Also see: Professions and Occupations 45:15 — Real Estate Brokers, Broker-Salespersons, and Salespersons
SUBCHAPTER 1. ORGANIZATIONAL RULES
§ 11:5-1.1 Commission responsibilities
The Real Estate Commission is responsible for the supervision and regulation of the education, examination and licensing of real estate brokers, broker-salespersons, salespersons, and referral agents; the regulation of the sale or lease of out-of-State properties to New Jersey residents through promotional activities in New Jersey; the investigation and adjudication of disciplinary actions against licensees; and the administration of the Real Estate Guaranty Fund.
§ 11:5-1.2 Organization of the Commission
The organizational chart of the Division of the Real Estate Commission is as follows:
§ 11:5-1.3 Functions of the Commission
(a) The Commission is comprised of four sections whose functions are as follows:
1. The Investigations Section is responsible for investigating the qualifications of applicants for licensure, and for investigating complaints against licensed brokers, broker-salespersons, salespersons or referral agents or individuals who have allegedly engaged in the business of a real estate broker, salesperson or referral agent without being licensed to do so.
2. The Real Estate Education Section is responsible for reviewing the qualifications of real estate school and instructor applicants and for regulating their activities as such through the Education Subsection.
3. The Bureau of Subdivided Land Sales Control is responsible for enforcing the provisions of the New Jersey Real Estate Sales Full Disclosure Act, N.J.S.A. 45:15-16.27 et seq. Its duties include, but are not limited to, reviewing applications for the registration of new projects, conducting inspections of conditionally registered projects, and reviewing applications for the renewal of projects.
4. The Hearings and Regulatory Affairs Section is responsible for processing the rulemaking activity of the Commission, the scheduling and processing of contested cases, the prosecution of certain contested matters, and other functions.
§ 11:5-1.4 Information available to the public
With the exception of the records designated as non-public in N.J.A.C. 11:5-1.5(g), the public may obtain information or make submissions or requests concerning any Commission functions by contacting the Real Estate Commission, Department of Banking and Insurance, PO Box 328, Trenton, New Jersey 08625-0328.
§ 11:5-1.5 Commission records open to public inspection; investigative files not open to the public
(a) The New Jersey Real Estate Commission makes, maintains and keeps records as listed in (b) through (g) below.
(b) Current and computerized public licensing records are available at the Commission's office for inspection and copying during normal business hours upon sufficient notice to the Commission staff. The Commission staff may require several weeks notice to locate records other than computerized records. Except as otherwise noted in this section, records are maintained for a minimum of three years. Older records may be unavailable. Copies of records can be purchased from the Commission at the fees established in the Right to Know Law, N.J.S.A. 47:1A-2.
(c) Requests for certified copies of the Commission's public licensing records (or for a certificate of the absence of a public record) shall be submitted in writing and must specify which records are requested and the time period covered by the request. The Commission staff requires at least 10 working days to provide certified copies of public records.
(d) The following records are maintained pursuant to the Real Estate Licensing Act:
1. Certifications of license history and status based upon computerized licensing records;
2. Real estate broker, broker-salesperson, salesperson, referral agent, school and instructor license applications, and materials submitted therewith to obtain, transfer, reinstate or renew such licenses, and the final disposition of such applications. However, criminal history information obtained by the Commission pursuant to N.J.A.C. 11:5-3.3 and personal data on a licensee such as home address, home telephone number and date of birth are considered confidential;
3. Real Estate Commission meeting minutes;
4. Orders to Show Cause and complaints issued by the Attorney General's office charging that a licensee or an unlicensed person has violated provisions of the Real Estate License Act or the Commission's administrative rules; documents accepted into the agency record in any such proceeding; and the final disposition of such proceedings including settlements; and
5. Notices, proposals and other records concerning rulemaking required to be kept or distributed to the public by the Commission pursuant to the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq. and N.J.A.C. 1:30-3 and 4 et seq. Complete records of unadopted proposals are available for one year after publication of the proposal. Complete records of adopted rules are available for three years after each rule's effective date.
(e) The following records are maintained by the Bureau of Subdivided Land Sales Control, pursuant to the Real Estate Full Disclosure Act, N.J.S.A. 45:15-16.27 et seq.:
1. Statements of record and additions or corrections thereto filed with the Bureau pursuant to N.J.S.A. 45:15-16.33, 16.36, 16.39 and 16.41(a);
2. Annual reports submitted by a subdivider pursuant to N.J.S.A. 45:15-16.40;
3. Public offering statements and amended public offering statements prepared pursuant to N.J.S.A. 45:15-16.38;
4. Orders to Show Cause and other pleadings charging violations of N.J.S.A. 45:15-16.27 et seq. and the final disposition of such orders, including Orders to Cease and Desist and/or imposing penalties or sanctions; documents accepted into the agency record in any such proceedings; and
5. Applications for exemption of a subdivision filed with the Bureau pursuant to N.J.S.A. 45:15-16.32(c) and N.J.A.C. 11:5-9.18 and the final disposition of any such exemption application.
(f) The following records are maintained pursuant to the Real Estate Guaranty Fund Act, N.J.S.A. 45:15-34 et seq.:
1. Court orders for payment from the Real Estate Guaranty Fund; and
2. Pleadings served upon the Commissioner of Insurance or any duly authorized agent or employee of the Department of Insurance pursuant to N.J.S.A. 45:15-39.
(g) The following licensee records are nonpublic in accordance with N.J.S.A. 47:1A-1 et seq.:
1. Criminal complaints, indictments, judgments of conviction and other separate documents submitted in connection with a license application concerning whether an applicant is disqualified by reason of indictment for or conviction of a crime;
2. Criminal history records obtained as the result of any criminal history check;
3. Petitions or discharges in bankruptcy, complaints, orders or other pleadings in actions for assignment to creditors and other separate documents submitted in connection with a license application concerning whether the applicant is disqualified by reason of unworthiness;
4. Copies of orders of suspension or revocation issued by professional or occupational licensing authorities, and other separate documents submitted in connection with a license application concerning whether the applicant is disqualified from licensure;
5. Records concerning the medical disability of any licensee;
6. Investigative files in any matter pending investigation, or in any completed investigation in which no formal disciplinary action was taken;
7. Personal data on a licensee such as home address, home telephone number and date of birth;
8. The Social Security numbers of any applicants or licensees which were submitted to the Commission on a license application or otherwise obtained by the Commission; and
9. Purchaser information submitted pursuant to N.J.S.A. 45:15-16.38.
SUBCHAPTER 2. EDUCATION
§ 11:5-2.1 Educational requirements for salespersons, referral agents and brokers in making application for licensure examination
(a) All applicants for a salesperson's, referral agent's or broker's license shall present with their license application evidence of their satisfactory completion of a course of education in real estate subjects taught in accordance with N.J.S.A. 45:15-10.1 and as required by this section.
1. This requirement shall also apply to disabled veterans making application for licensure pursuant to N.J.S.A. 45:15-11. However, the Commission shall approve a program of studies in real estate completed by such a veteran offered by a provider other than a licensed school if the program consisted of at least 75 hours in the case of an applicant for a salesperson's or referral agent's license, or 225 hours in the case of an applicant for a broker's license and the program was offered by an accredited college or university for credit.
2. No person shall receive credit toward the fulfillment of the salesperson or referral agent prelicensure education requirement for attendance at a broker's prelicensure course and no person shall receive credit toward the fulfillment of the broker's prelicensure education requirements for attendance at a salesperson's or referral agent's prelicensure course.
(b) To qualify to challenge the examination for licensure as a real estate salesperson or referral agent, a candidate must first successfully complete a course of study in real estate at a school licensed by the Commission pursuant to N.J.S.A. 45:15-10.4 consisting of a minimum of 75 hours as specified in (f) below. To qualify to challenge the real estate broker's license exam, a candidate must first successfully complete courses of study in real estate consisting of a minimum of 150 hours as specified in (g) below, offered by a licensed school or, with respect to those certain courses specified in (g)5 below, offered by some other Commission-approved provider.
(c) No person with the exception of qualified disabled veterans shall receive credit for satisfactory completion of the prescribed 150 hours of broker's courses unless that person was the holder of a salesperson's license at the time of enrollment in said course.
(d) The time allotted by any school for a final examination covering real estate subjects shall be applicable toward the minimum hours of course study. No more than five minutes of each course hour may be utilized for breaks in the actual classroom instruction being conducted at any given session of a pre-licensure course. During the time in which actual classroom instruction is conducted, in addition to covering the substantive material mandated by (f) and (g) below, instructors are to provide thorough instruction on the State license examination and license issuance procedures for salesperson, referral agent and broker license candidates, as applicable, and to perform all reasonably required administrative functions such as taking attendance and making announcements of general interest.
(e) The requirements that broker license candidates complete the general 90 hour broker prelicensure education course and that salesperson or referral agent license candidates complete the 75 hour salesperson prelicensure education course shall not apply to:
1. Applicants for licensure as a broker, salesperson or referral agent who have held a real estate broker's license issued by another state and who were actively engaged in the real estate brokerage business for three years or more immediately preceding the date of application;
2. Applicants for licensure as a broker who are attorneys at law admitted to the practice in the State of New Jersey and applicants for licensure as a salesperson or referral agent who are attorneys at law admitted to practice in New Jersey or in any other state at the time of making application;
3. Applicants for licensure as a salesperson or referral agent who have earned a college degree from any accredited institution of higher education, provided that:
i. The total number of college level classroom hours devoted to real estate and related subjects was 75 or more, and such courses were completed within three years of making application;
ii. The applicant received a bachelor or associate degree in real estate regardless of how long prior to their application for a waiver they received that degree; or
iii. The applicant satisfactorily completed 75 or more classroom hours of course work in real estate or related subjects, at least 45 hours of which consisted of instruction on real estate conducted as part of a post-graduate program and that such post-graduate studies were completed within three years of making application.
4. Applicants for licensure as a salesperson or referral agent who hold or held a real estate license issued by another state, provided that:
i. The applicant has satisfactorily completed a prelicensure course of real estate education at a proprietary school, college or university in that other state;
ii. The prelicensure course was sanctioned by the real estate licensing authority of that state;
iii. The total number of classroom hours included in the course was 75 or more;
iv. The applicant qualified for licensure in that state by examination; and
v. The applicant was actively licensed in that state within three years of applying for the waiver.
5. Applicants for licensure as a salesperson or referral agent who previously held a license as a New Jersey real estate broker and whose last license expired more than two but less than five years prior to making application.
(f) The salesperson's prelicensure course shall consist of 75 hours of education. Subject to (e) above, applicants for licensure as a salesperson or referral agent shall complete the 75 hour salesperson prelicensure course that shall include:
1. Property rights (9 hours);
2. Contracts and other property instruments (12 hours);
3. Leases and landlord-tenant relations (6 hours);
4. Mortgages and other liens (12 hours);
5. Business opportunity sales (2 hours);
6. The laws of agency (12 hours);
7. Appraising (2 hours);
8. License Act and regulations (9 hours);
9. Other state, Federal and municipal laws and regulations, including N.J.S.A. 17:16C-1 et seq., 39:1-1 et seq., 46:8-43 et seq. and 46:8C-1 et seq. as they pertain to the resale of mobile and manufactured housing units which bear or are required to bear motor vehicle titles (5 hours);
10. Salesperson duties and pitfalls in the real estate business (3 hours);
11. Quizzes and final examination (3 hours).
(g) The 150 hours of prelicensure education required of candidates for licensure as a broker or broker-salesperson by N.J.S.A. 45:15-10 shall be acquired as provided in this subsection. A 90 hour general broker's prelicensure course shall first be completed in accordance with the following syllabus and directives. Thereafter, two 30 hour broker courses as described in (g)5, 6 and 7 below shall be completed. All three courses, totaling 150 hours of instruction, must be successfully completed within a period of two years. Where the three courses are not so completed, a candidate must again successfully complete any previously taken course and all courses not previously taken within the two year time frame, and again fulfill the experience requirement established at N.J.S.A. 45:15-9 and N.J.A.C. 11:5-3.8 in order to qualify to challenge the broker license examination.
1. The 90 hour general broker's prelicensure course may be taught in blocks or modules of material. The maximum number of modules into which the course may be divided is 23, with their content corresponding to the 23 subject matter areas identified in the syllabus below. Schools offering courses in modules may include more than one subject matter in a given module. No student may commence a course which is offered in modules on a date other than the starting date of any module. No student shall be given credit for the successful completion of a 90 hour general broker's prelicensure course unless and until they have received instruction in all of the subject matter areas identified below for approximately the number of hours indicated, and passed a comprehensive final examination. The 90 hour general broker's prelicensure course shall be conducted in accordance with the following syllabus and directives. Substantive instruction shall be provided on the following topics for approximately the number of hours indicated:
i. Review license laws and regulations including provisions of the Real Estate Sales Full Disclosure Act and N.J.A.C. 11:5-9 (six hours);
ii. Listing contracts--sales and rentals (three hours);
iii. Sale contracts (three hours);
iv. Deeds and real property rights and interests including nature of ownership, legal description, chain of title, restrictions, consideration, various types, acknowledgments and recording, land and land elements, water rights (including riparian rights), state claims regarding tidelands estates and other interests, methods of ownership, dower and curtesy, wills and descent, adverse possession and fixtures (three hours);
v. Advanced financing techniques including qualification formulae, various types, typical prerequisites (insurance, flood insurance, if applicable, certificate of occupancy, etc.) and income tax ramifications (six hours);
vi. Liens, foreclosures and redemptions (one hour);
vii. Easements, restrictions, etc. (one hour);
viii. Condemnation (one hour);
ix. Zoning, including non-conforming uses, variances, subdivisions, planning, zoning issues raised by condominium construction or conversion and other types of real estate development (five hours);
x. Surveys (non-government type) and legal descriptions (one hour);
xi. Property taxes, assessment, re-valuations, assessment appeals and special appeals (three hours);
xii. Real estate valuation including techniques and distinctions between comparative market analyses and formal appraisals (three hours);
xiii. Settlement/closing procedures, RESPA forms (six hours);
xiv. Mathematics relative to real estate (six hours);
xv. Laws: Federal Fair Housing and the New Jersey Law Against Discrimination, New Jersey "Mount Laurel" requirements, RESPA, Truth in Lending, rent control, New Jersey Land Use Law, New Jersey's Truth in Renting Law, and the provisions in that law, in N.J.S.A. 17:16C-1 et seq., in N.J.S.A. 39:1-1 et seq. and in N.J.S.A. 46:8C-1 et seq. which pertain to the resale of mobile and manufactured housing units which bear or are required to bear motor vehicle titles (total three hours);
xvi. Business and management practices (total of six hours for (g)1xvi(1) through (6) below), including:
(1) Company structure including single ownership, partnership, corporate, requirements to establish, employees vs. independent contractors;
(2) Office management including bookkeeping and accounting relative to real estate, escrow responsibilities, company dollars, ledgers, records and computers;
(3) Personnel management including recruiting, hiring, training, supervising, compensation and termination;
(4) Advertising and promotions;
(5) Community involvement by the company, broker, salespersons and referral agents; and
(6) Insurance including errors and omissions, etc.
xvii. Principles of agency including ethics and legal liability, disclosure requirements and case studies (six hours);
xviii. Commercial and industrial real estate including small scale, large scale, leasing, financing, site analysis, advertising, remuneration, bulk sales, U.C.C., considerations in franchise transactions, E.C.R.A., BOCA Code, construction financing and other commercial construction concerns (three hours);
xix. Property management including responsibilities and information regarding repairs and maintenance, public relations, collection of rents, government regulations, business trends, personnel, recordkeeping, advertising, etc. (three hours);
xx. Residential real estate development including requirements of New Jersey's Planned Real Estate Development Act including time-sharing, the Home Owner's Warranty program and other concerns regarding single-family and condo/co-op development, conversion, marketing and financing (two hours);
xxi. Leases and landlord/tenant laws including Truth in Renting Law (four hours);
xxii. Real estate investments, syndications, REIT's, limited partnerships and S.E.C. licensing requirements (two hours); and
xxiii. Income tax considerations and ramifications of various real estate transactions (three hours).
2. Within the 90 hour general broker prelicensure course instruction will also be provided on the following topics for the hours indicated. These topics shall be taught in such a manner as to familiarize students with the basic elements of the listed topics and to impart to students an awareness of their scope and effect. The coverage on these topics will also inform students of the sources which can be contacted in order to obtain additional general information and/or specific data concerning the topics' applicability to or impact upon particular locations, and to educate students on their obligations and responsibilities as licensees to ascertain and disclose such information. The topics to be taught are:
i. Radon contamination, which instruction shall also include testing techniques, remediation techniques and the New Jersey DEP confidentiality statute (one hour);
ii. Ground water contamination, which instruction shall also include testing and remediation techniques (one hour);
iii. Problems posed by a property's proximity to solid waste disposal and/or toxic waste sites (one hour);
iv. Ground water percolation and private sewage disposal systems, which instruction shall also include testing methods (one hour);
v. Problems posed by lands officially designed as Wetlands, Pinelands, or within any other special classifications (one hour); and
vi. New Jersey's Coastal Areas Facilities Review Act (one hour).
3. Instructors conducting 90 hour general broker prelicensure courses shall provide general information to their students concerning the procedures through which students can arrange to sit for the State license examination and through which licenses are issued by the Commission, and shall give at least two spot quizzes and a comprehensive final exam on the material covered in the course (four hours).
4. In addition to classroom instruction and assigned reading from a general textbook, in the 90 hour broker course students shall also be assigned additional outside reading on various topics which shall include, but not be limited to, informational publications of the New Jersey Department of Environmental Protection on the various environmental topics covered, those sections of the New Jersey Law Against Discrimination which directly relate to the activities of real estate professionals, and other topics as directed by the New Jersey Real Estate Commission.
5. After having successfully completed the 90 hour broker course, all candidates for licensure as a broker or broker-salesperson must successfully complete a 30 hour prelicensure course on brokers' ethics and agency law and relationships, and a second 30 hour prelicensure course on office management and related topics.
i. All such agency/ethics and office management courses shall be taught by licensed instructors at licensed schools.
ii. All such agency/ethics courses shall be taught utilizing methods which maximize the use of case studies of recent Commission decisions in disciplinary actions, demonstration models and other non-lecture techniques.
iii. A final examination of not less than one hour shall be administered in all such courses on which students must receive a passing grade in order to be deemed to have successfully completed such courses.
iv. No school shall allow students to commence any 30 hour agency/ethics course or office management course at a time other than the starting date of such courses.
6. The 30 hours of instruction in the ethics/agency course shall be devoted to:
i. The fiduciary duties owed by agents to their principals;
ii. Disclosed and undisclosed dual agency;
iii. Conflicts of interest and self-dealing;
iv. The risks and benefits of sub-agency to the principal and the agent;
v. Restrictions on and disclosure requirements regarding acting for more than one party to a transaction, including those pertaining to licensees providing mortgage services;
vi. Disclosure requirements to non-principals;
vii. Issues raised by licensees involved in transactions as non-agents; and
viii. The obligations to properly qualify or pre-qualify prospective purchasers and related issues.
7. The 30 hours of instruction in the office management and related topics course shall be devoted to:
i. Office management requirements imposed upon supervising brokers of main and branch offices;
ii. Recordkeeping requirements, with particular emphasis upon and extensive coverage of escrow account records;
iii. The importance of adequate supervision and training of other licensees to assure their compliance with the license law and the rules of the Commission;
iv. Instruction on proper qualification and pre-qualification techniques, including requiring demonstrations by the students, and with emphasis upon the significance of training and oversight of other licensees;
v. Statutory and rule requirements pertaining to contracts, leases and listing agreements and to broker advertising;
vi. Closings;
vii. Environmental concerns; and
viii. Instruction on licensure requirements and procedures applicable to license applications, transfers, changes of broker address, branch offices, etc., and office closing requirements.
(h) A complete syllabus for the salesperson and broker courses shall be maintained at the offices of the Real Estate Commission and be open to the public for inspection.
(i) All course hours are suggested and may be modified at the discretion of the director of the approved school subject to written notice to and written approval by the Real Estate Commission.
§ 11:5-2.2 Licensed schools and instructors; requirements
(a) The following regulations are applicable to schools and instructors licensed to conduct prelicensure courses of education in real estate subjects pursuant to N.J.S.A. 45:15-10.4 and 10.5, to applicants for such licenses and, as applicable, to the conducting of continuing education courses by such schools and instructors pursuant to N.J.A.C. 11:5-12.1.
1. The original license term for pre-licensure course instructors and schools shall begin on July 1, 1994 and terminate on February 28, 1997. Thereafter, each two-year license term for school and instructor licenses shall run from March 1 to the last day of February of the second following year.
(b) The Commission shall require any school or instructor in making application for licensure to submit certain documents, statements and forms which shall form the basis for the Commission's judgment whether to grant a license. Where the Commission initially denies an application for a school or instructor license, it shall provide to the applicant notification in writing with reasons for such action. The applicant may appeal such a decision to the full Commission. N.J.A.C. 11:5-11.10 shall be applicable to all such appeals.
(c) Public adult education programs conducted under the auspices of a board of education in this State and any college or university accredited as such by the State Department of Higher Education shall be presumed to be qualified providers of real estate courses, so long as their real estate prelicensure education program is under the direction of a licensed instructor or other qualified individual who has affirmatively demonstrated to the Commission his or her good moral character and has met the other requirements of N.J.S.A. 45:15-10.9.
(d) Except as provided in (c) above, all other applicants for a license to operate a real estate prelicensure school, and in the case of a corporation, or limited or general partnership, the members, officers, directors and owners of a controlling interest thereof, shall demonstrate their good moral character, including the absence of any conviction for the crimes or other offenses specified under the provisions of N.J.S.A. 45:15-12.1. The Commission may make such further investigation and require such proof as it deems proper as to the honesty, trustworthiness, character and integrity of an applicant.
(e) When a school is to be conducted in the name of a corporation, a certified copy of its certificate of incorporation shall accompany the application for licensure. When a school is to be conducted under a trade name, whether a sole proprietorship, firm, general partnership, or limited partnership, a true copy of the certificate of trade name or articles of the general or limited partnership as filed in the office of the county clerk shall accompany the application. A school shall not use the designation of "College" or "University," as part of its name or in any other manner, unless it, in fact, meets the standards and qualifications of the State agency having jurisdiction and has been approved by that agency.
(f) Every school licensed by the Commission shall maintain a bona fide office open to the public during normal business hours for the purpose of assisting former and current students. Schools shall provide adequate space, seating, equipment and instructional materials for their students. The premises, equipment and facilities of the school shall comply with all local, city, county and State regulations, such as fire codes, building and sanitation codes. A certificate from a proper authority evidencing compliance with these requirements shall accompany an application for school licensure. The Commission may require proof of ownership or a copy of the lease if the facility is rented. Public adult education programs conducted under the auspices of a board of education in this State and any college or university accredited as such by the New Jersey Commission on Higher Education, the facilities of which have been approved by a State agency, shall be presumed to have met the requirements of this paragraph, so long as the real estate courses offered are held at the approved facility.
1. Any additional teaching locations must be licensed by the Commission and must comply with all the requirements applicable to licensed schools, their directors and instructors as set forth in the Act and this rule. School directors shall have oversight responsibility for these locations. All prelicensure courses conducted at such locations must be taught by licensed instructors or guest lecturers, pursuant to N.J.S.A. 45:15-10.5 and this rule. All continuing education courses conducted at such locations shall be taught by licensed instructors or by individuals approved as continuing education instructors pursuant to N.J.A.C. 11:5-12.10.
(g) All schools shall furnish to the Commission at the time of application for initial licensure the school policy and regulations pertaining to standards for satisfactory completion of the courses offered at the school and the issuance of a Certificate, conditions for dismissal of a student and conditions for reinstatement.
1. Any changes in school policy and regulations, as set forth in (g) above, from the information submitted with the original application for school licensure or as otherwise previously supplied, shall be disclosed to the Commission within 10 business days in writing, or on a form which the Commission prescribes.
(h) When a school fulfills all of the requirements for licensure, then a license shall be executed by the President of the Commission as attested by the Executive Director. School licensure shall be limited to the specific ownership and school locations identified on the license document(s).
(i) An individual seeking approval as a director of a licensed real estate school administered by a public adult education program or an accredited college or university who is not licensed as a real estate instructor may nevertheless qualify as the director of such a school, so long as he or she is at least 18 years of age; has a background of good moral character, including the absence of any conviction for the crimes or other offenses specified under the provisions of N.J.S.A. 45:15-12.1; and has fulfilled all of the education requirements imposed upon candidates for licensure as real estate instructors within two years of applying to the Commission for approval to be the director of such a school.
(j) In order to enable the Commission to confirm that courses offered by real estate schools include the required number of hours of instruction as prescribed in N.J.S.A. 45:15-10.1(a) and (b) and N.J.A.C. 11:5-2.1, every six months, each school director shall submit data on courses to be offered by their school in the forthcoming six month period, the starting and ending dates of the courses, the days and hours of class sessions and teaching locations. Such course information shall be provided on forms prescribed by the Commission and shall be retained as permanent records for not less than three years after submission.
(k) No person, other than a guest lecturer, shall teach real estate education courses, the attendance and successful completion of which shall constitute the fulfillment of the educational prerequisites for licensure established under N.J.S.A. 45:15-10.1, unless that person is licensed as an instructor pursuant to N.J.S.A. 45:15-10.5 and this section.
1. Each applicant for licensure as a real estate instructor shall be 18 years of age or older and shall have a background of good moral character, including the absence of any conviction for those certain crimes or other like offenses referred to in N.J.S.A. 45:15-12.1, subject to the applicant's ability to affirmatively demonstrate his or her rehabilitation from such conviction. In order to confirm the absence of any such conviction, the Commission shall require all non-attorney applicants to submit with their application for instructor licensure a New Jersey State Police Request for Criminal History Record Information Form and a certified check or money order in the amount established by the New Jersey State Police as the processing fee for such forms.
2. Each applicant for licensure must hold a bachelor's degree from an accredited college or university, except for the following applicants:
i. New Jersey licensed brokers who have been continuously licensed as such for the two years immediately preceding their application; and
ii. Licensed brokers from other states who have been continuously licensed as such for the three years immediately preceding their application.
3. Except as provided in (l)3i and ii below, all instructor license applicants must successfully complete all of the education requirements for licensure as a New Jersey broker established at N.J.A.C. 11:5-2.1, totaling 150 hours, not more than one year prior to passing the instructor license examination and applying for an instructor license.
i. New Jersey broker licensees who have been licensed as such for at least the two years immediately preceding the application and who have completed the full 150 hours of broker prelicensure courses established at N.J.A.C. 11:5-2.1 shall be deemed to have fulfilled the education requirements for licensure as an instructor.
ii. The following individuals will not be required to take the 90-hour general broker course but must successfully complete the two 30-hour broker prelicensure courses referred to in N.J.A.C. 11:5-2.1 in order to fulfill the instructor prelicensure education requirements:
(1) New Jersey broker licensees who have been licensed as such for the two years preceding their application for an instructor license but who have not previously completed those two courses; and
(2) Licensed brokers from other states who have been licensed as such for the three years immediately preceding application.
4. All instructor license applicants shall successfully complete an instructor license examination as established by the Commission. The examination shall extensively test the applicant's general real estate knowledge and shall include questions on teaching methods. Applicants are advised to engage in independent study and/or to take courses offered by independent providers on teaching methods.
5. Subsequent to passing the instructor license examination, as a prerequisite to being issued an instructor license, all applicants must attend a seminar conducted by or under the direction of the Commission staff covering Commission and licensing procedures. Such seminars shall not exceed one day in length.
(l) Regulations applicable to the renewal of school and instruction licenses are as follows:
1. Pursuant to N.J.S.A. 45:15-10.7, the fee for the renewal of a real estate instructor license for an additional two-year license term shall be $ 100.00. The fee for the renewal of a real estate school license shall be $ 400.00 for the first teaching location licensed and $ 200.00 for each additional licensed location to be renewed.
2. As a prerequisite for the renewal of an instructor license, an instructor must attend a Commission-sponsored seminar updating them on recent developments affecting the real estate brokerage business in New Jersey. Such seminars shall be offered on a minimum of two dates, each in a different location throughout the state, during the second year of each two-year license term. Persons initially licensed as instructors in the last six months of the two-year license term are exempt from this seminar attendance requirement for the first renewal of their instructor license.
3. In the event that any person to whom an instructor's license has been or shall have been issued shall fail to renew such license or obtain a new license for a period of two consecutive years or more after the expiration of the last license held, the Commission shall require such person to again fulfill all the qualifications for initial licensure as an instructor prior to issuance of a further instructor's license. This requirement shall not apply to a person reapplying for an instructor's license who was a licensed instructor and who allowed their license to expire due to subsequent employment in a public agency in this State with responsibility for dealing with matters relating to real estate if the person reapplying does so within one year of termination of that employment.
(m) For real estate prelicensure courses, the maximum teaching load per instructor or guest lecturer shall not exceed the ratio of one instructor or guest lecturer to 60 students per class. Each prelicensure course offered by a licensed school shall be under the supervision of an instructor licensed pursuant to N.J.S.A. 45:15-10.5 and N.J.A.C. 11:5-2.2(k). At least one licensed instructor shall be present in the classroom at all sessions. However, additional instructors or guest lecturers may be utilized for instruction so long as not more than 25 percent of the required instruction is done by guest lecturers. Broker prelicensure courses may be taught by up to three instructors, provided that one licensed instructor is designated as having the responsibility for the quality of instruction in that course. School directors shall maintain as a business record the names of any persons teaching as guest lecturers or as a group of instructors, with an indication of the designated supervising instructor.
(n) All tuition charged by a school shall be specified separately. If additional fees are to be charged for supplies, materials or books needed in course of work, they shall be itemized by the school prior to the payment of any fees and such items shall become the property of the student upon payment.
(o) The tuition and fees shall be specifically set forth in a student contract. The contract shall expressly state the school's policy regarding the return of unearned tuition when a student is dismissed or withdraws voluntarily or because of hardship.
(p) Any person who has a permanent disability or physical handicap which precludes that person from attending regular scheduled classes at a licensed school may request Commission approval to receive special instruction through a licensed school provided this request is supported by sworn statements of doctors or other persons having knowledge of the facts and provided a licensed school is willing to undertake such an agreement.
(q) No school shall, without the approval of the Commission, accept for enrollment as a transfer student any person concurrently enrolled with any other licensed school, unless upon the showing of good cause by said student to the Commission in writing.
(r) Any school that offers real estate continuing education courses shall maintain records of licensees' attendance at such courses as prescribed by N.J.A.C. 11:5-12.8. Every school shall permanently establish and maintain for each student enrolled in a prelicensure education course, complete, accurate and detailed records for a period of not less than three years after student matriculation. Such records shall be available for inspection during regular school hours by the Commission and shall contain the following information:
1. The total number of hours of instruction undertaken by the student;
2. Completed areas of study in real estate subjects prescribed by the Act and these regulations;
3. The student's attendance record; and
4. The names of all supervising instructors and guest lecturers.
(s) To satisfactorily complete any prelicensure course, a student must receive a passing grade and attend at least 80 percent of the class session hours required for the course by N.J.A.C. 11:5-2.1.
(t) Upon a student's satisfactory completion of a prelicensure course in real estate, the school shall issue to the student a Course Completion Certificate.
(u) The director of a real estate school shall be responsible for properly closing the school in compliance with this subsection.
1. No later than 10 days after the date on which the school ceases operations, the director shall return the school license, stamp, and all education certificates to the Commission and shall advise the Commission in writing of the date on which the school closed.
2. Within 30 days of the date on which the school ceases operations, the director shall submit an affidavit to the Commission certifying the following:
i. The location where student records are to be kept in compliance with (r) above and the name of the person who is to act as custodian of the records. The Commission shall be notified immediately of any change in such information. Records shall be kept for a period of not less than three years;
ii. The name of the owner or authorized representative of the school and the address where he or she may be contacted by the Commission;
iii. That the school license and school stamp have been returned to the Commission;
iv. That all students have been timely notified of the school closing, and any tuition received by the school for future courses or courses which were not completed has been returned to the students;
v. That all signs have been removed, and all advertisements and trade materials which refer to the school have been recalled;
vi. That the appropriate telephone services have been advised that the school is closed and that future telephone directories should not contain the name of the school; and
vii. That there are no outstanding fees, fines or penalties due and owing the Commission.
(v) No school shall use any name other than the name in which it is licensed for advertising or publicity purposes; nor shall any school advertise or imply that it is "recommended," "endorsed," "accredited," or "approved" by the Commission, but a licensed school may indicate that it has been "licensed" to conduct courses of education in real estate subjects to qualify applicants for licensure examination. No school shall make any warranties or guarantees that a student will pass the State license examination as a result of taking its course.
(w) (Reserved)
(x) The purpose of this subsection is to assure that there is a total separation between instructional activity conducted by licensed schools and any solicitation of students, which, as defined in (x)2ii below, means any recruiting efforts or brokerage activity directed at students. These provisions will be construed in a manner consistent with that regulatory objective. A violation of any of these provisions will be considered by the Commission as conduct demonstrating unworthiness for licensure, thereby subjecting the offending licensee to sanctions pursuant to N.J.S.A. 45:15-17(e) and (t). The Commission may also impose sanctions for a violation of these provisions pursuant to N.J.S.A. 45:15-10.11 and N.J.A.C. 11:5-12.15. Requirements regulating the involvement of licensed schools in soliciting students to become salespersons or referral agents for particular real estate brokers are as follows:
1. At the beginning of the first class session of all salesperson or referral agent prelicensure courses, all licensed schools shall distribute to all students in writing the following:
NOTICE TO: ALL SALESPERSON/REFERRAL AGENT COURSE STUDENTS
FROM: NEW JERSEY REAL ESTATE COMMISSION
RE: SOLICITATION OF SALESPERSON OR REFERRAL AGENT LICENSE CANDIDATES AT PRELICENSURE SCHOOLS
It is the policy of the New Jersey Real Estate Commission that there be a complete and total separation between the instruction you receive in your prelicensure education course and any efforts by brokers to recruit you to join their firm and/or to secure listings or offers on listed properties from you. This policy is reflected in Commission rule N.J.A.C. 11:5-2.2(x), which is reproduced in its entirety below.
If you are subjected to any recruitment efforts or are solicited for listings or offers during class time you should immediately notify your instructor, the Director of your school, and the New Jersey Real Estate Commission by writing to:
New Jersey Real Estate Commission
20 West State Street
PO Box 328
Trenton, New Jersey 08625-0328
Attn: Director, Real Estate Education
You are free to negotiate the terms of your employment with any broker. It is in your own best interest to talk to several prospective employing brokers before deciding which offers the best compensation plan, including post-termination payment provisions, and support package for you. You should also consider a prospective employer's professionalism and reputation for honesty and integrity when deciding which broker to work for.
In the event an enrolled student does not attend the first session of a salesperson's/referral agents course, a copy of the foregoing notice shall be delivered to that student at the commencement of the first class session which that student does attend.
2. For the purposes of this subsection, the following definitions shall apply:
i. The phrase "brokerage activity" means any activity which, pursuant to N.J.S.A. 45:15-1 and 45:15-3 would require the person engaging in such activity to hold a license as a real estate broker, real estate salesperson or referral agent;
ii. The term "solicit" means to recruit, invite or urge a student to seek employment with a particular broker, or to list, purchase or lease through, or to make referrals of listing, purchaser or lessee prospects to a particular broker; and
iii. The phrase "successful completion" means the receipt by the student of a Real Estate Commission school certificate form, duly signed by the instructor and the school director and stamped by the licensed school, certifying to the student's having completed and passed a prelicensure course conducted by that school.
3. With the exception of posting, distributing or displaying written materials as provided in (x)5 below, no school director, instructor, guest lecturer or staff member shall, prior to, nor within seven days following, a student's successful completion of a course, solicit a student to become a salesperson or referral agent for any particular real estate broker, nor shall any such person at any time accept any fee or other compensation for soliciting or recruiting students attending their school to apply for employment with a particular real estate broker.
4. No in-person or electronic solicitation of students to apply for employment as salespersons or referral agents with a particular real estate broker shall be permitted at a licensed school location during the prescribed class hours, nor in the breaks between such class hours. Such soliciting may be scheduled and held at licensed schools before, after or separate from the prescribed class hours, for example as a "career night" for students, provided that students are notified in writing in advance that their attendance at such recruitment functions is completely voluntary. However, no school director, instructor, guest lecturer or staff member shall engage in such activity at any time prior to, nor within seven days following, a student's successful completion of a course. Licensed instructors who are also licensed brokers, salespersons or referral agents may conduct prelicensure courses, and licensees who are not licensed instructors may appear as guest lecturers in such courses, so long as their presentations do not include the solicitation of students.
5. Any licensed school which posts, distributes or displays written material which solicits students to inquire about employment as a salesperson or referral agent with a particular broker must similarly post, distribute or display comparable written material from any real estate broker who requests the school to do so. However, no written material soliciting students to apply for employment with a particular real estate broker or any referral program shall be distributed during the prescribed class hours.
6. No licensed school may offer a reduced tuition rate to students where eligibility for the lower tuition is contingent upon a student making a commitment to becoming licensed through a particular broker subsequent to their qualifying for licensure and no licensed school may otherwise make or imply any promise or guarantee of employment to any student.
7. No oral statements or written text referring to a licensed school may be included or contained in any advertisement by a real estate licensee, and no advertisement of a licensed school may refer to the brokerage operation or include the telephone number of any licensee except that a school which is owned by a real estate licensee or franchisor may use that name in its school name.
i. Any advertisement by a school whose name includes the name of an affiliated licensed real estate broker or franchisor shall include the following disclosure legend:
Attending this school will not obligate you to become employed with our affiliated real estate broker(s), nor guarantee you an interview or a job with our affiliated real estate broker(s).
ii. No advertisement referring to a licensed school may be placed in the Help Wanted classified section of any newspaper or periodical.
8. No licensed school shall conduct prelicensure course sessions in any area which is part of a location which is licensed as a main or branch office of a real estate broker. For the purposes of this paragraph, an area will be considered as part of a licensed office location if any brokerage activity is conducted in that area at any time.
i. Where space on two or more floors in a multi-story building is licensed as a main or branch office location, it is permissible for prelicensure courses to be conducted in such a building, provided that the primary means of access to and egress from the floor where the courses are conducted does not require the students to walk through any area of the licensed office location wherein brokerage activity occurs.
ii. Where only one floor in a building is licensed as a main or branch office, it is permissible for prelicensure courses to be conducted in another area on that floor, provided that there is a separate entrance to that area either from the exterior of the building or from a common foyer or lobby and provided that the primary means of access to and egress from the area wherein the courses will be conducted does not require students to walk through a portion of the licensed premises wherein brokerage activity takes place.
iii. In all situations where prelicensure courses are conducted in the same building in which brokerage activity occurs under the authority of a broker in any way affiliated with the licensed school conducting such courses, the broker shall post signs either on the exterior of the building or in any common foyer or lobby, directing students either to the separate exterior entrance to the school location or to the primary route of access to the school location from such foyer or lobby.
9. No licensed school shall allow any person to solicit students enrolled in, or considering enrolling in, a prelicensure or continuing education course to list, purchase or lease any property; or for referrals of prospective sellers, purchasers or lessees at any time while such students are on school premises.
(y) Licensed schools providing continuing education courses shall comply with all requirements imposed upon the providers of such courses as set forth in N.J.A.C. 11:5-12.
§ 11:5-2.3 Applications processed by the Education Bureau of the Real Estate Commission
(a) Applications for the following licenses and approvals are processed by the Education Bureau of the Real Estate Commission:
1. Real Estate Instructor license;
2. Real Estate School license;
3. License for additional teaching location of a licensed real estate school;
4. Approval of Real Estate School Director;
5. Approval of experience report for broker license applicant;
6. Approval of real estate continuing education provider;
7. Approval of real estate continuing education instructor; and
8. Approval of real estate continuing education course.
(b) Applications for the following waivers are processed by the Education Bureau of the Real Estate Commission:
1. Waiver of salesperson or referral agent prelicensure education requirement;
2. Partial waiver of broker prelicensure education requirement and/or complete waiver of broker experience requirement;
3. Waiver of broker experience and certain prelicensure education requirements based upon status of applicant as a qualifying disabled veteran pursuant to N.J.S.A. 45:15-11; and
4. Waiver of continuing education requirement pursuant to N.J.A.C. 11:5-12.5.
§ 11:5-2.4 Examination eligibility certificates
(a) The Education Bureau issues Certificates of Examination Eligibility to:
1. Broker license candidates who have fulfilled or, to the extent permitted by N.J.A.C. 11:5-3.8 and 2.1(e), had waived the broker license experience and/or education requirements;
2. Instructor license candidates who have fulfilled or, to the extent permitted by N.J.A.C. 11:5-2.2(k), had waived the instructor license education requirement; and
3. Salesperson or referral agent license candidates who, as provided in N.J.A.C. 11:5-2.1(e), have had the salesperson's or referral agent's license education requirement waived.
§ 11:5-2.5 Education Bureau forms and processing times
(a) The following forms are utilized by the Education Bureau of the Real Estate Commission:
1. Application for real estate school license for non-public school;
2. Application for licensure of additional teaching location for a non-public real estate school;
3. Application for real estate school license for public college, university or adult education program;
4. Application for real estate instructor license;
5. Application for change in address of administrative office or primary teaching location of non-public real estate prelicensure school;
6. Application for relicensure of public college, university or adult education program with new director;
7. Application for relicensure of non-public school with new director or with new partner(s) (partnership) or new owner(s) of a controlling interest (corporation) or school name change;
8. Application for waiver of salesperson or referral agent prelicensure education requirement;
9. Application for partial waiver of broker prelicensure education requirement and/or complete waiver of experience requirements;
10. Experience report for Broker License Applicant;
11. New Jersey State Police, State Bureau of Identification Request for Criminal History Record Information Form;
12. Application for approval of real estate continuing education provider;
13. Application for approval of real estate continuing education instructor; and
14. Application for approval of real estate continuing education course.
(b) Following the receipt by the Commission of complete and accurate application forms with the required fee(s) in the correct form, the applications specified below are generally processed by the Education Bureau within the time frames indicated:
1. Applications for real estate instructor licenses, school licenses, and additional teaching location licenses--three weeks;
2. Applications for a change of address of a licensed school--three weeks;
3. Applications for relicensure of schools with new directors or new owners of a controlling interest--three weeks;
4. Applications for renewal of instructor licenses, school licenses, and additional teaching location licenses--four weeks;
5. Applications for waivers of the prelicensure education requirements and/or the broker experience requirement which do not require the review of additional information--four weeks;
6. Applications for the approval of experience as a real estate salesperson to fulfill the experience requirement for licensure as a broker (see N.J.S.A. 45:15-9 and N.J.A.C. 11:5-3.8)--four weeks;
7. Applications for approval of real estate continuing education provider--three weeks after recommendation by the Voluntary Advisory Committee is considered by the Real Estate Commission;
8. Applications for approval of real estate continuing education instructor--three weeks after recommendation by the Voluntary Advisory Committee is considered by the Real Estate Commission;
9. Applications for approval of real estate continuing education course--three weeks after recommendation by the Voluntary Advisory Committee is considered by the Real Estate Commission; and
10. Applications for the issuance of a waiver of the continuing education requirement--three weeks after receipt of a complete waiver application.
§ 11:5-2.6 Education Bureau transaction fees
The fees applicable to transactions processed by the Education Bureau of the Real Estate Commission that are unrelated to real estate continuing education are listed in the table below. Fees applicable to applications for approval of real estate continuing education providers, instructors and courses are listed in N.J.A.C. 11:5-12.17.
| EDUCATION BUREAU TRANSACTION FEES | |
|---|---|
| Description | Amount |
| Criminal history check and electronic fingerprint scan | State-contracted vendor fee (paid directly to vendor) |
| Application fee, school license | $ 100.00 |
| Application fee, instructor license | $ 50.00 |
| Application fee, waiver of salesperson or referral agent education | $ 25.00 |
| Initial license fee, non-public school | $ 400.00 for licenses issued in the first year of a two-year license term; $ 200.00 for licenses issued in the second year of a two-year term. |
| Renewal fee, non-public school | $ 400.00 plus $ 200.00 for each additional licensed location |
| License fee, additional teaching location | $ 200.00 for licenses issued in the first year of a two-year license term; $ 100.00 for licenses issued in the second year of a two-year term. |
| Change of address (school) | $ 50.00 |
| License fee, instructor | $ 200.00 for licenses issued in the first year of a two-year license term; $ 100.00 for licenses issued in the second year of a two-year term. |
| Renewal fee, instructor | $ 100.00 |
| Change of name (school) | $ 100.00 |
| Change of name for individual | $ 50.00 |
| Change of school director | $ 50.00 |
| Application fee, waiver of salesperson education | $ 25.00 |
| Application fee, waiver of broker education or experience | $ 25.00 |
| Application fee, approval of experience report for broker license applicant | $ 25.00 |
SUBCHAPTER 3. LICENSING
§ 11:5-3.1 Terms of real estate licenses
Commencing July 1, 1997, broker, broker-salesperson, salesperson, referral agent and branch office licenses shall be issued on the basis of two year license terms. All licenses issued during each biennial term shall run from the date of issuance to the end of the biennial term. All licenses shall expire on June 30 of the second year following the year in which the license term commenced.
§ 11:5-3.2 Payment of fees as prescribed by statute
With the exception of fees paid to the State-contracted fingerprint scanning vendor, fees paid to the license examination administration vendor and fees paid to accomplish an online transfer or termination as set forth in N.J.A.C. 11:5-3.11, any and all fees prescribed by the Real Estate License Act shall be paid by broker's business account check, certified or bank check or money order payable to the State Treasurer of New Jersey. No cash or currency shall be accepted.
§ 11:5-3.3 Criminal history record check
(a) The Commission shall require an individual licensee or any officer, director, partner or owner of a controlling interest of a licensed corporation or partnership to complete an electronic fingerprint scan through the State-contracted vendor, pay the fees required for its processing and submit proof of completion of the fingerprint process with their licensing application.
(b) Evidence of completion of the fingerprint scanning process shall include the applicant's copy of the completed fingerprint scanning vendor's form and a copy of the payment receipt issued by the fingerprint scanning vendor at the time of the completion of the fingerprint scanning process.
(c) The applicant, if a natural person, shall submit with his or her license application the evidence of completion of the fingerprint scanning process set forth in (b) above.
(d) The applicant, if a corporation or partnership, shall submit with its application for license evidence of completion of the fingerprint scanning process as set forth in (b) above for each officer, director, partner, or owner of a controlling interest.
§ 11:5-3.4 Examination rules
(a) In the administration of examinations for licensure as a real estate broker, broker-salesperson, salesperson or referral agent, the following examination rules shall apply:
1. Examinees shall not be permitted to refer to any notes, books, or memoranda.
2. The copying of questions or making of notes for personal use is strictly prohibited.
3. No examinee shall leave the examining room except at the discretion of the examiner.
4. The real estate broker license, salesperson and referral agent license examinations, required by N.J.S.A. 45:15-10 to be taken and successfully passed by all applicants for a real estate broker, broker-salesperson, salesperson or referral agent license before said license may be issued, shall be in the form of a multiple choice examination prepared by a testing service as designated by the Commission. Fees charged applicants to take the real estate examinations and for fingerprinting scanning shall be considered service fees to be paid directly to the testing service and fingerprint scanning vendor separate and apart from any fee required by N.J.S.A. 45:15-9 to be paid to the Commission at the time of the license application.
(b) A request for special accommodations may be made if the applicant qualifies for such accommodations as provided in the Americans With Disabilities Act or any other applicable law. Such requests shall initially be made to the firm administering the licensing examinations. The Commission shall retain final authority to determine whether such requests shall be granted.
§ 11:5-3.5 Requests for disclosure of social security numbers and electronic mailing addresses
(a) The Commission may request that licensees and license applicants, including registrants for license examinations, submit their social security numbers to the Commission. All such requests shall either include or be accompanied by a notice stating:
1. The purpose or purposes for which the Commission intends to use the social security numbers;
2. That disclosure made pursuant to the request is either voluntary or mandatory; and
3. That the request is authorized by this section and by such other law as may be applicable.
(b) Business entity and sole proprietor broker licensees ("brokers") shall establish an official e-mail address. Brokers shall provide to the Commission their current official e-mail address at the time of applying for license renewal through the on-line renewal system. Upon the establishment by the Commission of an Internet-based system for updating brokers' official e-mail addresses, brokers shall, within 30 days of being advised of the availability of that system, enter their current official e-mail address on that system. Subsequent to the implementation of the Internet-based system for updating the official e-mail addresses of brokers, the Commission shall, at its discretion, transmit all general orders, bulletins and public notices to brokers either through e-mail or regular mail.
(c) Upon making any subsequent change to their official e-mail address, the broker shall update the information on the on-line broker e-mail address notification system within 10 days of making such a change.
§ 11:5-3.6 Salesperson's and referral agent's licenses; age requirement
(a) No salesperson's or referral agent's license shall be issued to any person who has not attained the age of 18 years.
(b) Every applicant for licensure as a salesperson or referral agent shall present with his or her application for licensure a certificate of satisfactory completion of a course of education in real estate subjects at a school licensed by the Commission pursuant to N.J.S.A. 45:15-10.1(a) and 10.4 and N.J.A.C. 11:5-2.2, unless waived by the Commission in accordance with the provisions of N.J.S.A. 45:15-10.2.
(c) An applicant must pass the State salesperson or referral agent examination and apply for and request the issuance of a salesperson's or referral agent's license not later than one year after the date of successful completion of the course prescribed at N.J.A.C. 11:5-2.1. Any person who fails to apply for the issuance of a salesperson's or referral agent's license within the one year period shall be required to retake and successfully complete the prescribed course in real estate and the examination.
(d) All applicants for licensure as a salesperson or referral agent shall certify that they possess a high school education or equivalency. The Commission may require the production of evidence of such education or equivalency as a condition to issuing a license to any applicant.
§ 11:5-3.7 Employment of salesperson or referral agent sponsored by broker
(a) No broker shall knowingly sponsor an applicant for licensure as a real estate salesperson or referral agent who does not bear a good reputation for honesty and fair dealings.
(b) An application for licensure or renewal of licensure as a referral agent shall include a certification signed by the licensed real estate broker by whom the applicant is or will be employed confirming:
1. The broker and the applicant have reviewed the restrictions imposed by law upon the activities of a referral agent; and
2. The applicant or referral agent has acknowledged that he or she is aware that the activities of a referral agent are limited to referring prospective consumers of real estate brokerage services only as set forth in N.J.A.C. 11:5-6.10(a)2.
(c) Applications for licensure as a referral agent other than renewal applications shall also contain a certification signed by the applicant confirming the statements in (b)1 and 2 above.
§ 11:5-3.8 Qualifications for licensing; broker and broker-salesperson
(a) All references in this section to "brokers" shall include broker-salespersons. The experience requirement for licensure as a broker imposed by N.J.S.A. 45:15-9 is construed to require a demonstration by the applicant of their commitment to real estate brokerage as their primary vocation, as evidenced by their involvement in the real estate brokerage business on a full-time basis.
1. A person who is presently licensed as a broker in another state and who has been actively licensed and engaged in the real estate brokerage business on a full time basis as a broker, broker-salesperson or salesperson for at least three years immediately preceding the date of application shall qualify for a waiver of the experience requirement for licensure as a New Jersey real estate broker.
2. With the exception of persons licensed as brokers in other states, all applicants for licensure as a broker must have been continuously licensed and employed on a full-time basis as a real estate salesperson during the three years immediately preceding their application. Such full-time employment shall be demonstrated by a showing that:
i. The applicant has worked as a salesperson under the authority of the broker(s) with whom they were licensed for at least 40 hours per week and during the hours of approximately 10:00 A.M. to 8:00 P.M.;
ii. Such work in (a)2i above was performed during any five days in each week of the three-year period; and
iii. If the applicant was employed in any other occupation during the three year period, such other employment was on a part-time basis and did not exceed 25 hours per calendar week.
3. No applications for approval of an applicant's experience to qualify for licensure as a broker shall be made until an applicant:
i. Has been continuously licensed as a salesperson for at least the three years immediately preceding such application;
ii. Has completed the 90-hour general broker's prelicensure course and the two 30-hour courses referred to in N.J.A.C. 11:5-2.1(g).
(b) The Commission shall give due consideration to the following in reviewing the experience of an applicant:
1. Evidence of having been actively involved in the real estate brokerage business as a real estate salesperson on a full-time basis during each year of the three year period. Written statements by the brokers with whom the applicant was licensed during the three year period which certify the applicant's activity as a salesperson while licensed through those brokers must be submitted.
2. Applicants and/or brokers may also be required to submit supporting documentation relating to the closed transactions on which the applicant received compensation as a salesperson from the broker, or to supply other evidence of full-time activity, such as extensive involvement in a specialized field of real estate brokerage.
3. In no event will an applicant whose brokerage activity was limited to solely making referrals to other licensees be deemed to have fulfilled the full-time, active involvement in the brokerage business requirement for licensure.
(c) Broker-salespersons shall meet the same qualifications as brokers, including the qualifications as set forth in (a) and (b) above. A person licensed as a broker-salesperson must be employed by and act under the supervision of a duly licensed real estate broker and shall not independently maintain an office or escrow account. A broker-salesperson may be authorized to serve as an office supervisor or a branch office in accordance with the provisions of N.J.S.A. 45:15-12.
(d) Every applicant for licensure as a broker or broker-salesperson shall present with his or her application for licensure examination a certificate of satisfactory completion of courses in real estate and related subjects at a school licensed by the Commission or offered by another approved provider pursuant to N.J.S.A. 45:15-10.1(b) and N.J.A.C. 11:5-2.1 and 2.2, unless waived by the Commission in accordance with the provisions of N.J.S.A. 45:15-10.2 and N.J.A.C. 11:5-2.1.
(e) An applicant must pass the State broker license examination and apply for and request the issuance of a license as a broker or broker-salesperson not later than one year after successful completion of the 150-hour broker prelicensure education requirements. Any person who fails to apply for the issuance of a license as a broker or broker-salesperson within the said one year time period shall be required to retake and successfully complete all prescribed courses and the examination and must submit evidence of having again fulfilled the experience requirement during the three years immediately preceding the new application.
§ 11:5-3.9 Return of license when broker ceases to be active; office closing; change of broker of record
(a) Each broker who ceases to be active shall within five business days of the cessation of business return to the Commission his license, and the licenses of all salespersons, broker-salespersons and referral agents for cancellation.
(b) Each employee's license must be accompanied by a letter terminating employment in compliance with N.J.S.A. 45:15-14.
(c) No broker engaging in the real estate brokerage business as a sole proprietor, as a broker of record of a partnership or as a broker of record of a corporation shall be relicensed by the Commission unless within 30 days of the date of which the broker ceases engaging in the real estate brokerage business he or she shall complete and submit an affidavit to the Commission certifying that:
1. The broker's license, the corporate or partnership license, and the licenses of all referral agents, salespersons and broker-salespersons have been returned to the Commission for cancellation;
2. The broker's trust account has been closed and that all funds held in trust for others have been disbursed to proper parties;
3. All commissions and other compensation owed to salespersons, referral agents and broker-salespersons have been paid, or, if not yet received by the broker, will be paid upon receipt;
4. No further commissions are due the broker except that any commissions for services previously rendered and payable in the future upon the occurrence of specified events are described on a list attached to the affidavit. The list shall describe the nature and amounts of such outstanding commissions with sufficient information to identify each transaction;
5. The broker has notified all principals in ongoing transactions, in writing, that the broker has ceased engaging in the real estate brokerage business or that the broker will hereinafter engage in the real estate brokerage business in another capacity. The notice shall describe the disposition of pending transactions and the name of custodian and place of deposit of any funds received from principals;
6. The broker has removed from the licensed premises all signs indicating that the premises contains the office of a licensed real estate broker;
7. The broker has recalled all signs and other advertisements or trade materials indicating that the broker is engaged in the real estate brokerage business;
8. The broker has advised the appropriate telephone services that the firm is no longer engaged in the real estate brokerage business, and that further telephone directories should not contain the name of the individual or firm as licensed brokers;
9. There are no outstanding fines or penalties due and owing the Real Estate Commission;
10. The broker acknowledges his or her responsibility to maintain records as required in N.J.A.C. 11:5-5.4. The broker must provide the address of the place of depository of such records and acknowledge responsibility to advise the Commission of any change in the name of the custodian or place of depository for a period of six years.
(d) When a new broker of record of a corporation or partnership is being substituted for the existing broker of record, the existing broker of record satisfies the certification requirements of (c) above when in compliance with the substitution procedures of (e) below.
(e) No new broker of record of a corporation or partnership shall be substituted unless the new broker of record and the former broker of record prepare and submit a joint affidavit to the Commission certifying that:
1. Custody of all funds held in trust for principals has been assumed by the new broker of record;
2. The new broker of record has reviewed all pending transactions and is satisfied that all funds held in trust have been accounted for;
3. All salespersons', broker-salespersons' and referral agents' commissions and other compensation are paid to date;
4. The new broker acknowledges responsibility to pay salespersons', broker-salespersons' and referral agents' commissions in accordance with the policy for payment existing on the date of substitution;
5. No fines are presently owed to the Real Estate Commission, and if any fines are assessed after the date of substitution for actions occurring prior to substitution, both the former broker and new broker are jointly and severally responsible for payment;
6. All signs and advertisements have been changed to reflect the broker now authorized to transact business in the name of the firm;
7. All records required to be maintained pursuant to N.J.A.C. 11:5-5.4 have been turned over to the new broker, and the new broker acknowledges responsibility to maintain such records for a period of six years;
8. The new broker acknowledges that he or she will be responsible to transact business in the name and on behalf of the firm.
§ 11:5-3.10 Sponsoring of license applications or transfers of license
(a) The New Jersey Real Estate Commission, Department of Banking and Insurance, hereby grants to brokers of record or employing brokers the right to have initial applications for licenses of referral agents, salespersons or broker-salespersons who will be in their employ authorized by one other person, other than the broker of record or employing broker. This other person must be the holder of a broker's license and an officer of the broker of record's corporation or a member of his or her partnership, as the case may be. In the event the employing broker is a sole proprietor, such a designee shall be licensed as a broker-salesperson in the employ of the employing broker. The broker of record or employing broker, as applicable, shall file with the New Jersey Real Estate Commission a power of attorney granting this authority to the designated person at least 10 days prior to delegating performance of the function of that person.
(b) Any employing broker or broker of record may authorize one individual in their employ to sign and surrender to the Real Estate Commission, in accordance with the requirements of N.J.S.A. 45:15-14, the real estate referral agent, salesperson or broker-salesperson license of any licensee whose employment relationship with that employing broker or broker of record is terminated. The employing broker or broker of record shall, on a form to be provided by the Commission, notify the Commission in writing of the designation of the employee so authorized, which person need not be the holder of a real estate license. The form designating the authorized person shall be filed with the Real Estate Commission at least 10 days prior to delegating performance of the function of that person. The employing broker or broker of record shall immediately notify the Real Estate Commission in writing in the event that, for any reason, the authority of the person so designated to perform that function is revoked, and shall indicate whether a new designee is to be named. Only the employing broker or broker of record and one other person duly designated and identified to the Real Estate Commission as provided in this section may perform the said license transfer functions at any one time.
§ 11:5-3.11 License transfer and termination procedures
(a) For the purpose of expediting the right of licensees to engage in real estate activities, where license certificates cannot be issued without delay after all conditions have been fulfilled, the Commission directs that a certificate of authority in the form of a letter to the licensee be sent to serve as a temporary license for a limited period of time.
(b) In cases where a licensee who is transferring from one broker to another requests that their current broker deliver their license to them, rather than return it to the Commission, so as to personally facilitate the transfer process, the license shall be so delivered, provided that:
1. The rear of the license certificate is signed and dated by the terminating broker in the appropriate location prior to the delivery of the license to the departing licensee;
2. At the time of the delivery of the license to the departing licensee, the termination confirmation section of the license, reflecting the effective date of the licensee's separation from that broker, has been completed, signed and retained by the terminating broker; and
3. Within five business days of the delivery of the license to the departing licensee, the terminating broker shall either:
i. Mail to the Commission the completed and signed termination confirmation section of the license and send a copy of it to the departing licensee at their last known residence address; or
ii. Process the termination online at http://www.state.nj.us/dobi and send a copy of the completed and signed termination confirmation section of the license to the departing licensee at their last known residence address.
(c) A transferring licensee who receives their license from the terminating broker after that broker has signed the license and entered the date of termination on it may then take that license to their new employing broker. Prior to the transferring person commencing work as a licensee for the new employing broker, that broker shall:
1. Enter on the license in the appropriate location the effective date of the individual's employment with that broker and sign the license as the new employing broker;
2. Detach the temporary license stub portion from the main license document and place it with the licenses of the other persons licensed with that broker; and
3. Either mail to the Commission the dated and signed license of the transferring individual with the required transfer fee (see N.J.S.A. 45:15-14) in the form of a certified or cashier's check or money order or broker's business account check (See N.J.A.C. 11:5-3.2) or process the transfer online at http://www.state.nj.us/dobi and pay the required transfer fee in the form of an electronic check or credit card and retain the paper license signed by the broker, with the effective date of the transferring individual's employment with their firm entered thereon, as a business record as set forth in (f) below.
(d) In cases where a broker terminates the employment of a broker-salesperson, salesperson or referral agent with his or her firm or where a broker-salesperson, salesperson or referral agent resigns such employment, written notice specifying the effective date of the termination or resignation shall be provided by the terminating broker or by the resigning licensee, as applicable. Within five business days of the broker's issuance of a notice of termination or receipt of a resignation, if the licensee has not requested the delivery of the license to them so as to personally facilitate a transfer of their license to another broker, the broker shall either:
1. Deliver or mail to the Commission the licensee's license; or
2. Process the termination online at http://www.state.nj.us/dobi; and
3. Regardless of whether the procedure in (d)1 or 2 above is utilized, contemporaneously send to the licensee at their last known residence address written notice of the license having been returned to the Commission or of the termination of the licensee's employment with the broker having been processed online.
(e) The following regulations pertain to online transfers and terminations:
1. Only referral agent, salesperson or broker-salesperson licenses can be transferred or terminated online;
2. All terminations and transfers shall be completed by an active broker of record or an active employing broker;
3. A broker of record or employing broker shall not process an online termination or transfer on their own license; and
4. Online transfers are not allowed unless the license of a referral agent, salesperson or broker-salesperson has been terminated by the broker of record or employing broker under whose supervision the transferring individual was licensed to engage in brokerage activity prior to the termination.
(f) Brokers who terminate licensees or accomplish the transfer of licensees to their firms as set forth in this section shall maintain records of such terminations and transfers for six years.
§ 11:5-3.12 License applications processed by the Real Estate Section of the Department of Banking and Insurance Licensing Services Bureau
(a) Applications for the following license types are processed by the Department of Banking and Insurance Licensing Services Bureau, Real Estate Section:
1. Real Estate Salesperson;
2. Real Estate Referral Agent;
3. Real Estate Broker--Salesperson;
4. Real Estate Broker--Sole Proprietor;
5. Real Estate Broker--Business entity;
6. Real Estate Broker--Broker of Record of a licensed business entity; and
7. Branch office.
§ 11:5-3.13 Licensing Services Bureau, Real Estate Section forms, instructions, processing times, deadlines
(a) The following forms are utilized by the Real Estate Section of the Department of Banking and Insurance Licensing Services Bureau:
1. Original salesperson or referral agent license application;
2. Original broker/broker-salesperson application;
3. Name change (by license or application);
4. Broker status change;
5. Referral agent, salesperson or broker-salesperson transfer of license (on rear of license document);
6. Broker's Authorized Designee or Power of Attorney;
7. Change of business address;
8. Application for broker license for business entity (includes application for broker of record license);
9. Application for sole proprietor broker license;
10. Application for reactivation within current license term or for reinstatement of referral agent or salesperson license;
11. Application for reactivation within current license term or for reinstatement of broker-salesperson license;
12. Office Closing affidavit;
13. Application for branch office license;
14. Change of branch office supervisor;
15. Initial Application for Renewal of Broker License and of all related licenses;
16. First Supplemental Renewal Application (lists licensees who became licensed with the broker between the date on which the Initial Renewal Application form was generated and the date on which the First Supplemental Renewal Application form was generated);
17. Second Supplemental Renewal Application (lists licensees who became licensed with the broker between the date on which the First Supplemental Renewal Application form was generated and the expiration date of the license term in which the renewal forms are generated);
18. Change of corporate representative and multiple license;
19. Change of broker of record;
20. Change of corporate title;
21. Corporate license and multiple broker license;
22. Reinstatement of business entity broker license;
23. Reinstatement of sole proprietor broker license;
24. Additional broker of record license to sole proprietor broker;
25. Change of tradename or new tradename;
26. Multiple broker of record license;
27. Temporary broker's license;
28. Change of Broker of Record Affidavit;
29. Individual irrevocable consent to service of process;
30. Corporate irrevocable consent to service of process;
31. Partnership/LLC/other irrevocable consent to service of process;
32. The form to request fingerprint scan processing utilized by the State-contracted fingerprint scanning vendor; and
33. Change of license type.
(b) In addition to the instructions that are contained on the forms themselves, separate instructions for the licensing forms related to broker licenses and branch offices are available from the Licensing Services Bureau, Real Estate Section.
(c) License applications are normally processed within 15 business days from the date a complete and accurate application with all required fees in the correct form is received. Processing times during the biennial renewal of licenses may vary. License certifications are normally processed within 15 business days from receipt of the written request and correct fee.
(d) Deadlines for the submission of license applications and other required forms are as follows:
1. Original salesperson, referral agent, broker-salesperson or broker: one year from date on which prelicensure course and education requirements were completed (see N.J.A.C. 11:5-3.6(c) for salespersons and referral agents and 11:5-3.8(e) for brokers and broker-salespersons);
2. Applications for the reinstatement of a salesperson, referral agent, broker-salesperson or brokers license: two years from the expiration date of the last license held unless exempted as provided in N.J.S.A. 45:15-9;
3. Brokerage firm office closing affidavit: within 30 business days from date of closing (see N.J.A.C. 11:5-3.9(c));
4. Brokerage firm change of address: prior to or immediately upon move to new address (see N.J.S.A. 45:15-12 and 45:15-13);
5. Temporary broker license: within 30 business days from date of death or of incapacity of sole proprietor broker or broker of record (see N.J.S.A. 45:15-11.3); and
6. License renewals:
i. Initial renewal application: by June 30 of the year in which the license is due to expire (see N.J.A.C. 11:5-3.1);
ii. First supplemental renewal application: 45 days from date application issued; and
iii. Second supplemental renewal application: 30 days from date application issued.
(e) Late fees are assessed for license renewals postmarked and received by the Commission after the deadlines referenced in (d)6 above. Those fees are set forth in N.J.A.C. 11:5-3.14.
§ 11:5-3.14 Licensing fees
The fees applicable to transactions processed by the Department of Banking and Insurance Licensing Services Bureau, Real Estate Section are listed in the table below. Renewal fees are assessed biennially for the renewal of licenses for a two-year term pursuant to N.J.S.A. 45:15-15. All other fees are payable in full regardless of when during a license term the application to which the fee pertains is submitted.
LICENSE FEES
Initial License Fees (amounts include $ 50.00 application fee and, where applicable, Real Estate Guaranty Fund fees of $ 10.00 for salespersons and referral agents and $ 20.00 for brokers and broker-salespersons. See N.J.S.A. 45:15-35. Amounts do not include the processing fee for fingerprint scanning payable directly to the State-contracted vendor):
| License | Fee |
|---|---|
| Corporations, partnerships and other business entities | $ 270.00 |
| Broker of record | $ 270.00 |
| Sole proprietor broker | $ 270.00 |
| Broker-salesperson | $ 270.00 |
| Salesperson | $ 160.00 |
| Referral agents | $ 160.00 |
| Branch office | $ 150.00 |
| Temporary broker license | $ 300.00 |
Renewal Fees:
| License | Fee |
|---|---|
| Corporations, partnerships and other business entities | $ 200.00 |
| Broker of record | $ 200.00 |
| Sole proprietor broker | $ 200.00 |
| Broker-salesperson | $ 200.00 |
| Salesperson | $ 100.00 |
| Referral agents | $ 100.00 |
| Branch office | $ 100.00 |
Late Renewal Fees:
| License | Fee |
|---|---|
| Corporations, partnerships and other business entities | $ 40.00 |
| Broker | $ 40.00 |
| Broker-salesperson | $ 20.00 |
| Salesperson | $ 20.00 |
| Referral agents | $ 20.00 |
Transfers:
| License | Fee |
|---|---|
| Broker-salesperson | $ 25.00 |
| Salesperson | $ 25.00 |
| Referral agents | $ 25.00 |
Reinstatements of unrenewed licenses (amounts include $ 50.00 application fee):
| License | Fee |
|---|---|
| Corporations, partnerships and other business entities | $ 250.00 |
| Broker of record | $ 250.00 |
| Sole proprietor broker | $ 250.00 |
| Broker-salesperson | $ 250.00 |
| Salesperson | $ 150.00 |
| Referral agent | $ 150.00 |
| Branch office | $ 150.00 |
Changes:
| Type | Fee |
|---|---|
| Name change | $ 50.00 |
| Change of business address: sole proprietor brokers and corporations, partnerships or other business entities (plus $ 10.00 for each individual licensee) | $ 50.00 |
| Change of status--sole proprietor, broker, broker of record, broker-salesperson, salesperson or referral agent | $ 50.00 |
| Change of branch office supervisor | $ 50.00 |
§ 11:5-3.15 Change of status from referral agent to salesperson or broker-salesperson
(a) A licensed referral agent who was not previously licensed as a broker, broker-salesperson or salesperson and who has been licensed as a referral agent for less than one year shall be eligible for licensure as a salesperson without being required to complete any continuing education.
(b) A licensed referral agent who was not previously licensed as a broker, broker-salesperson or salesperson and who has been licensed as a referral agent for between one and six years immediately preceding making application for a change of status to that of a licensed salesperson shall, in order to qualify for licensure as a salesperson, complete 24 hours of continuing education, all of which shall be in core topics as set forth in N.J.A.C. 11:5-12.4. The 24 hours of continuing education shall be completed within the two years immediately preceding application for licensure as a salesperson.
(c) A licensed referral agent who was not previously licensed as a broker, broker-salesperson of salesperson and who has been licensed as a referral agent for more than the six immediately preceding years shall, in order to qualify for licensure as a salesperson, be required to complete the prelicensure education requirement applicable to salespersons and to pass the State license examination for salespersons.
(d) A licensed referral agent who was previously licensed as a broker, broker-salesperson or salesperson who has been licensed as a referral agent for the six immediately preceding years or any lesser period shall, in order to qualify for reissuance of a broker, broker-salesperson or salesperson license, complete the hours of continuing education as set forth below:
1. To qualify for relicensure as a salesperson, a person who has been licensed as a referral agent for less than three years shall complete 12 hours of continuing education, all of which shall be in core topics as set forth in N.J.A.C. 11:5-12.4 within the two years immediately preceding application.
2. To qualify for relicensure as a salesperson, a person who has been licensed as a referral agent three years or more, but less than six years, shall complete 18 hours of continuing education, all of which shall be in core topics as set forth in N.J.A.C. 11:5-12.4 within the two years immediately preceding application.
3. To qualify for relicensure as a broker or broker-salesperson, a person who has been licensed as a referral agent for less than three years shall complete 18 hours of continuing education within two years immediately preceding application, all of which shall be in core topics as set forth in N.J.A.C. 11:5-12.4.
4. To qualify for relicensure as a broker or broker-salesperson, a person who has been licensed as a referral agent for three years or more, but less than six years, shall complete 24 hours of continuing education within the two years immediately preceding application, all of which shall be in core topics as set forth in N.J.A.C. 11:5-12.4.
(e) A licensed referral agent who was previously licensed as a broker, broker-salesperson or salesperson who has been licensed as a referral agent for more than the six immediately preceding years shall, in order to qualify for re-licensure as a broker, broker-salesperson or salesperson, complete 30 hours of continuing education, 24 hours of which shall be in core topics as set forth in N.J.A.C. 11:5-12.4, and shall pass the broker's license examination or the salesperson's license examination, as applicable.
SUBCHAPTER 4. EMPLOYMENT PRACTICES/OFFICE AND LICENSEE SUPERVISION
§ 11:5-4.1 Licensee business relationship agreements; commissions; accounting to salespersons and referral agents; actions for collection of compensation
(a) Prior to a salesperson or referral agent engaging in any real estate brokerage activity, a broker and the salesperson or referral agent must enter into and sign a written agreement that contains the terms of their business relationship. Such agreement shall contain terms including, but not limited to, the following:
1. The rate of compensation to be paid to the salesperson or referral agent during his or her affiliation with the broker;
2. A promise by the broker to pay to the salesperson or referral agent his or her portion of commissions earned within 10 business days of their receipt by the broker or as soon thereafter as such funds have cleared the broker's bank, or in accordance with another payment schedule explicitly set forth in the written agreement;
3. The rate of compensation payable to the salesperson or referral agent on transactions which close and, if applicable, on renewals which occur subsequent to the termination of the salesperson's or referral agent's affiliation with the broker; and
4. A provision that any future changes to the agreement will not be binding unless the changes are contained in a writing signed by both parties.
(b) A copy of the fully executed agreement shall be provided to the salesperson or referral agent upon the commencement of his or her affiliation with the broker, and the original thereof shall be maintained by the broker as a business record in accordance with N.J.A.C. 11:5-5.5.
(c) All compensation paid to brokers shall, unless debited from funds held in escrow in accordance with N.J.A.C. 11:5-5.1(d), be deposited into the general business account of the broker within five business days of their receipt by the broker.
(d) If any monies due a salesperson or referral agent under the terms of the written agreement with their broker are not paid within 10 business days of the broker's receipt of such funds or promptly thereafter upon their having cleared the broker's account, the broker shall provide to the salesperson or referral agent a complete written explanation of the failure to pay such monies.
(e) Within 30 days of the termination of the affiliation of a salesperson or referral agent with a broker, the broker shall provide a complete written accounting of all monies due the salesperson or referral agent as of the date of termination and/or which may become due in the future. If any sums so accounted for are not in accord with the terms of the post-termination compensation clause in the written agreement between the broker and the salesperson or referral agent, the broker shall give a complete written explanation of any difference to the salesperson or referral agent with the accounting.
(f) A broker must maintain copies of the following documents and proof of delivery of the document to the salesperson or referral agent for six years: agreements as described in (a) above; explanations of the failure to pay compensation due a salesperson or referral agent on a timely basis as described in (d) above; and accountings and explanations regarding compensation due a salesperson or referral agent subsequent to the termination of their affiliation with a broker as described in (e) above.
(g) If the Commission confirms that a broker has complied with the requirements imposed by this section, the Commission will not further investigate a complaint alleging the non-payment of a commission by a broker to a salesperson or referral agent unless such complaint is accompanied by a copy of an arbitration decision or the equivalent, or a copy of a judgment of a court of competent jurisdiction secured by the salesperson or referral agent against the broker. Unless appealed, the failure by a broker to pay monies awarded to a salesperson or referral agent under the terms of any such decision or judgment within 30 days of its effective date shall subject the broker to sanctions pursuant to N.J.S.A. 45:15-17.
(h) Broker, salesperson and referral agent licensees may only bring or maintain actions in the courts of New Jersey for the payment of compensation due them for brokerage services performed as provided in N.J.S.A. 45:15-3.
1. The Commission interprets the language "at the time the alleged cause of action arose" as used in N.J.S.A. 45:15-3 to mean at the time that the brokerage services which form the basis for the alleged claim to compensation were rendered. For example, at the time when a property was listed for sale or rental by a licensee.
2. The Commission does not interpret the language "at the time the alleged cause or action arose" as requiring that the licensee must have been actively licensed at the time that the compensation allegedly due was to have been paid. For example, the Commission does not construe this language as requiring licensure at the time of the renewal of a lease to enable a claimant to sue for compensation based upon a promise, made or in effect when the lease was originally executed, to pay additional consideration to the claimant in the event that the lease was renewed.
(i) All references to "salesperson" in this section include individuals licensed as broker-salespersons. All references to "non-payment of a commission" in this section shall be construed to include the non-payment of other forms of compensation.
(j) The Commission interprets "employment agreement," "employ," and "employing broker" in N.J.S.A. 45:15-1 et seq., and this section to permit an employment relationship or an independent contractor relationship between a broker and a broker-salesperson, salesperson, or referral agent.
§ 11:5-4.2 Broker supervision and oversight of individual licensees, office operations and escrowed monies
(a) The following apply to individual broker licensees operating as sole proprietors (employing brokers) or as the authorized broker (broker of record) of a corporation or other entity licensed as a New Jersey real estate broker. As used in this section, the term "individual broker" shall refer to employing brokers and brokers of record and the term "broker licensee" shall refer to sole proprietors and corporations or other entities licensed as brokers.
1. The Commission will hold responsible individual brokers for any actions of the broker licensee or any person employed by or licensed through the broker licensee taken in the pursuit of its real estate brokerage business which violate any of the provisions of the real estate license law, N.J.S.A. 45:15-1 et seq., or the regulations promulgated thereunder.
i. This responsibility shall apply regardless of where the persons licensed through the broker licensee engage in actions in pursuit of the broker licensee's real estate brokerage business.
2. Every real estate transaction in which a broker licensee participates as a broker shall be under the ultimate supervision of the individual broker.
3. The individual broker shall, in addition to ascertaining that a separate account is maintained for the funds of others coming into the possession of the broker licensee, make certain that no such funds of others are disbursed or utilized without his or her express authorization and knowledge.
4. The provisions of this subsection do not apply to brokers licensed as broker-salespersons.
§ 11:5-4.3 Use of license for the benefit of others
(a) No arrangement, direct or indirect, shall be entered into by any licensee whereby an individual licensee lends his name or license for the benefit of another person, firm or corporation, or whereby the provisions of the real estate statute and rules relating to licensing are circumvented.
(b) Lending a broker's license for the benefit of another person, firm or corporation shall be construed as including any arrangement whereby a broker fails to personally oversee and direct the operations of the business of which he or she is licensed as broker of record or employing broker. For the purposes of this section, personal oversight and direction of the business shall be construed as requiring the broker to be physically present in the main office or branch office locations of the business at least one day each week (excluding vacations and emergencies). Communication via telephone and/or mail alone for an extended period of time may be considered by the Commission as evidence of prohibited license lending.
(c) Nothing in this section shall be construed to limit a broker's responsibility to insure the adequate supervision of all offices in accordance with the requirements of N.J.A.C. 11:5-4.4 and 4.5.
§ 11:5-4.4 Maintained offices
(a) Every resident real estate broker not licensed as a broker-salesperson shall maintain a main office for the transaction of business in the State of New Jersey, which shall be open to the public during usual business hours. This main office and the activities of the licensees working from it shall be under the direct supervision of either the broker himself or herself, or of a person licensed as a broker-salesperson. Such supervision shall be maintained on a full time basis. Maintaining full-time supervision shall not be construed as requiring the person performing the supervisory functions to be present at the office location continuously during usual business hours. However, the person performing the supervisory functions shall provide sufficient information so as to allow the personnel at the main office to make communication with that person at all times. Further, the licensee supervising the main office shall be so employed on a full-time basis and, when not required to be away from the office for reasons related to the business of the office, shall be physically present at that office during usual business hours at least five days per calendar week (excluding vacations and emergencies) and shall not be otherwise employed during such time.
1. In the event the main office of a broker is under the direct supervision of a broker-salesperson, the broker who maintains such a main office shall be ultimately responsible for all activities conducted by licensees and employees. Such a broker shall also provide sufficient information to the personnel at such offices so as to allow them to make communication with such broker at all times. Nothing in this section shall be construed to limit a broker's responsibility to comply with the requirements of N.J.A.C. 11:5-4.3.
(b) If such office is located in a residence, it shall be independent of living quarters and shall have a separate exterior entrance plainly visible from the street upon which the licensed premises shall have frontage. This subsection shall not apply to offices in existence prior to December 1, 1963.
(c) No broker's maintained place or places of business shall be in the dwelling premises of any salesperson or referral agent in that broker's employ.
(d) Sole proprietor employing brokers and persons licensed as a broker of record for a licensed entity are responsible to supervise, track and oversee the brokerage activity of persons licensed under their authority regardless of where such activity takes place.
§ 11:5-4.5 Branch office compliance with N.J.A.C. 11:5-4.4 (Maintained offices)
(a) In the event a real estate broker maintains a branch office or offices, every such place of business shall comply with the provisions of N.J.A.C. 11:5-4.4 (Maintained offices).
(b) No license shall be issued for a branch office situated in the dwelling premises of a referral agent, a salesperson or a broker-salesperson.
(c) Any branch office shall be under the direct supervision of a licensed broker employed as a broker salesperson by the broker maintaining the branch office.
(d) Such individual shall devote his or her full time to management of said office during the usual business hours.
(e) The name of the individual responsible for the supervision of the branch office shall be recorded at all times with the Commission.
(f) When a branch office license is issued to a broker it shall specifically set forth the name of the broker and the address of the branch office, and shall be conspicuously displayed at all times in the branch office. The branch office shall also prominently display the name of the broker-salesperson licensee in charge as "office supervisor" and the names of all other licensees doing business at that branch office.
(g) The said branch office license shall be returned for cancellation or correction upon the change of an "office supervisor".
SUBCHAPTER 5. TRUST ACCOUNTS/RECORDS OF BROKERAGE ACTIVITY
§ 11:5-5.1 Special accounts for funds of others; commingling
(a) Every resident real estate broker shall establish and maintain, in an authorized financial institution in New Jersey, and every reciprocally licensed Real Estate broker shall establish and maintain in an authorized financial institution in New Jersey or the State wherein he has a resident real estate broker's license, a special account or special accounts, separate and apart from other business or personal accounts, for the deposit of all moneys or others received by the broker acting in said capacity, or as escrow agent, or as temporary custodian, in a real estate transaction.
(b) Every real estate broker shall file with the broker's application for licensure or license renewal an affidavit or certificate setting forth the name or names of the financial institution or institutions where said special account or accounts have been established and shall identify any and all account numbers. Any change in an existing account or the establishment of any new account shall be immediately reported to the Real Estate Commission in the form of an affidavit or certification.
(c) In construing N.J.S.A. 45:15-17(o), the following shall be considered to constitute commingling by a licensee:
1. Mingling the money of his principals with his own;
2. Failure to maintain and deposit promptly in a special account in an authorized financial institution, separate and apart from personal or other business accounts, all moneys received by a real estate broker acting in said capacity, or as escrow agent, or as the temporary custodian of the funds of others in a real estate transaction; or
3. Failure to promptly segregate any moneys received which are to be held for the benefit of others.
(d) Where the nature of a given real estate transaction is such that the commissions earned by a broker in connection with services rendered in said transaction are included among the funds deposited to the broker's trust account, the portion of such funds deposited to the broker's trust account which constitute the broker's commission shall be promptly paid from the trust account, with appropriate annotations to the broker's business records to indicate the amount and source of such commissions; provided, however, that such broker shall have been previously authorized to make such disbursement.
(e) Within the meaning of this section, the word "promptly" means not more than five business days next following the receipt of the money or property of another. However, where monies are received by a licensee as provided in (c)2 above as a good faith or earnest money deposit accompanying an offer to buy or lease property, if during the five business day period next following the date of the licensee's receipt of those funds the offer is withdrawn prior to acceptance by the offeree or is rejected with no counteroffer made by the offeree, the licensee need not deposit those funds into an escrow or trust account but may, upon the request of the offerer, return them in the same form in which they were received to the offerer. In all other cases, the licensee must deposit such monies within five business days of receipt. Examples of such cases include transactions where negotiations are ongoing, or if a contract or lease is being reviewed by an attorney, or if subsequently to the rejection of an offer the offerer has requested the licensee to retain the monies in the event that the offerer determines to submit another offer on the same or a different property.
(f) The maintenance of clearly nominal amounts of the licensee's funds in trust accounts solely to provide continuity in such account or to meet bank service charges shall not be construed to be commingling.
(g) Where any law or governmental regulation compels maintenance of a fixed amount of the funds of a licensee is a trust account for the purpose of providing a safety factor, the maintenance of such fixed amount shall not be construed to be commingling.
(h) Every person licensed as a broker of record or as a sole proprietor broker shall be a signatory on the escrow or trust account(s) of their brokerage firm. Only individuals who are actively licensed by the Commission as a real estate broker-salesperson or salesperson may be additional signatories on escrow or trust accounts.
(i) Brokers may accept payments to be held in trust or in escrow, or as the temporary custodian of the funds of others in any real estate transaction, in the following forms: cash; a negotiable instrument payable to the broker's firm; a charge against a check debit card resulting in a credit to the broker's trust or escrow account; or a wire transfer of funds directly from an account of the payor to the trust or escrow account of the broker. As provided in this subsection, brokers may also accept deposit and rent payments to be held by them in trust or in escrow or as a temporary custodian in the form of charges made upon the credit cards of tenants in short term rental transactions.
1. All payments to be held by a broker in trust or in escrow, or as the temporary custodian of monies in a real estate transaction, made in the form of cash, negotiable instruments, wire transfers or by charges made upon credit cards or check debit cards shall be recorded in the broker's trust or escrow account ledger and as otherwise required by N.J.A.C. 11:5-5.4.
2. Brokers shall not accept payments made through credit card charges in any real estate transaction other than a short term rental. For the purposes of this subsection, a "short term rental" is a rental of a residential property for not more than 125 consecutive days with a specific termination date.
3. Brokers who accept payments in the form of credit card charges in short term rentals shall cause those payments to be credited to a special trust or escrow account, distinct from the escrow or trust account(s) maintained by the broker for other purposes. Brokers who accept such payments shall also maintain a business account, separate and apart from all trust or escrow accounts including the account to which the credit card charges shall be credited. The said business account may be the same business account maintained by the broker for general purposes.
4. Before accepting any payment in the form of a credit card charge on a short term rental, a broker shall inform the owner in writing of the potential for such payments to be "charged-back" by the tenant and obtain written authorization signed by the owner for the broker to accept such payments.
i. For the purposes of this subsection, "charged-back" means the recrediting of a previously charged payment to the account of a cardholder through the electronic debiting of an account of the broker.
ii. Where an owner's written authorization is secured by the listing broker, it shall be made a part of or an addendum to a listing agreement.
iii. In all cases, the owner's written authorization shall be retained by the broker to whom it was given as a business record in accordance with N.J.A.C. 11:5-5.4.
5. In the event that a dispute concerning a charged-back payment arises between a broker and a consumer, under no circumstances may the broker apply or set-off against the disputed amount any monies paid to the broker on another transaction in which the same consumer is a party.
6. Brokers who accept credit card charges in payment of deposits or rent on short term rentals shall formulate a written statement of their policy on credit card payment cancellations. All such cancellation policies shall include:
i. An indication of the time period during which the cardholder may cancel the charged payment made to the broker; and
ii. A statement that, in the event a cancellation request is not received by the broker within the specified cancellation time period, the request will not be honored and the disposition of the monies credited to the broker will be governed by the terms of the lease or rental agreement between the landlord and the cardholder.
7. In no event shall the cancellation period terminate prior to the delivery to the cardholder of a fully executed written lease containing the final terms of the rental agreement, or the full acceptance by the parties of the final terms of a verbal rental agreement.
8. Brokers shall provide copies of the written cancellation policy in the following manner:
i. To property owners upon the earlier of the broker obtaining a listing on the rental property or presenting an offer to rent the property; and
ii. To prospective tenants at the time of first accepting a payment in the form of a credit card charge. In the event that the same tenant makes subsequent payments on the same rental transaction through charges against a credit card, the broker accepting such payments shall not be required to provide additional copies of the written cancellation policy.
9. Except as otherwise provided in (j) below, brokers who accept payments in the form of credit card charges shall comply with all restrictions and requirements imposed by N.J.S.A. 45:15-17(o) and this section with regard to the deposit and maintenance of such funds.
(j) In all cases, the amount credited to a broker's special escrow or trust account as a result of a charged payment on a short term rental transaction shall be the full amount of the payment made by the tenant to the broker. All transaction fees payable by the broker to the company which issued the credit card shall not be paid before the full amount of the charged payment is credited to the broker's special escrow or trust account. Brokers who accept payments through charges on credit cards shall also comply with one of the procedures specified in (j)1 and 2 below:
1. A business account of the broker shall be designated in the contract between
the broker and any company whose credit card charges the broker shall accept as the sole source of funds for
the payment by the broker of all credit card transaction fees due to the company, and the sole source of
funds for all charge-backs which may be assessed against the broker by the company; or
2. The
broker shall maintain a reserve amount of the broker's funds in the special escrow or trust account to
which charged payments will be credited. The said reserve shall be sufficient to cover all transaction fees
incurred by the broker on charged transactions and all estimated charge-backs of payments by cardholders.
The maintenance of such reserve funds in the said special escrow or trust account shall not be construed as
commingling. In all cases where brokers utilize this procedure:
i. Transaction fees debited from the said reserve amount shall be replenished by the broker on at least a monthly basis;
ii. In the event that a broker is notified that a charge-back has occurred after some or all of the funds received through the charged-back payment have been disbursed, the broker shall, within one business day of receipt of such notice, replenish the reserve funds in the special escrow or trust account in an amount equal to the amount debited from the reserve through the charge-back; and
iii. Brokers may replenish or increase the said reserve amount as often as
necessary. Brokers may only reduce the said reserve amount on an annual basis. All credits to and debits
from the special escrow or trust account made by the broker to replenish, increase or decrease the reserve
amount shall be duly noted in the business records of the broker and maintained as such as required by
N.J.A.C. 11:5-5.4.
§ 11:5-5.2 Funds of others; safeguards
(a) No licensee shall accept funds or deposits from a prospective purchaser without ascertaining that there have been established by escrow, or otherwise, adequate precautions to safeguard such funds or deposits where the licensee knows, or conditions are such as to palpably give him reason to know, any facts which would tend to reasonably create a doubt:
1. As to the ability of the seller to perform his contractual obligations; or
2. As to the ability of the seller to return such funds or deposits in the event of the failure of a contingency contained in a real estate contract.
(b) The provisions of subsection (a) shall not apply to a licensee who, before accepting such funds or deposits, has adequately informed the prospective purchaser of any risk entailed and has secured from him a separate signed writing in which the purchaser has acknowledged:
1. His awareness of any risk or contingency;
2. The disposition of his funds or deposits; and
3. The absence of any representations by the licensee as to the solvency of the seller and his ability to return such funds.
(c) Funds or deposits placed in escrow pursuant to this regulation may be held by any person or entity legally authorized to hold funds in that capacity, such as, but not limited to, the real estate broker himself, lawyers or banks.
§ 11:5-5.3 Advance fees; accounting
(a) Any broker who charges or collects an advance fee in excess of $ 25.00 for services to be rendered, such as, but not limited to advertising costs, under an advance fee agreement, shall within 90 days after such charge or collection furnish his principal with an accounting as to the use of such moneys.
(b) Such accounting shall set forth the actual amount of each individual expenditure, including date of insertion and name of newspaper or periodical, and similarly detail any other type of promotional expenditure if the funds are spent for other than newspaper or periodical advertising.
§ 11:5-5.4 Records to be maintained by broker
(a) Every broker shall keep records as prescribed herein of all funds of others received by him or her for not less than six years from the date of receipt of any such funds. All such funds shall be deposited by the broker in accordance with the requirements of N.J.A.C. 11:5-5.1.
1. Whenever a broker receives funds to be held in trust in cash, a written receipt signed by the licensee to whom the funds were paid and specifying the date, amount, purpose and from whom those funds were received shall be issued to the payor of the funds. A copy of that receipt shall be retained by the broker as prescribed in this section.
(b) The records required to be kept pursuant to (a) above shall include:
1. Written references on the checkbook stubs or checkbook ledger pages to all deposits into and withdrawals from the account(s) maintained by the broker in accordance with N.J.A.C. 11:5-5.1, which shall specifically identify the date, amount and payor of each item deposited, the property to which the monies pertain and the reason for their being held by the broker. Such records shall also specify the date, amount, payee and purpose of each disbursement. All trust or escrow account withdrawals shall be only by authorized intrastate or interstate bank transfer or by check payable to a named payee and not to cash;
2. In appropriate ledger book for all trustee accounts or escrow accounts showing, in one location in that ledger book for each separate trust transaction, the payor of all funds deposited in such accounts, the date of deposit, the names of all persons for whom the funds are or were held, the amount of such funds, the amounts and dates of all disbursements of such moneys, and the names of all persons to whom such funds were disbursed. The Commission will not deem a regular checkbook ledger as sufficient to constitute an appropriate ledger book. Such a ledger book may be maintained in a computer or similar device, so long as it is capable of reproducing the electronically stored data on paper so as to depict the complete history of all activity in each separate trust transaction, and the data can be maintained in an easily accessible form for the required six year period. A regular running balance of the individual transaction ledger sheets shall be maintained. The total of the running balance must agree with the control figure computed by taking the beginning balance, adding the total of moneys received in trust on that transaction, and deducting the total of all moneys disbursed;
i. Brokers who accept credit card charges on short term rental transactions and who maintain a reserve in their special trust or escrow account to which funds received through such charges are credited as provided in N.J.A.C. 11:5-5.1(j) shall record in one location in their ledger book, entries specifying deposits made to establish, replenish, and increase the reserve amount and all withdrawals made to reduce the reserve amount. Brokers who maintain reserves in such special escrow or trust accounts shall not be required to make an entry in their ledger for each transaction fee debited from the said account as a result of their acceptance of a payment through a charge on a credit card.
3. Copies of all records, showing that at least quarterly a reconciliation has been made of the checkbook balance, the bank statement balance and the client trust ledger sheet balances;
4. All bank statements, cancelled checks, duplicate deposit slips and, if the broker accepts credit card charges on short term rental transactions as provided in N.J.A.C. 11:5-5.1, all confirmation slips or other written material reflecting the broker's acceptance of such payments;
5. Copies of all offers, contracts of sale and sale or rental listing agreements;
6. Copies of all leases and property management agreements;
7. Copies of all statements to owners, sellers, purchasers and tenants showing the disbursement of funds to them or on their behalf, which statements shall identify the property and unit, if applicable, for which the disbursement was made and the reason for the disbursement;
8. Copies of all bills paid for owners, sellers, purchasers or tenants by the broker from escrowed funds, which payments may only be made pursuant to written authorization;
9. Copies of all records showing payments to persons licensed with the paying broker and to cooperating brokers, which records shall contain all information required by N.J.A.C. 11:5-5.1(d); and
10. Copies of all receipts issued for all security deposits accepted from tenants, and of checks for and letters accompanying the release of such funds, and/or the duplicate deposit slips evidencing the deposit of such funds by the broker.
(c) With the exception of the materials described in (d) below, on transactions where a broker has not received the property or funds of others, the following records shall be maintained for six years from the earlier of the date of the listing or property management agreement or of the contract or lease:
1. Copies of all fully executed leases, contracts of sale, property management and listing agreements;
2. Copies of bills for brokerage services rendered in such transactions;
3. Copies of all records showing payments to persons licensed with the paying broker and to co-operating brokers; and
4. Copies of all bank statements, cancelled checks and duplicate deposit slips pertaining to the broker's general business account.
(d) Unaccepted offers and expired listing agreements during the term of which no contract of sale was executed or no tenancy was entered into shall be maintained for six months from the date of the offer or the expiration date of the listing agreement.
(e) The financial books and other records as described in (a), (b), (c) and (d) above shall be maintained in accordance with generally accepted accounting practice. They shall be located at the main New Jersey office of each broker or, in situations where separate general business and/or trust or escrow accounts are maintained at licensed branch offices, either at that branch office or at the main office of the broker. Copies of all items designated as records in (a) through (d) above shall be maintained by brokers as provided in this section. Items may be maintained either on paper or stored electronically in a computer or similar device, so long as the electronically stored data can be readily reproduced on paper so as to depict the complete history of all activity and the data can be maintained in an easily accessible form for the required six-year period. This requirement shall apply to all such records, including any items generated through e-mail or any other means which does not require the creation of a paper document. All such records shall be available for inspections, checks for compliance with this section and copying by a duly authorized representative of the New Jersey Real Estate Commission. Licensees may be required to certify to the accuracy of the reproduced data.
§ 11:5-5.5 Inspection of records
(a) Every licensee shall make available for inspection by the Commission or its designated representatives all records of transactions, books of account, instruments, documents and forms utilized or maintained by such licensee in the conduct of the licensed business, which may be pertinent to the conduct of the investigation of any specific complaint.
(b) To accomplish the objectives and carry out the duties prescribed by this Act, especially the provisions of N.J.S.A. 45:15-17, the Commission may issue subpoenas to any person, administer an oath or affirmation to any person, and conduct hearings in aid of any investigation or inquiry.
(c) All files on pending and closed sale, exchange or lease transactions, all files on listings for sales or rentals, and all property management files shall be maintained or stored at the offices of brokers licensed as employing brokers or corporate or partnership brokers. Upon terminating their employment with such a broker, and/or transferring to the employ of another such broker, no referral agent, salesperson or broker-salesperson shall remove or cause to be removed any of the contents of such files from the offices of the broker. The term "files" as used herein shall be construed to mean all transaction records required to be kept by brokers pursuant to N.J.A.C. 11:5-5.4.
Summary
For a combined view of both the statutory (45:15) and administrative code (11:5) provisions governing referral agents, see our Restrictions on Referral Agents page.