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NJ Real Estate practice questions

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Question 1New Jersey License Law and Real Estate Commission Rules

Which New Jersey entity issues and regulates real estate broker and salesperson licenses?

  1. The Real Estate Commission Correct answer.
  2. The Office of the Secretary of State
  3. The New Jersey Department of Banking and Insurance
  4. The Division of Taxation in the Department of the Treasury

Explanation

The Real Estate Commission sits within the Division of Consumer Affairs in the Department of Law and Public Safety and administers the licensing statute and its regulations. It handles licensing, investigations, and disciplinary proceedings for brokers and salespersons.

Question 2New Jersey License Law and Real Estate Commission Rules

Before taking the New Jersey salesperson licensing examination, an applicant must complete how many hours of approved pre-licensing education?

  1. 75 hours Correct answer.
  2. 90 hours
  3. 45 hours
  4. 150 hours

Explanation

New Jersey requires salesperson applicants to complete 75 hours of approved pre-licensing coursework before sitting for the state exam. The larger 150-hour requirement applies to broker applicants, not salespersons.

Question 3New Jersey License Law and Real Estate Commission Rules

A New Jersey salesperson closes a sale. From whom may the salesperson lawfully accept the commission?

  1. The employing broker Correct answer.
  2. Either party, as long as the amount is disclosed
  3. The buyer, if the buyer signs a compensation agreement
  4. The seller, if the seller agrees in the contract

Explanation

A salesperson may be compensated for brokerage services only by the broker with whom the salesperson's license is affiliated; the broker then pays the salesperson. Accepting payment directly from a buyer or seller is a license law violation, even with written consent.

Question 4New Jersey License Law and Real Estate Commission Rules

New Jersey salespersons and brokers must complete continuing education in which amount?

  1. 12 hours per two-year license term Correct answer.
  2. 6 hours per calendar year
  3. No hours, once the licensee has held a license for 10 years
  4. 24 hours per two-year license term

Explanation

New Jersey licensees must complete 12 hours of continuing education during each two-year licensing term, and a portion must cover core subjects such as ethics, agency, and fair housing. The requirement applies to both salespersons and brokers and must be satisfied before renewal.

Question 5New Jersey License Law and Real Estate Commission Rules

A salesperson places an advertisement for a listing. Which element must the advertisement contain?

  1. The salesperson's license number
  2. The name of the employing brokerage Correct answer.
  3. The commission rate being offered
  4. The seller's written approval line

Explanation

New Jersey advertising rules require that advertising identify the employing brokerage so the public knows who is responsible for the services. A salesperson may appear in the ad but may not advertise in a way that suggests the salesperson is the broker.

Question 6New Jersey License Law and Real Estate Commission Rules

In New Jersey, the commission a broker charges for selling a home is:

  1. Fixed at 5 percent for residential resales
  2. Negotiable between the broker and the client Correct answer.
  3. Capped at 6 percent by statute
  4. Set by the Real Estate Commission's fee schedule

Explanation

Commission rates are negotiated between the broker and the client; no statute or regulation sets or caps them. Any attempt by licensees to fix rates collectively would also raise antitrust concerns.

Question 7New Jersey License Law and Real Estate Commission Rules

Which activity requires a New Jersey real estate license?

  1. A bank disposing of property it owns in foreclosure
  2. A trustee selling property under a court order
  3. An owner selling her own principal residence without assistance
  4. Listing another person's home for a fee Correct answer.

Explanation

The licensing statute covers persons who, for compensation, list, sell, buy, or rent real estate belonging to another. Owners selling their own property and persons acting under court authority are outside that definition.

Question 8New Jersey License Law and Real Estate Commission Rules

A broker receives a buyer's good-faith deposit on a sale that has not yet closed. The broker must:

  1. Turn it over to the salesperson for safekeeping
  2. Hold it in a separate trust account Correct answer.
  3. Apply it to the broker's commission if the deal stalls
  4. Deposit it in the broker's general business account

Explanation

Trust funds belonging to others must be maintained in a separate escrow or trust account and may not be commingled with the broker's operating funds. Mishandling or commingling trust funds is a ground for disciplinary action.

Question 9New Jersey License Law and Real Estate Commission Rules

Under New Jersey rules, the Consumer Information Statement describing agency relationships must be given to a consumer:

  1. Only when a dual agency arises
  2. At the closing table
  3. Only when the consumer asks for a copy in writing
  4. At the first substantive contact about a transaction Correct answer.

Explanation

The Consumer Information Statement must be provided at the first substantive contact so the consumer understands the types of agency available before a relationship is formed. Waiting until closing or until a conflict arises defeats the purpose of the disclosure.

Question 10New Jersey License Law and Real Estate Commission Rules

A brokerage firm wants to represent both the buyer and the seller in the same residential transaction. What does New Jersey law require?

  1. Written consent of both parties Correct answer.
  2. Verbal consent from the seller only
  3. Nothing, because dual agency is prohibited in New Jersey
  4. Approval from the Real Estate Commission before closing

Explanation

Dual agency is permitted in New Jersey only with the informed written consent of all parties to the transaction. Without that consent, the brokerage must limit its representation to an arrangement the parties have agreed to in writing.

Question 11New Jersey License Law and Real Estate Commission Rules

The New Jersey Real Estate Guaranty Fund may make payment to:

  1. A broker's unpaid commission from a former client
  2. A consumer with an unpaid judgment against a licensee Correct answer.
  3. A buyer's deposit lost when financing falls through
  4. A licensee's legal fees in a Commission hearing

Explanation

The Guaranty Fund reimburses consumers who obtain a court judgment against a licensee for fraud, misrepresentation, or other wrongful conduct and cannot collect it from the licensee. It is not a general deposit insurance program for deals that simply fall apart.

Question 12New Jersey License Law and Real Estate Commission Rules

In New Jersey, a "broker-salesperson" is:

  1. A salaried employee of a broker who holds no license
  2. A salesperson who has passed the broker exam but not yet applied
  3. A broker who handles only commercial property
  4. A broker who works for another broker Correct answer.

Explanation

New Jersey issues a broker-salesperson license to an individual who qualifies as a broker but is employed by another broker rather than operating an independent brokerage. The person holds broker-level credentials but works under a principal broker.

Question 13New Jersey License Law and Real Estate Commission Rules

Before applying for a New Jersey broker license, an applicant must have how much full-time experience as a licensed salesperson?

  1. One year
  2. Five years
  3. Three years Correct answer.
  4. No experience is required if the applicant holds a college degree

Explanation

Broker applicants must document three years of full-time experience as a licensed salesperson, along with the required broker pre-licensing education. A degree does not substitute for the experience requirement.

Question 14New Jersey License Law and Real Estate Commission Rules

Which task may an unlicensed assistant lawfully perform for a New Jersey brokerage?

  1. Negotiate the terms of a counteroffer
  2. Quote the asking price to a buyer who calls
  3. Deliver listing flyers prepared by the broker Correct answer.
  4. Explain the contract's contingencies to a buyer

Explanation

Unlicensed assistants may perform clerical and administrative work but may not engage in activities that require a license, such as quoting prices, negotiating terms, or interpreting contract provisions for the public.

Question 15New Jersey License Law and Real Estate Commission Rules

A broker wants to pay $500 to an unlicensed neighbor who referred a buyer. This payment is:

  1. Permissible up to $500 under the referral-fee rule
  2. Permissible if the broker reports it to the Commission
  3. Prohibited, since referrals are brokerage activity Correct answer.
  4. Permissible if the buyer is told about it

Explanation

Paying compensation to an unlicensed person for procuring a buyer is a violation of the license law, because compensated brokerage activity requires a license. Disclosure or a small dollar amount does not cure the violation.

Question 16New Jersey License Law and Real Estate Commission Rules

A New Jersey exclusive-right-to-sell listing agreement must:

  1. State a definite expiration date Correct answer.
  2. Be approved by the Commission
  3. Contain an automatic renewal clause
  4. Run for at least six months

Explanation

Listing agreements must have a definite termination date so the seller knows when the exclusive period ends. Open-ended listings and automatic renewal provisions are not permitted.

Question 17New Jersey License Law and Real Estate Commission Rules

A salesperson leaves Broker A and begins working for Broker B. Before Broker B can pay the salesperson a commission, the salesperson must:

  1. Retake the state licensing exam
  2. Obtain Broker A's written release
  3. Wait 30 days after leaving Broker A
  4. Have the license transferred to Broker B Correct answer.

Explanation

A salesperson may be compensated only by the broker to whom the license is currently affiliated, so the license must be transferred to Broker B before any compensation is paid. Acting for a new broker before the transfer is a license law violation.

Question 18New Jersey License Law and Real Estate Commission Rules

Under the New Jersey Law Against Discrimination, a landlord may not refuse to rent to a tenant because the rent would be paid with a housing voucher. This refusal is discrimination based on:

  1. Disability
  2. Source of lawful income Correct answer.
  3. National origin
  4. Familial status

Explanation

The New Jersey Law Against Discrimination protects renters who pay with lawful income sources, including government housing subsidies, and is broader than the federal Fair Housing Act in this respect. Refusing an otherwise qualified applicant over a voucher violates state law.

Question 19New Jersey License Law and Real Estate Commission Rules

A seller asks a salesperson what her home would realistically sell for. The salesperson may:

  1. Prepare a comparative market analysis Correct answer.
  2. Certify the value as an appraiser would
  3. Perform an appraisal and charge a fee for it
  4. Issue a formal written appraisal

Explanation

A licensee may prepare a comparative market analysis of recent sales to help a client price a home, but may not perform an appraisal for compensation without an appraiser credential. Appraisal is regulated separately from real estate licensing.

Question 20New Jersey License Law and Real Estate Commission Rules

A salesperson wants to buy a client's listing for the salesperson's own investment. What must the salesperson do?

  1. Disclose the intent to buy in writing Correct answer.
  2. Assign the contract to the broker
  3. Nothing, since the client set the price
  4. Wait until the listing expires

Explanation

A licensee acquiring a client's property must make full written disclosure of licensed status and of the intent to purchase, so the client can consent with complete information. Secret self-dealing breaches the fiduciary duty of loyalty.

Question 21New Jersey License Law and Real Estate Commission Rules

Which person may sell real estate for another in New Jersey without holding a real estate license?

  1. An attorney acting in the ordinary practice of law Correct answer.
  2. A consultant who charges a flat fee to list homes
  3. A marketer who is paid per closed sale
  4. A property manager who rents apartments for a fee

Explanation

The licensing statute exempts attorneys acting in the ordinary practice of law, along with certain other fiduciaries and court-appointed persons. Persons who provide brokerage services for a fee, such as listing homes or renting apartments for others, must be licensed.

Question 22New Jersey License Law and Real Estate Commission Rules

The Real Estate Commission may refuse a license to an applicant who lacks the honesty and fitness to deal with the public. The statutory standard applied is:

  1. Absence of New Jersey residency
  2. Failure to join a trade association
  3. Lack of financial reserves
  4. Unworthiness or incompetency Correct answer.

Explanation

The Commission may refuse, suspend, or revoke a license for "unworthiness or incompetency to act as a broker or salesperson," a standard that reaches dishonesty and untrustworthiness. It gives the Commission latitude to protect the public beyond proven statutory violations.

Question 23New Jersey License Law and Real Estate Commission Rules

A salesperson violates the license law while showing a listing to a buyer. Who may the Commission discipline?

  1. Neither, unless a consumer files a lawsuit first
  2. Both the salesperson and the employing broker Correct answer.
  3. Only the broker, since the salesperson is an employee
  4. Only the salesperson, since the broker had no knowledge

Explanation

Brokers are required to supervise the licensees affiliated with them, so discipline may reach both the salesperson and the supervising broker for conduct within the scope of the brokerage business. A pending civil suit is not a prerequisite to Commission action.

Question 24New Jersey License Law and Real Estate Commission Rules

A buyer's deposit is held by the broker when the sale collapses and the parties disagree about who gets the money. The broker should:

  1. Return it to the buyer immediately
  2. Hold it until written agreement or court order Correct answer.
  3. Deduct the commission and hold the rest
  4. Pay it to the seller as liquidated damages

Explanation

When entitlement to a deposit is disputed, the broker must continue to hold the funds in trust until the parties agree in writing or a court directs disbursement. Releasing the money to either side exposes the broker to liability and discipline.

Question 25New Jersey License Law and Real Estate Commission Rules

After the Real Estate Commission issues a final order revoking a license, the licensee's avenue for judicial review is:

  1. A rehearing by the full Commission
  2. The Division of Consumer Affairs' director
  3. The Appellate Division of the Superior Court Correct answer.
  4. The Governor's office

Explanation

A final decision of the Commission is final agency action, reviewable by the Appellate Division of the Superior Court under the Administrative Procedure Act. The licensee must first exhaust available agency remedies, such as a hearing.

Question 26New Jersey License Law and Real Estate Commission Rules

In New Jersey, an applicant for a real estate salesperson license must be at least:

  1. 18 years old Correct answer.
  2. There is no minimum age requirement
  3. 21 years old
  4. 16 years old

Explanation

New Jersey license law requires a salesperson applicant to be at least 18 years of age, hold a high school diploma or its equivalent, complete the required pre-licensing course, and pass the licensing examination before a license will be issued.

Question 27New Jersey License Law and Real Estate Commission Rules

Before sitting for the New Jersey salesperson licensing examination, an applicant must complete a pre-licensing course of:

  1. 40 hours
  2. 75 hours Correct answer.
  3. 60 hours
  4. 120 hours

Explanation

New Jersey requires salesperson applicants to complete a 75-hour pre-licensing course at a school approved by the Real Estate Commission before taking the state examination. The broker pre-licensing requirement is a longer, separate course.

Question 28New Jersey License Law and Real Estate Commission Rules

A New Jersey salesperson license may be registered with:

  1. Any number of brokers, so long as each broker is notified
  2. The salesperson's own brokerage, which the salesperson may operate independently
  3. No broker, provided the salesperson works only part time
  4. One employing broker at a time Correct answer.

Explanation

A salesperson license is issued to the individual but must be filed with an employing broker, and the salesperson may be associated with only one broker at a time. A salesperson cannot broker independently or split association among several firms.

Question 29New Jersey License Law and Real Estate Commission Rules

The New Jersey Real Estate Commission carries out its functions within which agency?

  1. The Division of Consumer Affairs Correct answer.
  2. The Department of Banking and Insurance
  3. The Department of Community Affairs
  4. The Division of Criminal Justice

Explanation

The Real Estate Commission is an administrative agency placed within the Division of Consumer Affairs, which is part of the Department of Law and Public Safety under the Attorney General. It administers licensing, education and disciplinary functions for the real estate industry.

Question 30New Jersey License Law and Real Estate Commission Rules

A salesperson runs an advertisement for a listing that gives only her own name and cell number, omitting the brokerage's name. Under New Jersey rules, this advertisement is:

  1. Prohibited, because it must name the employing broker Correct answer.
  2. Acceptable, because the salesperson paid for the ad herself
  3. Acceptable, if the salesperson adds her license number
  4. Acceptable, because the seller approved the wording in writing

Explanation

Advertising by a licensee must identify the employing broker's business name, and a salesperson may advertise only with the broker's authorization and under the broker's name. An advertisement that hides the brokerage violates the Commission's advertising rules.

Question 31New Jersey License Law and Real Estate Commission Rules

A broker licensed in New Jersey maintains a main office in Trenton and opens a second office in Cherry Hill. To operate the new location, the broker needs:

  1. A separate corporation formed for the new location
  2. Only a sign bearing the broker's name at the new location
  3. A branch office license for the new location Correct answer.
  4. Nothing further, because one broker license covers every office the broker owns

Explanation

Each office at which brokerage business is conducted must be separately licensed, so a second location requires a branch office license. The branch must also operate under the supervision of a licensed broker.

Question 32New Jersey License Law and Real Estate Commission Rules

How many hours of continuing education must a New Jersey salesperson complete during each two-year licensing period?

  1. No continuing education is required
  2. 24 hours
  3. 6 hours
  4. 12 hours Correct answer.

Explanation

New Jersey licensees must complete 12 hours of approved continuing education every two years as a condition of renewal, with a portion devoted to core subjects. Completing fewer hours prevents timely renewal.

Question 33New Jersey License Law and Real Estate Commission Rules

A licensed salesperson moves her business to a different brokerage office in another town. She must notify the Real Estate Commission of the address change:

  1. Only when her license comes up for renewal
  2. Within 30 days of the change Correct answer.
  3. Within 10 days of the change
  4. Within six months of the change

Explanation

Licensees are required to keep the Commission informed of their current business address and must report a change within 30 days. Prompt notice preserves the accuracy of the licensing records and the licensee's ability to be served with official notices.

Question 34New Jersey License Law and Real Estate Commission Rules

In New Jersey, a listing agreement is a contract between the seller and:

  1. The multiple listing service that publishes the listing
  2. The Real Estate Commission
  3. The salesperson who obtained the listing
  4. The employing broker Correct answer.

Explanation

A listing agreement creates an agency relationship with the brokerage, so the contracting party on the brokerage side is the broker. A salesperson may obtain and service the listing, but only on behalf of the employing broker.

Question 35New Jersey License Law and Real Estate Commission Rules

After a smooth closing, a seller offers to pay the salesperson a $1,000 bonus directly. The salesperson should:

  1. Accept it as a personal gift from the seller
  2. Accept it if the broker credits it against the agreed commission
  3. Decline it, because only the employing broker may pay her Correct answer.
  4. Accept it if the broker is told afterward

Explanation

A salesperson may not accept compensation for brokerage services from anyone other than the employing broker. Any payment for the transaction must run through the broker, who then compensates the salesperson under their arrangement.

Question 36New Jersey License Law and Real Estate Commission Rules

A salesperson's license is inactive because she has no broker association. While inactive, she may:

  1. Handle rentals only, since rental work is unregulated
  2. Show property if she receives no payment for it
  3. Perform no brokerage activity until the license is reactivated Correct answer.
  4. Continue closing the transactions she had already begun

Explanation

A salesperson's authority to act comes from association with a licensed broker, so an inactive license bars all brokerage activity, whether sales or rentals and whether or not a fee is charged. The license must be activated with a broker before she may act for another.

Question 37New Jersey License Law and Real Estate Commission Rules

A lender asks a licensed salesperson to prepare a certified appraisal of a listed property. The salesperson should:

  1. Prepare it and sign as a licensed salesperson
  2. Prepare it and have the broker co-sign the report
  3. Decline it, because appraisals require an appraiser certification Correct answer.
  4. Prepare it if the lender supplies the appraisal forms

Explanation

Appraisal practice in New Jersey is regulated separately and requires an appraiser certification or license that a real estate license does not confer. A salesperson may provide a broker price opinion in the ordinary course of brokerage work but may not issue a certified appraisal.

Question 38New Jersey License Law and Real Estate Commission Rules

A real estate corporation holds a New Jersey broker license, and its designated broker of record resigns. The corporation:

  1. May keep operating for up to 90 days while it searches for a permanent replacement broker
  2. Loses its corporate status and must dissolve
  3. May keep operating if a licensed salesperson is put in charge of the office
  4. May not continue brokerage business until a new broker of record is approved Correct answer.

Explanation

A corporate broker license depends on a designated individual broker of record who is responsible for the firm's brokerage activities. When that individual leaves, the entity may not conduct brokerage business until a qualified replacement is designated and approved by the Commission.

Question 39New Jersey License Law and Real Estate Commission Rules

Before the Real Estate Commission may revoke a license, the licensee is entitled to:

  1. A jury trial in Superior Court
  2. A private meeting with the Commission's director
  3. Notice of the charges and an administrative hearing Correct answer.
  4. An automatic stay of all Commission proceedings

Explanation

Disciplinary action must follow administrative due process: the licensee receives notice of the allegations and an opportunity to be heard at a hearing before the license is suspended or revoked. Judicial review comes only after the agency issues a final order.

Question 40New Jersey License Law and Real Estate Commission Rules

The Commission revokes a broker's license. The salespersons registered with that broker:

  1. Must stop practicing until they place their licenses with another broker Correct answer.
  2. Keep their licenses active for one year regardless of employment
  3. Automatically become brokers of record of the firm
  4. May keep practicing independently while they look for a new broker

Explanation

Salesperson licenses depend on association with a licensed employing broker, so termination of the broker's license leaves those salespersons unable to practice. They must transfer their licenses to another licensed broker before resuming brokerage activity.

Question 41Agency, Fiduciary Duties, and Consumer Disclosure

A listing agent learns that the seller would accept an offer $20,000 below the listed price. What is the agent's obligation regarding that information?

  1. Keep it confidential until the seller authorizes the agent to share it. Correct answer.
  2. Disclose it to buyers if the seller signs a waiver at the closing.
  3. Share it only after the home has been on the market for thirty days.
  4. Disclose it to any buyer who asks, because pricing is material to the purchase decision.

Explanation

The fiduciary duty of loyalty includes confidentiality about the client's bargaining position and private motivations. The agent may not use or reveal that information to benefit another party without the seller's permission.

Question 42Agency, Fiduciary Duties, and Consumer Disclosure

A New Jersey broker receives a $10,000 earnest money deposit on a pending sale. How must those funds be handled?

  1. Deposited into a trust or escrow account maintained for client funds. Correct answer.
  2. Held in the broker's personal savings account until the closing.
  3. Deposited into the broker's general business operating account.
  4. Given to the listing salesperson to hold until the closing date.

Explanation

Money held on behalf of clients must be placed in a designated trust or escrow account and accounted for separately. Commingling client funds with the broker's own money is prohibited.

Question 43Agency, Fiduciary Duties, and Consumer Disclosure

Under New Jersey's approach to sex offender registry information, what is a licensee's obligation when working with a buyer?

  1. Disclose the addresses of nearby registered offenders as a material fact.
  2. Make no representation about the registry and refer consumers to the State Police for registry information. Correct answer.
  3. Provide the buyer with a written list of registered offenders living near the property.
  4. Verify offender locations with the municipal police before showing a home.

Explanation

Registry information is available to the public through the New Jersey State Police, and licensees are not expected to investigate or represent its contents. The proper practice is to direct consumers to the registry so they can research on their own.

Question 44Agency, Fiduciary Duties, and Consumer Disclosure

Which statement correctly describes the Seller's Property Condition Disclosure Statement used in New Jersey residential sales?

  1. It is required only when the buyer obtains FHA financing.
  2. It is completed by the seller based on actual knowledge and is not a guarantee of condition. Correct answer.
  3. It is prepared by the listing broker after inspecting the property.
  4. It is a warranty that the home will remain free of defects for one year after closing.

Explanation

The disclosure form records what the seller actually knows about the property's condition. It is not a warranty, and the broker does not complete it on the seller's behalf.

Question 45Agency, Fiduciary Duties, and Consumer Disclosure

The standard form contract of sale used in New Jersey contains an attorney review clause. What does that clause provide?

  1. Either party may cancel for any reason within seven days of signing.
  2. The contract is subject to attorney review, and an attorney may disapprove it within three business days. Correct answer.
  3. Attorney review is waived automatically if no lawyer is named in the contract.
  4. The buyer has ten days to obtain mortgage approval before review begins.

Explanation

The attorney review clause gives the parties' attorneys a three-business-day window to disapprove or modify the contract. If neither attorney acts, the contract becomes binding at the end of that period.

Question 46Agency, Fiduciary Duties, and Consumer Disclosure

A licensee is marketing a home that was built in 1972. What does federal law require of the seller and the licensee?

  1. Disclose known lead-based paint hazards and give the buyer the EPA pamphlet plus a ten-day opportunity to test. Correct answer.
  2. Remove all lead-based paint from the home before title is transferred.
  3. Obtain a municipal certificate of occupancy before the buyer's inspection.
  4. Provide a certified laboratory report showing no lead in the water supply.

Explanation

For pre-1978 housing, the federal lead disclosure rule requires disclosure of known lead-based paint hazards, delivery of the EPA pamphlet, and a ten-day (or agreed) period for the buyer to test.

Question 47Agency, Fiduciary Duties, and Consumer Disclosure

When must the New Jersey Consumer Information Statement on agency relationships be given to a consumer?

  1. At the closing, together with the settlement statement.
  2. At the first substantive contact, before confidential information is exchanged. Correct answer.
  3. Within thirty days after the first showing of a property.
  4. Only when a written buyer brokerage agreement is signed.

Explanation

New Jersey requires the agency relationship information statement to be delivered at the first substantive contact so the consumer understands who represents whom before sharing confidences.

Question 48Agency, Fiduciary Duties, and Consumer Disclosure

Which event ends a listing agency relationship by the terms of the agreement itself?

  1. The buyer obtains mortgage preapproval.
  2. The expiration date stated in the listing agreement passes. Correct answer.
  3. The seller reduces the asking price.
  4. The listing agent takes a two-week vacation.

Explanation

An agency created for a fixed term terminates automatically when that term expires. Other events, such as completion of the purpose or mutual agreement, can also end the relationship.

Question 49Agency, Fiduciary Duties, and Consumer Disclosure

A broker wishes to act as a dual agent in a transaction. What must occur first?

  1. Written informed consent from both the buyer and the seller before the dual role begins. Correct answer.
  2. A note in the MLS listing that discloses the dual role.
  3. Approval from the New Jersey Real Estate Commission for each transaction.
  4. Consent from the seller alone, because the seller pays the commission.

Explanation

Dual agency requires the informed written consent of both parties, since the broker cannot give undivided loyalty to either one. Consent must be obtained before the dual role is undertaken.

Question 50Agency, Fiduciary Duties, and Consumer Disclosure

How is designated agency typically structured within a New Jersey brokerage?

  1. The seller's agent becomes a dual agent automatically when a buyer client appears.
  2. The buyer's licensee reports to the seller's broker as a subagent of the seller.
  3. The broker represents the transaction itself and neither party has an agent.
  4. Two licensees affiliated with the same broker are assigned to represent the seller and the buyer separately, with written consent. Correct answer.

Explanation

In designated agency, the broker assigns different affiliated licensees to represent each side, and the client consents in writing. Each designated licensee then owes full fiduciary duties to that licensee's own client.