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Appraisal Board Approves New BPO Advisory

The New Jersey Board of Real Estate Appraisers (Appraisal Board) approved an advisory opinion declaring that Broker Price Opinions (BPOs) are appraisals and therefore are subject to the jurisdiction of the Appraisal Board. Consequently, it is the view of the Appraisal Board that the preparation of a BPO by anyone other than a licensed real estate appraiser may be guilty of the unlicensed practice of appraising and may be subject to significant fines.
Click here for to Read the Full Opinion

23 Federal Laws That Apply to Real Estate Sales

Residential real estate has become more complex over the years as a result of laws enacted to protect consumers' welfare. REALTOR® Magazine created a list of laws to provide agents with an idea of how much of their actions fall under federal regulations.

Click here for the List of 23 Federal Laws

ADA Compliance Workshop

Click here to learn how you can be ADA compliant



If you have been arrested for any reason (does not have to be real estate related) the law requires you to notify the NJ REC. You have 30 days from the date of your arrest to notify the Commission.

Who’s the Client?

When you list a property, the seller is your client. The seller must be informed of ALL written offers up until the property closes, even if the seller has requested permission for a short sale from his bank. Your fiduciary duty is to present the offer to the seller. The seller makes the decision whether to present subsequent offers to the bank. Supervision of agents.

Best Practices

Ask your licensees to give you the names of their web and blogging sites: Linked In, Active Rain, Twitter, Facebook, for example. Periodically visit these sites to monitor their activity. Google the street addresses of your office listings. Check the different websites the listings appear on for compliance with state advertising rules.


Following Up

As a real estate licensee, it is your job to see that the contingencies of the contract are met. Note the contingency dates in your calendar and call your client’s attorney and/or the other agent to be sure the parties have performed.

Initial Deposits

Generally, when an offer is written the buyers show intent by offering an initial deposit and promising to deliver an additional deposit at a later time.
The NJAR pre-printed contracts read (in part): 2. Manner of payment: A deposit paid by buyer on signing this agreement to ___ Listing Broker ___ Participating Broker, by ___ cash or ___ check for which this is a receipt $ ___________.
Two actions are appropriate:
1. A copy of the check or receipt should accompany the presentation of the offer.
2. The original check, written out to the broker’s trust account, must be deposited into the broker’s escrow account within 5 days. Failure to do so is considered comingling. Holding escrow checks until an offer is fully negotiated is not acceptable.
The date on the check should be the date the offer was written, not the date the offer was accepted. If the offer is accepted, sending a substitute check to the seller’s attorney’s trust account is also not acceptable unless all parties agree in writing. If the buyer would like to write the initial deposit check to the seller’s attorney’s trust account, call and obtain that information from the listing agent before the offer is written. Deliver the check and the offer to the seller’s agent who must deliver it to the seller’s attorney so it can be deposited.

Escrow Accounts

Brokerage escrow accounts must be reconciled quarterly. The REC recommends that it be done monthly. Reminder: escrow funds are only to be released upon closing or on written agreement of both the seller and the buyer (or their legal representatives). Escrow is other people’s money and should never be used for business or personal expenses.

Bulk Sales

Under the Bulk Sales Act, a person who purchases residential property from a partnership, LLC or other corporation or any other business entity is subject to the Bulk Sales Act and will be liable for NJ taxes owed by the seller UNLESS the purchaser files a Notification of Sale with the NJ Division of Taxation at least 10 business days before the closing. If the seller of the residential property is an individual, trust or estate, the buyer is not required to file the form. Buyers who buy Bank owned properties should also file the form.

Contract Purchasers

If you have a property listed, and it is sold to an investor who promptly realists it for sale with you, you now have fiduciary duties to two sellers. Get it in writing that you no longer represent the original seller and that all subsequent offers will be given only to the contract purchaser.

MAP Rule

 This rule holds real estate agents who offer or give mortgage ‘rate sheets’ describing specific mortgage products to prospective buyers liable for any misrepresentation in those materials. The agent can also be held liable under the Consumer Fraud Act for any misrepresentation of the financial products.

Best practices:

1. Give consumers three business cards of mortgage representatives, not their rate sheets.

2. All rate sheets should have disclaimers written on them but take care; most disclaimers are written to protect the loan officer, not the real estate agent.

3. Have the mortgage rep attend the open house and hand the rate sheet to the consumer.

Seller Property Disclosures

Completed Seller Property Disclosure Forms should be given to buyers BEFORE they make an offer on a property. To make it easier for prospective buyers to receive this information prior to making their offer, listing agents should post the completed form on the NJMLS as an associated document, email it to the selling agent, or leave a copy in an obvious location in the home.

Affiliated Business Arrangements

Agents are often encouraged to refer business to other businesses owned wholly or in part by the broker-owner. RESPA has certain rules relating to Affiliated Business Arrangements between real estate brokerage firms and settlement service providers, e.g. a mortgage or title company, where there is a 1% or more common ownership between the companies. A brokerage may refer to settlement services to business affiliates (settlement service providers), if all of the following three conditions are met:

  1. Written disclosure that there is common ownership is given to the consumer at or before the time each referral is made
  2. The consumer is not required to use any specific provider of settlement services and
  3. The only thing of value other than the fee for service that is received from the arrangement is a return on the ownership interest.

For more information please go to:

Furniture Rental Company referral fees are not permitted.

This type of fee is clearly not allowed by the New Jersey Real Estate License Act. Here are excerpts from the applicable statutes and regulations (underlines were added);

Statute and Rules, Administrative Codes - Subchapter 7.  Prohibited Activities. - 11:5 – 7.2

 (a) Any real estate licensee who solicits or accept any fees, kickback, compensation or thing of value, merely for referring a customer or client to a lender, mortgage broker, or other provider of related services, shall be subject to sanctions by the Commission for engaging in conduct demonstrating unworthiness, bad faith and dishonesty.  Any compensation received by a real estate licensee, pursuant to N.J.A.C. 11:5 – 7.1 (e), for services in related transactions must be for services actually performed by the licensee beyond mere referral. 

11:5 – 7.1 – (e) A licensee who represents any party to a sale or rental transaction may receive compensation from either party for providing actual services in related transactions, provided that the licensee discloses the related services, sources and amounts of compensation in writing to the parties to the sale or rental transaction.  Where the related services to be provided by the licensee are mortgage financing services provided to the buyer for compensation or reimbursement, the written disclosures must comply with N.J.A.C. 11:5 – 6.7.  The broker shall maintain records of such related transactions, including all required written disclosures, which records shall be available to the Commission for inspection pursuant to N.J.A.C 11:5 – 5.5.

(b) Real estate brokers are prohibited from offering incentives to the salespersons or broker-salespersons licensed under them for merely referring clients or customers to a particular lender, mortgage broker, or other provider of related services.  Any compensation paid by a real estate broker to a salesperson for services in transactions related to a sale or rental transaction must be for services actually performed by the salesperson beyond mere referral.  For example, a real estate broker who provides in-house mortgage services may compensate a salesperson licensed with that broker who performs actual mortgage services.  However, the broker is prohibited from offering bonuses or any extra consideration of any kind to salespersons for merely referring buyers to the in-house mortgage service or any particular lender or mortgage broker.  For example, a real estate broker shall not offer to pay a salesperson a higher commission rate on a real estate transaction because the mortgage is placed the in-house mortgage service or affiliated lender.  A broker shall not award prizes or bonuses to salespersons based upon the number of customer referrals made to the in-house mortgage service or to a particular lender.

New Rule May Affect REALTORS® Doing Short Sales

The FTC has issued a rule, called MARS “Mortgage Assistance Relief Services” that is designed to protect homeowners from scams. Essentially, it bans businesses that market and provide “mortgage relief services” from charging up front fees. It also requires that the provider give the consumer certain notices in four circumstances:

  1. Advertising short sale negotiation services or expertise
  2. Communicating with a consumer about a possible short sale prior to the listing agreement being signed
  3. Negotiating a short sale on behalf of a consumer
  4. Arranging a short sale negotiation for a consumer (referring a consumer to a short sale negotiator).

REALTORS® are advised not to charge any up front fees for Short Sales and to use mandated disclosures in all advertising for short sale sellers. If you offer short sale services, please read NAR's "FTC MARS Rule Q&A" (login required).

NAR has been in contact with the FTC to see if REALTORS® can be exempt from these disclosure requirements but as of now, the rule does require REALTORS® to make these disclosures. Watch for news on this important issue at

RESPA-related Issues

Home Warranties can continue to be sold by REALTORS®, but REALTORS® cannot accept a fee for each warranty sold. RESPA is clear, REALTORS® cannot accept a fee for just referring a service. The only exception to that rule is a real estate broker to real estate broker referral. However, a REALTOR® can be paid for work done on behalf of the Home Warranty company: inspecting items covered by the warranty, recording serial numbers and documenting condition (includes taking photos).

A Home Warranty company can pay a real estate company a flat fee for marketing, e.g. a banner ad on the real estate company’s website.

Best practice: Consult an attorney before entering into or accepting any fees from a vendor such as a Home Warranty Company.

Stick to What You Know

Your job is to assist others sell or buy property. Don’t attempt to answer questions or offer opinions that are outside the scope of your services. Write a letter, email or text your clients and advise them to contact qualified experts. If you refer an “expert,” be sure you check that they have any appropriate licenses, e.g. a contractor, plumber or debt counseling advisor.

Get Your Broker Involved Sooner Rather than Later

When problems arise, speak to your Broker. Don’t assume you know what’s appropriate or the right approach to solve the problem. Don’t try to handle unhappy or dissatisfied clients alone. Your Broker may choose to try to resolve the situation or may decide to immediately refer the situation to the company Errors & Omissions insurer.

If you wait to report the issue and the client or customer decides to sue, the insurer may deny coverage on the claim based on the common requirement that all potential claims must be reported “promptly”.

Short Sale Fraud

In Connecticut, a listing agent received an offer to purchase a property for a price of $132,500. Subsequently, the listing agent and another person (also an agent) submitted an offer to the bank for $102,375 from a corporation (an entity that the listing agent owned). The bank agreed to a short sale of the property for the lower price, and released its mortgages on the property. The property was sold to the company.

The company then sold the property for $132,500 to the original bidder on the property, and the listing agent and her partner retained the difference between the two sale prices.

The listing agent faces up to 30 years in prison. For a full description of the case, click here

If you suspect that you represent a buyer involved in a fraudulent transaction such as this, speak to your broker immediately. Report your suspicions to the police or the FBI.

Choose Your Customers and Clients Carefully

In these difficult economic times, some buyers and sellers are angry. Don’t be a convenient target. If you meet a very difficult prospective seller or buyer, don’t take the listing or show properties. If a buyer or seller has unrealistic expectations, release the listing unconditionally or cancel the buyer agency agreement.

Don't Come Up Short on Short Sales

Licensees should never advise a homeowner to walk away from or stop making payments on his or her mortgage.

This type of advice should only be given by an attorney. Homeowners should get information about the benefits and risks of all options (e.g. short sale, foreclosure, loan modification, deed in lieu, etc.) when under water on their mortgage payments. A short sale is only one option. Recommend, in writing, the consumer discuss all their options with an attorney and financial advisor.

Answering the Tough Questions

On your initial meeting with a buyer, direct them, in writing, to the Consumer Resource Tab on our website where they can find up-to-date information on the neighborhoods and schools in your market area; including the contact info for town, state and federal resources and officials. Valuable resources about Fair Housing can be found by clicking on the link to

Create an Electronic "Paper Trail"

We all know that an agent should document any conversation he/she has with a buyer or seller or their agent. Next time you have a conversation, send a follow-up email which will stamp your communication with the time and date of the conversation. For example: “Just to reiterate some of the issues we discussed today..." Keep copies of those emails in the transaction file.

If your client prefers text messaging, you can document those, too. Send a copy of the text message to your email account and print out the message. Keep copies in the transaction file. For instructions on how to email a text message, Google "how to email text messages" with your phone’s make (e.g. Blackberry Storm).

Inform Your Buyer of OPRA

Agents should suggest, in writing, that buyers who wish to make an offer on a property request the property’s records from the municipality in which the property is located. These records are open to inspection through the Open Public Records Act (OPRA). The records would show any permits that were or were not granted, any inspections that were done and other information that may be important to a buyer. Since you have no way to know what may or may not be important to a buyer and what records will be offered by a particular town, make sure the buyer does this personally. To visit the OPRA website, click here.

Use the NJ Dept. of Consumer Affairs Seller Property Disclosure

The only way an agent can protect themselves from the treble damages of Consumer Fraud is to use New Jersey Department of Consumer Affairs Seller Property Disclosure (NJDCASPD). Remember, you must visually inspect any property you list or sell and then compare it to what the seller wrote. If there are differences between what you see and what the seller wrote, attach an addendum with your observations and have the buyer sign the addendum at the same time he or she signs the NJDCASPD. The Seller Property Disclosure can be found at NJAR®'s website here.

Protect Your Seller's Floors and Yourself

If your seller requests that those viewing their home wear disposable shoe covers to protect their carpets and flooring, make sure the seller purchases and provides the disposable shoe covers. 


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