NJ RE Broker cheat sheet

The New Jersey Real Estate Commission, within the Division of Consumer Affairs, administers the Real Estate License Act, N.J.S.A. 45:15-1 et seq.

License categories are broker, broker-salesperson, salesperson, and referral agent; only a broker may be paid directly by a client.

A salesperson or broker-salesperson must be sponsored by a licensed New Jersey broker; the license is inactive until sponsorship is filed.

A referral agent may only refer prospects and is paid through the sponsoring broker; a referral agent may not list, show, or negotiate.

Prelicensing education is 75 hours for salesperson and 150 hours for broker, plus the experience and examination requirements for broker.

Licenses renew biennially and require approved continuing education for active status.

The Commission may deny, suspend, revoke, or fine a licensee for violations such as misrepresentation, commingling, or unlicensed activity.

Unlicensed persons may not list property, negotiate a sale, or accept compensation for brokerage services.

Continuing education: 12 approved hours per two-year license term, including required core topics, must be completed before renewal.

A licensee must notify the Commission of a change of business address, name, or sponsoring broker as required by rule.

Each branch office must hold a separate office license and be supervised by a licensed broker or broker-salesperson.

Advertising must identify the brokerage name; a salesperson's advertising must include the broker's name and may not imply independent brokerage status.

A licensee may not pay a commission or referral fee to an unlicensed person or entity for brokerage activity.

Commission rules govern listing agreements, agency disclosure, escrow accounts, recordkeeping, and advertising.

Renewal applications are due before expiration; practicing on an expired license is a violation.

The Commission may require remedial education as a condition of reinstatement or as a disciplinary penalty.

The broker of record is accountable for all brokerage activity at the office, including supervision of salespersons and broker-salespersons.

Each office must maintain and display the licenses of the broker and affiliated licensees as required.

The broker must adopt written office policies covering agency representation, escrow handling, advertising, and document review.

Independent contractor agreements must be in writing and should address commission splits, supervision, and termination.

The broker must review transaction files for completeness, signatures, disclosures, and required riders before closing.

A branch office may not operate until its office license is issued and a licensed supervisor is in place.

Team names and team advertising must be approved by and identify the brokerage; teams are not separate licensed entities.

The broker is responsible for retaining transaction records for the period required by Commission rules.

Trust funds such as earnest money and security deposits must be deposited in a separate escrow account at a New Jersey bank.

Commingling client funds with the broker's operating, personal, or general business funds is prohibited.

A broker may not disburse escrow funds until the deposit has cleared and the disbursement is authorized by the contract or parties.

The broker must keep a separate ledger for each transaction showing deposits, disbursements, and balances.

Monthly reconciliation compares the checkbook, bank statement, and individual ledgers; shortages must be corrected immediately.

The broker is responsible for the escrow conduct of affiliated licensees and for any funds they receive on the broker's behalf.

Security deposits for managed rental property are client trust funds and must be handled under the same escrow rules.

Escrow records must be available for inspection by the Commission and retained for the required period.

New Jersey recognizes seller's agent, buyer's agent, dual agent, and transaction broker relationships.

Agency relationships should be established by a written agreement that defines the scope, term, and compensation.

Dual agency requires the informed written consent of both buyer and seller and limits the broker's ability to advocate for either party.

A transaction broker assists both parties without representing either and does not owe fiduciary loyalty to either side.

Fiduciary duties include loyalty, obedience, disclosure, confidentiality, accounting, and reasonable care.

A seller's agent may not reveal the seller's confidential motivation or lowest acceptable price to a buyer.

A buyer's agent may not disclose the buyer's confidential financial information without authorization.

The Consumer Information Statement explains these relationships and must be delivered at first substantive contact.

The Consumer Information Statement must be given at the first substantive contact and the consumer's receipt acknowledged in writing.

The CIS explains seller agency, buyer agency, dual agency, and transaction brokerage, and states that compensation may come from either party.

A written buyer agency agreement should be signed before the broker provides services as the buyer's agent.

Dual agency must be disclosed in writing and consented to by both parties before the broker acts.

New Jersey sellers must provide a property condition disclosure statement to prospective buyers.

Federal law requires lead-based paint disclosure and the EPA pamphlet for housing built before 1978.

Advertising must not be false or misleading and must identify the brokerage by its licensed name.

Licensees must disclose any compensation or referral fee received from a third party in connection with the transaction.

The standard New Jersey real estate contract contains a three-business-day attorney review period after signing by both parties.

Listing agreements must be in writing and include a definite expiration date; automatic renewal without new consideration is not permitted.

Common listing types are exclusive right to sell, exclusive agency, and open listing.

The Statute of Frauds requires real estate sale contracts and leases over one year to be written and signed.

Essential contract terms include parties, property description, purchase price, closing date, and contingencies.

Earnest money is held in escrow and applied to the purchase price or returned per contract terms.

Buyer agency agreements may be exclusive or non-exclusive and should state the term and compensation.

New Jersey requires a certificate of smoke detector and carbon monoxide alarm compliance before closing on residential resale.

Loan-to-value ratio equals the loan amount divided by the lesser of purchase price or appraised value.

FHA loans typically allow 3.5 percent down; VA loans may allow zero down for eligible veterans.

Conventional loans above 80 percent LTV usually require private mortgage insurance.

Federal law requires PMI cancellation when the loan balance reaches 78 percent of the original value, with borrower-requested cancellation at 80 percent.

One discount point equals one percent of the loan amount and is prepaid interest.

RESPA requires a Loan Estimate within three business days of application and a Closing Disclosure three business days before consummation.

NJHMFA provides first-time homebuyer mortgages and down payment assistance subject to income and purchase price limits.

Mortgage priority is generally determined by the date of recording; the first recorded mortgage has senior lien position.

The three valuation approaches are sales comparison, cost, and income.

Highest and best use must be legally permissible, physically possible, financially feasible, and maximally productive.

In sales comparison, adjustments are made to comparables; if a comparable is superior, its price is adjusted downward.

Gross rent multiplier equals sale price divided by gross monthly rent.

Capitalization rate equals net operating income divided by value.

Depreciation may be physical deterioration, functional obsolescence, or external obsolescence.

Appraisals must follow USPAP; New Jersey appraisers are licensed by the Board of Real Estate Appraisers.

A broker price opinion is not an appraisal and may not be represented as one.

New Jersey limits residential security deposits to one and one-half months' rent.

Security deposits must be held in an interest-bearing account at a New Jersey bank, and the tenant must be notified of the bank and account.

Interest earned on a security deposit is paid to the tenant annually or credited to the tenant.

The landlord must return the deposit with an itemized list of deductions within 30 days after the tenant vacates.

Residential leases carry an implied warranty of habitability that cannot be waived.

Eviction requires a court judgment; self-help lockouts and utility shutoffs are prohibited.

Property managers must comply with fair housing laws in screening, advertising, and showing.

A lease should identify parties, premises, term, rent, security deposit, and maintenance responsibilities.

Federal Fair Housing Act protected classes are race, color, religion, sex, national origin, familial status, and disability.

The New Jersey Law Against Discrimination adds protections including source of income, sexual orientation, gender identity, marital status, ancestry, and age.

Blockbusting, steering, and redlining are prohibited practices.

Landlords and sellers must provide reasonable accommodations and allow reasonable modifications for disability.

Advertising may not state a preference or limitation based on a protected class.

The New Jersey Consumer Fraud Act prohibits unconscionable commercial practices and misrepresentations in real estate transactions.

RESPA Section 8 prohibits kickbacks and unearned fees for settlement service referrals.

Realtors are additionally bound by the NAR Code of Ethics, including duties to clients and the public.

Commission equals sale price multiplied by the commission rate.

A salesperson's share equals the total commission multiplied by the agreed split.

For an annual expense, proration equals annual amount divided by 365, multiplied by the number of days.

Loan-to-value equals loan amount divided by value or price, expressed as a percentage.

Points equal loan amount multiplied by the point percentage; one point is one percent.

Area equals length times width; one acre equals 43,560 square feet.

Capitalization rate equals net operating income divided by price; GRM equals price divided by gross monthly rent.

Percent change equals the difference divided by the original amount, multiplied by 100.

New Jersey residential closings are typically attended by attorneys for buyer, seller, and lender.

The Closing Disclosure must be delivered at least three business days before consummation under federal rules.

The New Jersey Realty Transfer Fee is generally paid by the seller and is based on consideration.

An additional one percent tax applies to residential sales of one million dollars or more.

Property taxes, rents, and association dues are prorated as of the closing date.

The deed and mortgage are recorded to give public notice and establish priority.

A certificate of smoke detector and carbon monoxide alarm compliance is required for residential resale.

Closing debits are charges to a party; credits are amounts received, and the settlement statement balances to zero.