NJ Real Estate cheat sheet

The New Jersey Real Estate Commission, within the Division of Consumer Affairs, licenses real estate brokers and salespersons and enforces license law through investigations and disciplinary hearings.

A salesperson must be affiliated with a licensed New Jersey broker; the salesperson cannot operate independently or accept compensation directly from a client or customer.

New Jersey salesperson applicants must complete 75 hours of approved prelicensing education; broker applicants must complete 150 hours and satisfy the Commission's experience requirement.

Only licensed brokers may be paid commissions; paying a commission or referral fee to an unlicensed person for brokerage activity is prohibited.

Advertising must include the broker's business name; a salesperson may not advertise real estate independently of the sponsoring broker.

New Jersey real estate licenses renew biennially, and renewal requires completion of the continuing education hours prescribed by the Real Estate Commission.

Disciplinary penalties include reprimand, probation, suspension, revocation, and fines; licensees are entitled to notice and a hearing under the Administrative Procedure Act.

A licensee must retain transaction records as required by Commission rules and must make them available for inspection during an investigation.

New Jersey agency relationships include seller's agent, buyer's agent, disclosed dual agent, and designated agent within a brokerage.

The Consumer Information Statement explaining agency relationships must be provided at the first substantive contact in a residential transaction, before confidential information is exchanged.

Fiduciary duties owed by a New Jersey agent include loyalty, obedience, disclosure, confidentiality, reasonable care, and accounting.

A disclosed dual agent must obtain written consent, treat both parties fairly, and may not advocate for either party's position or disclose one party's confidences to the other.

Designated agency permits one brokerage to assign different licensees to represent buyer and seller separately, with written consent and safeguards for confidential information.

A seller's agent must promptly present all offers to the seller unless the seller has instructed otherwise in writing, and must disclose material facts affecting the property.

A buyer's agent owes loyalty to the buyer, including disclosure of material facts known to the agent and accounting for funds entrusted by the buyer.

Confidential information learned from a client, such as motivation or financial limits, may not be disclosed without authorization even after the agency relationship ends.

A New Jersey contract for the sale of land must be in writing and signed by the party to be charged, and must identify the parties, property, price, and essential terms under the Statute of Frauds.

The New Jersey attorney review clause allows either party's attorney to disapprove the signed contract within three business days after delivery, which voids the contract if exercised.

Earnest money is held in escrow by a broker, attorney, or title company; the contract specifies disbursement if the transaction closes, fails, or the buyer defaults.

For most residential mortgage loans, the lender must deliver the Closing Disclosure at least three business days before closing so the borrower can compare final costs with the Loan Estimate.

The New Jersey Realty Transfer Fee is based on the sale price, is paid at recording, and is customarily paid by the seller, with additional surcharges for higher-priced residential sales.

A mortgage contingency clause makes the buyer's performance conditional on obtaining financing by a stated deadline; if financing fails, the buyer may cancel and recover earnest money.

At closing, property taxes, rent, and similar items are prorated as of the closing date so each party bears expenses for the period it owns or uses the property.

A contract may make time of the essence, which means a party's failure to perform by the stated date is a material breach rather than a minor delay.

New Jersey is a race-notice recording state: a later purchaser who takes without notice of a prior interest and records first prevails over an earlier unrecorded interest.

Deeds are recorded with the county clerk or register in the county where the property is located; recording gives constructive notice to later purchasers.

Common New Jersey deeds include the warranty deed, bargain and sale deed, and quitclaim deed; the bargain and sale deed is frequently used in residential transactions.

Married couples may hold title as tenants by the entirety, which includes a right of survivorship and generally cannot be severed by one spouse alone.

Joint tenants hold equal undivided interests with a right of survivorship; tenants in common hold undivided interests without survivorship and may convey their shares separately.

Adverse possession in New Jersey generally requires actual, open, exclusive, continuous, and hostile possession for twenty years before title may be acquired.

An easement appurtenant benefits a dominant parcel and burdens a servient parcel, runs with the land, and transfers automatically when either property is conveyed.

The Municipal Land Use Law authorizes planning boards and zoning boards of adjustment; a zoning board of adjustment hears use variance, bulk variance, and interpretation requests.

Title insurance protects the insured against covered title defects; an owner's policy protects the owner and a lender's policy protects the mortgage lender.

Loan-to-value ratio equals the loan amount divided by the appraised value or purchase price, whichever is lower; lenders use LTV to assess risk and mortgage insurance requirements.

Down payment equals purchase price minus loan amount; a conventional loan with less than a 20 percent down payment usually requires private mortgage insurance.

One discount point equals 1 percent of the loan amount; points are paid at closing to reduce the interest rate and are a form of prepaid interest.

PITI equals principal, interest, property taxes, and hazard insurance; lenders use PITI to calculate the front-end housing expense ratio.

The amortizing mortgage payment formula is M = P × [r(1+r)^n] ÷ [(1+r)^n − 1], where r is the monthly interest rate and n is the number of monthly payments.

Annual property tax equals assessed value multiplied by the tax rate; New Jersey equalization ratios may be applied to derive true value for certain purposes.

A commission equals sale price multiplied by the commission rate; the broker then splits the commission with cooperating brokers according to the brokerage agreements.

Private mortgage insurance on a conventional loan may be cancelled when the loan balance reaches the level specified by federal law or the lender's requirements.