads in NJ must include the name of the brokerage firm
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When a real estate broker advertises in the local newspaper he must specify the municipality
within which the property is located
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Should the employing broker die, a temporary broker license may be issued to a salesperson
provided that the request is made within 30 days of the broker’s death
Chapter 3
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NJ State Law
the rules and regulations of the NJ real estate commission requires licensees to provide owners
with a cop of the attorney general’s memorandum on the law against discrimination
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The REC may suspend or revoke a license, for using the insignia of membership in a real estate
organization of which licensee is not a member
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In advertising a listed property for sale, broker may NOT legally run an ad giving the impression
that he is the owner of the property
-He may run an ad, which does not give the listing price of the property, state the kind of
financing available, and fail to state the street address of the property
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The Realtor ® Code of ethics is a code obligatory upon members of The National Association of
Realtors ®
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An individual employed to handle the sale of units in a condominium building, one who for
compensation effects an ”exchange” of real estate, and one who auctions real estate is required
to comply with the state licensing laws
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A principal broker for a corporation must be responsible for every licensee and clothed with full
authority even if he has no ownership interest
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Does not have to be a citizen of the United States, a NJ resident, or given a contract
for a fixed term unless he has substantial ownership interest
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A salesperson who has completed a sale would ordinarily receive his commission from the
employing broker only
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A real estate deal is made between a seller and buyer, without the services of a broker. They
arrange with a licensed broker, for a fee, to prepare certain instruments. He may not lawfully
prepare agreement of sale, deed, or a purchase money mortgage
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If a licensee is convicted of forgery, the REC will NOT grant a license within five years
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To be licensed as a broker, you must be of legal age
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A broker may properly advertise free market study
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Do not have to be US citizen or a resident of NJ
Can not advertise free appraisal, free cooking gas, or free parking
With regard to the maintenance of trust accounts, the depository institution may be located in
another state if it is an approved depository in the other state
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A real estate licensee brings a prospective buyer to see a property and the property owner
requests identification you would show your pocket card
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Monies may be paid of the Guaranty a fund in the event a seller suffers a monetary loss due to
the embezzlement of money by a licensed broker, a licensed real estate salesperson or an
unlicensed employee of a real estate broker
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The responsibilities of the Real Estate Commission do not include settling the fees for licensing
exams, promulgating real estate laws, or setting license fees
Chapter 3
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NJ State Law
A real estate sales person may lawfully accept a bonus for the completion of a difficult sale only
from his or her employing broker
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The broker owes an obligation to present to his principal all written offers he receives including all
the terms and conditions of each offer signed by a prospective buyer
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You are the seller’s broker negotiating a difficult sales contract between an experienced seller of
real estate and a novice purchaser, you recommend that the purchaser employs an attorney
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A real estate broker hires a secretary who does not have a real estate license and agrees to pay
her a fixed salary. She may type contracts for the salespersons in the broker’s office
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She may not give information over the telephone as to selling price of the office
listings, Collect rents from lessees of property managed by the broker, or take
telephone solicitation of listing from prospective sellers
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A salesperson may advertise a property sale only if the name of his broker is included in the ad
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A broker must keep permanent records of how he handled other persons’ funds for six years
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A broker must transmit to his principal all written offers
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Residential rental referral agencies must include in their contract with a prospective tenant the
date and duration of the contract, the refund policy, a statement the business is licensed by the
NJ real estate commission
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A salesperson has listed a house for sale and has knowledge of a latent defect in the building.
His responsibility is to disclose it to the buyer
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A NJ broker named Amy first listed a house. She may refuse to cooperate with another licensee if
the owner of the home signs a statement directing her not to cooperate
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The maximum fine for violation of the real estate sales full disclosure act is $50,000 per violation
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When a broker prepares a document pertaining to a real estate transaction, he must give a copy
to all parties signing it at the time the signature is obtained
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Funds received for deposit in the Guaranty Fund, are used to indemnify aggrieved participants in
real estate transactions
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Every broker must maintain records of all funds and property of others for not less than six years,
except in two cases where records have to be kept for only six months. Those exemptions are
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Unaccepted offers and expired listings that did not sell
If a salesperson is terminated, discharged, or otherwise leaves the employ of the broker, the
employing broker must return the license to the Commission within five days
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The real estate commission consists of 8 members who are appointed by the governor
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A person needs a license to do all of the following
-listing real estate for sale
-selling, purchasing, renting, or auctioning real estate
-Collecting rents and managing income- producing properties
Chapter 3
NJ State Law
-negotiating a loan to be secured by a mortgage
-selling businesses that involve an interest in real estate including negotiation of a new
lease
-Selling lots for an owner for a salary or commission
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Office must be open during normal business hours in addition the name of the broker of record or
employing broker and the words “licensed real estate broker must be conspicuously displayed on
the outside of the building
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Must be separated from the living quarters and have its own exterior entrance which is visible
from the street
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May not have it at the homes of any salespersons
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Shall maintain records for 6 years
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Brokers may not sue for compensation unless they were licensed at the time of transaction
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Cannot accept payment from anyone other than employing broker
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Ads placed by licensees must show brokers regular business name and contain words that would
indicated that the ad was placed by person engaged in real estate business
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Must have consent from employing broker before placing an ad
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Cannot specify any limitation based on creed, sex, affectional, or sexual orientation
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Ads that refer to amounts, down payments, monthly payments, taxes, or mortgage money
available must contain phrase “to qualified buyer”
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NO FREE OFFERINGS including offering of free appraisals may not be made
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Words such as “included in the purchase price” may be used in referring to items included by the
owner when selling or renting real estate
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Free offers that are subordinate to the real estate transaction such as a free comparative market
analysis (CMA) or calendars or pens are allowed
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Licensees must disclose in writing any compensation received for such promotion or offer
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Broker may not list a property as sold until the closing has taken place
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All ads must specify the municipality within the property is located
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Advertisement containing the name of a salesperson must specify the municipality with which the
property is located
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Brokerage firms are required to maintain a trust account for the purpose of holding funds
belonging to others relative to transactions in which they are engaged. Otherwise he would be
guilty of commingling
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A broker may maintain one trust account into which all qualified monies may be deposited as long
as careful accounting is kept
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Brokers acting as temporary custodians of such finds may not receive, obtain, or use any interest
earned on such funds for their own business or personal use
Chapter 3
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NJ State Law
Trust account records, banking records, and other transaction documents are subject to
unannounced inspection by the NJREC investigation staff
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All real estate brokers are required to keep a ledger book
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Every licensee who is paid monies to be held in trust by a broker shall only accept such monies if
they are in the form of cash or a negotionable instrument payable to whom the individual is
licensed
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A check cannot be accepted when it is made payable to a broker salesperson
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A principal broker is responsible for all trust fun monies however he may authorize a salesperson
in writing to deposit client monies on his behalf
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You are guilty of commingling if
-failing to maintain a separate account for client and customer funds in an authorized
institution
-failing to promptly deposit monies received into this account “promptly” which is defined
as 5 business days after receipt of such funds
Failing to promptly segregate property belonging to others
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Licensees must transmit all formal written offers on a property within 24 hours of receipt and are
encouraged to to written acknowledgement from the person receiving the offer indicating the date
and time the offer was submitted
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Licensees may never refuse to present offers not may they wish to withhold them
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Salespersons are only bound to present written offers
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Suspension involves a period less than the entire remaining license term. The commission has
the authority with at least 24 hours notice to suspend a license
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Hearing must be help within 30 days of any order imposing such a temporary suspension
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Revocation of license is termination of license
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First violation- not more than $5,000
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Subsequent violations- Not more than $10,000
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An order for restitution may also be made if appropriate
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If a licensee is guilty of a third violation whether the same of separate offense the commission
may deem that person as a repeat offender and may direct that no license as a real estate
salesperson or broker shall henceforth be issued to that person
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Any licensee who violated the civil or criminal laws of NJ could be further prosecuted under those
laws
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Under the order of the court, a defendant found guilty of violation, and refusing to pay the fines
assessed may be committed to the county jail for a period of time not to exceed 30 days
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When a licensee is indicted for a crime, the license may be suspended at the discretion of the
commission
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If a licensee is convicted of a money offense the license MUST BE REVOKED
Chapter 3
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NJ State Law
If a broker license is suspended or revoked other licensees operating under him will have their
licensees automatically suspended
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There is no presumption of wrongdoing on their part
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The failure of any person to cooperate with the commission in the performance of its duties or to
comply with the subpoena issued by the commission or the failure to give a verbal or written
statement concerning the matter is guilty of UNWORTHINESS * had this on my test
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Using a plan, scheme, or method for the sale or promotion of the sale of real estate which
involved a lottery, contest, game, prize, drawing, or the offering of lot or parcels of lots for
advertising purposes is permitted unless it requires that the person has to sign into a contract or
sale as a condition of the offer *on my test
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READ HIGHLIGHTS ON PAGES 58 and 59 *def on test
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READ HIGHLIGHTS AND FIRST SENTENCE OF EACH SUBSECTION (a,b,c, etc.) on pages
89,90,91,95,96,
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Any broker who charges or collects an advance fee in excess of $25.00 for services to be
rendered, such as, but not limited to advertising cost, shall with in 90 days after such charge or
collection furnish his principal with an accounting as to how he used this money *on my test
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Any written comparative market study or analysis (CMA) provided by a licensee to a consumer
shall include a statement indicating that CMA Is not an appraisal and should not be considered
the equivalent of an appraisal. Should appear in large print *was on my test
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READ HIGHLIGHTS on pages 98,99,100
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Licensee- prepared revision or additions reflected on the instrument itself shall be initialed by all
parties to the transaction *on my test
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A reasonable effort to ascertain material information shall include at least
-Inquiries to the seller or seller’s agent about any physical conditions that may affect the
property
-visual inspection of the property to determine if there are any readily observable physical
conditions affecting the property
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Licensees who possess actual knowledge of an off-site condition which may materially affect the
value of residential real estate other than newly constructed properties shall disclose that info to
perspective buyers
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Unless directed not to in writing by an owner, every licensee shall fully cooperate with hall other
NJ licensees utilizing cooperation arrangements which shall protect and promote the interests of
the licensee’s client
Chapter 3
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NJ State Law
Should the client or principal direct the listening broker not top cooperate at all with all other
licensees evident of the intent shall be in writing in the form of WAIVER OF BROKER
COOPERATION
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Real estate licensees are prohibited from receiving compensation from both a seller and a buyer
for representation both seller and buyer in the same real estate sales transaction. This applies
even when dual agency has been disclosed by the licensee to both parties
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Real estate broker are prohibited form offering incentives to the salesperson or brokersalespersons licensed under them for merely referring customers or clients to a particular lender,
mortgage broker, or provider of related service. Any compensation paid by a real estate broker to
a sales person must be for services actually rendered beyond a mere referral. *on my test
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Every contract or agreement shall contain the following notice in 10 point boldface type or larger-NOTICE TO PUCHASER OR LESSEE- you have the right to cancel this contract by
midnight of the seventh calendar day following the day on which you have executed this
contract or agreement