Consumer Information Statement on New Jersey Real Estate Relationships
In New Jersey, real
estate licensees are required to disclose how they intend to work with
buyers and sellers in a real estate transaction. (In rental transactions,
the terms "buyers" and "sellers" should read as "tenants" and "landlords,"
respectively.)
1. AS A SELLER'S AGENT OR SUBAGENT, I, AS A LICENSEE, REPRESENT THE SELLER
AND ALL MATERIAL INFORMATION SUPPLIED TO ME BY THE BUYER WILL BE TOLD
TO THE SELLER.
2. AS A BUYER'S AGENT, I, AS A LICENSEE, REPRESENT THE BUYER AND ALL MATERIAL
INFORMATION SUPPLIED TO ME BY THE SELLER WILL BE TOLD TO THE BUYER.
3. AS A DISCLOSED DUAL AGENT, I, AS A LICENSEE, REPRESENT BOTH PARTIES,
HOWEVER, I MAY NOT, WITHOUT EXPRESS PERMISSION, DISCLOSE THAT THE SELLER
WILL ACCEPT A PRICE LESS THAN THE LISTING PRICE OR THAT THE BUYER WILL
PAY A PRICE GREATER THAN THE OFFERED PRICE.
4. AS A TRANSACTION BROKER, I, AS A LICENSEE, DO NOT REPRESENT EITHER
THE BUYER OR THE SELLER. ALL INFORMATION I ACQUIRE FROM ONE PARTY MAY
BE TOLD TO THE OTHER PARTY.
Before you disclose confidential information to a real estate licensee
regarding a real estate transaction, you should understand what type of
business relationship you have with that licensee. There are four business
relationships: (1) seller's agent; (2) buyer's agent; (3) disclosed dual
agent; and (4) transaction broker. Each of these relationships imposes
certain legal duties and responsibilities on the licensee as well as on
the seller or buyer represented. These four relationships are defined
in greater detail below. Please read carefully before making your choice.
SELLER'S AGENT
A seller's agent WORKS ONLY FOR THE SELLER and has legal obligations,
called fiduciary duties, to the seller. These include reasonable care,
undivided loyalty, confidentiality and full disclosure. Seller's agents
often work with buyers, but do not represent the buyer's. However, in
working with buyers a seller's agent must act honestly. In dealing with
both parties, a seller's agent may not make any misrepresentations to
either party on matters material to the transaction, such as the buyer's
financial ability to pay, and must disclose defects of a material nature
affecting the physical condition of the property which a reasonable inspection
by the licensee would disclose.
Seller's agents include all persons licensed with the brokerage firm which
has been authorized through a listing agreement to work as the seller's
agent. In addition, other brokerage firms may accept an offer to work
with the listing broker's firm as the seller's agents. In such cases,
those firms and all persons licensed with such firms are called "sub-agents."
Sellers who do not desire to have their property marketed through subªagents
should so inform the seller's agent.
BUYER'S AGENT
A buyer's agent WORKS ONLY FOR THE BUYER. A buyer's agent has fiduciary
duties to the buyer which include reasonable care, undivided loyalty,
confidentiality and full disclosure. However, in dealing with sellers
a buyer's agent must act honestly. In dealing with both parties, a buyer's
agent may not make any misrepresentations on matters material to the transaction,
such as the buyer's financial ability to pay, and must disclose defects
of a material nature affecting the physical condition of the property
which a reasonable inspection by the licensee would disclose.
A buyer wishing to be represented by a buyer's agent is advised to enter
into a separate written buyer agency contract with the brokerage firm
which is to work as their agent.
DISCLOSED DUAL AGENT
A disclosed dual agent WORKS FOR BOTH THE BUYER AND SELLER. To work as
a dual agent, a firm must first obtain the informed written consent
of the buyer and seller. Therefore, before acting as a disclosed dual
agent, brokerage firms must make written disclosure to both parties. Disclosed
dual agency is most likely to occur when a licensee with a real estate
firm working as a buyer's agent shows the buyer properties owned by sellers
for whom that firm is also working as a seller's agent or sub-agent.
A real estate licensee working as a disclosed dual agent must carefully
explain to each party that, in addition to working as their agent, their
firm will also work as the agent for the other party. They must also explain
what effect their working as a disclosed dual agent will have on the fiduciary
duties their firm owes to the buyer and to the seller. When working as
a disclosed dual agent, a brokerage firm must have the express permission
of a party prior to disclosing confidential information to the other party.
Such information includes the highest price a buyer can afford to pay
and the lowest price the seller will accept and the parties' motivation
to buy and sell. Remember, a brokerage firm acting as a disclosed dual
agent will not be able to put one party's interests ahead of those of
the other party and cannot advise or counsel either party on how to gain
an advantage at the expense of the other party on the basis of confidential
information obtained from or about the other party.
If you decide to enter into an agency relationship with a firm which is
to work as a disclosed dual agent, you are advised to sign a written agreement
with that firm.
TRANSACTION BROKER
The New Jersey Real Estate Licensing Law does not require licensees to
work in the capacity of an "agent' when providing brokerage services.
A transaction broker works with a buyer or a seller or both in the same
sales transaction without representing anyone. A TRANSACTION BROKER DOES
NOT PROMOTE THE INTERESTS OF ONE PARTY OVER THOSE OF THE OTHER PARTY TO
THE TRANSACTION. Licensees with such a firm would be required to treat
all parties honestly and to act in a competent manner, but they would
not be required to keep confidential any information. A transaction broker
can locate qualified buyers for a seller or suitable properties for a
buyer. They can then work with both parties in an effort to arrive at
an agreement on the sale or rental of real estate and perform tasks to
facilitate the closing of a transaction.
A transaction broker primarily serves as a manager of the transaction,
communicating information between the parties to assist them in arriving
at a mutually acceptable agreement and in closing the transaction, but
cannot advise or counsel either party on how to gain an advantage at the
expense of the other party. Owners considering working with transaction
brokers are advised to sign a written agreement with that firm which clearly
states what services that firm will perform and how it will be paid. In
addition, any transaction brokerage agreement with a seller or landlord
should specifically state whether a notice on the property to be rented
or sold will or will not be circulated in any or all Multiple Listing
System(s) of which that firm is a member.
YOU MAY OBTAIN LEGAL ADVISE ABOUT THESE BUSINESS RELATIONSHIPS FROM
YOUR OWN LAWYER.
THIS STATEMENT IS NOT A CONTRACT AND IS PROVIDED FOR INFORMATIONAL
PURPOSES ONLY.
DECLARATION OF BUSINESS RELATIONSHIP
I, ________________________________
(name of licensee)
as an authorized representative of _____________________________________,
intend, as of this time, to work with you as a:
(indicate one of the following)
o seller's agent o buyer's agent
o seller's agent and disclosed dual agent if the opportunity arises.
o buyer's agent and disclosed dual agent if the opportunity arises.
o transaction broker
DATE_______________________________
