Effective July 1, 1995, every licensee in the state of New Jersey will be required to advise consumers of real estate services the 4 types of business relationships that they are permitted to engage in. They are: Sellers, Agent, Buyers Agent, Disclosed Dual Agent, and Transaction Broker. The following is a synopsis of what must be disclosed how, and when:

Every licensee must distribute a Consumer Information Statement which describes the types of business relationships in which a licensee may engage:

The sale of one to four family residential properties or vacant one-family lots.

Residential lease transactions other than short term rentals (short term rental Means the rental of residential property for not more than 90 consecutive days).

1) Inform buyer/seller – lessee/landlord of the four business relationships:

To the Buyer:

a) verbally– prior to the first discussion at which the buyer’s motivation or financial ability to buy is discussed.

b) written – give the Consumer Information Statement at first business
meeting prior to the discussion of the buyer’s needs. Definitely prior
to the showing.

To the Seller:

a) verbally – prior to the first discussion of the seller’s motivation to sell and
prior to discussion of a selling price.

b) written – Consumer Information Statement at first business meeting prior to discussion of motivation or of desired selling price.

c) unlisted properties – not later than the first showing.

2) Brokerage Agreements (listings buyer-agent agreements, etc.) must contain:

a) The business relationship the firm intends to have with the other party to the agreement (mandated language).

b) Statement acknowledging receipt of the Consumer Information Statement.

3) All offers, contracts or leases prepared by licensees must contain:

a) The business relationship the firm has with respect to the parties named in those documents (mandated language).

b) Statement acknowledging receipt of the Consumer Information Statement
(mandated language.)

Miscellaneous:

1. Brokers MAY acknowledge delivery of the Statement by having the
   parties sign and date it.
2. Brokers MAY also indicate on the statement the capacity in which they
   intend to work with the party to whom they deliver the statement.
3. Licensee must disclose to other licensees what type of business relationship they have with the party with whom they have a brokerage agreement and with any other party with whom they may be working.

(a) When applied to rental transactions which are not exempt from this rule, references to sellers and buyers, and to the various types of brokerage agreements and business relationships mentioned throughout this rule should be construed as indicating their appropriate counterparts in rental transactions. For example, references to sellers should be read as lessors or owners and references to buyers should be read as lessees or tenants, etc. As used in this rule, the following terms or phrases shall have the following meanings:

1. "Brokerage Agreement" means a written agreement between a brokerage firm and a party describing the terms under which that firm will perform brokerage services as specified in N.J.S.A. 45:15-3. Brokerage agreements include, but are not limited to sale and rental listing agreements, buyer-broker, lessee-broker, transaction broker, and dual agency agreements.
2. "Brokerage Firm" means a licensed corporate partnership or sole proprietor broker, and all individuals licensed with that broker.
3. "Consumer Information Statement" means the Consumer Information Statement on New Jersey Real Estate Relationships as prescribed in (h) below.
4. "Informed Consent to Dual Agency" means the written authorization by a party for the brokerage firm which represents them as their agent in a real estate transaction to also represent the other party to that transaction as an agent. Informed consent can only be obtained after the brokerage firm has disclosed to the consenting party all material facts which might reasonably impact on that party’s decision to authorize dual agency, including the extent of the conflicts of interests involved and the specific ways in which each consenting party will receive less than full agency representation from the dual agent. In order to obtain informed consent it is also necessary for the licensee to first advise the consenting party of the other business agreements offered by that licensee and of those not offered by that license, and of that party’s right to consult an attorney.
5. "Party" shall mean actual or prospective sellers, lessors, buyers or lessees of an interest in real estate.
6. "Short Term Rental" shall mean the rental of a residential property for not more than 90 consecutive days, under the terms of an oral rental agreement or rental lease which contains a specific termination date. Month – to – Month tenancies are not considered short term rentals.
7. "Transaction Broker" Shall mean a brokerage firm which works with both parties in an effort to arrive at an agreement on the sale or rental of real estate and facilitates the closing of a transaction, but does not represent either party, and has no agency relationship with either party to the transaction. The New Jersey Real Estate License Law, N.J.S.A. 45:15-1 et seq., and the Administrative Rules promulgated thereunder do not mandate that licensees must act as agents when rendering real estate brokerage services.
8. "Business Relationship (s)" means real estate licensees working as a seller’s agent; a buyer’s agent; a disclosed dual agent; or a transaction broker.

(a) Prior to acting as a dual agent, a brokerage firm must have the written informed consent of the parties to the transaction. Informed consent is not acquired through distribution of the Consumer Information Statement on New Jersey Real Estate Relationships as required by (e) and (k) below alone. At a minimum, licensees must also secure the signature of the party on a separate writing which confirms the party’s informed consent to the licensee acting as a Disclosed Dual Agent for that party. Such a writing may be part of, or an attachment to, a brokerage agreement.

(b) Licensees shall supply information with regard to their working relationship with parties to real estate transactions as provided in this rule.

(c) Licensees shall comply with all requirements of this rule when involved in:

1. Transactions which involve the sale of residential real estate containing one to four dwelling units or the sale of vacant one-family lots.
2. Residential lease transactions other than short term rentals. However, in short-term rental transactions, licensees shall include in all leases prepared by them a statement indicating that they are acting in the transaction either as an agent of the landlord, an agent of the tenant, a disclosed dual agent or a transaction broker.
3. The securing of brokerage agreements on residential properties, including rental listing agreements on residential properties to be offered for short term rentals.

(d) All licensees shall supply information on business relationships to buyers and sellers in accordance with the following:

1. With respect to buyers:

i. All licensees shall verbally inform buyers of the four business relationships described in this rule prior to the first discussion at which a buyer’s motivation or financial ability to buy is discussed.

ii. If the first such discussion occurs during a business meeting on the buyer’s real estate needs, licensees shall deliver the written Consumer Information Statement to the buyers prior to such a discussion. If the first such discussion is telephonic or in a social setting, licensees shall, after having verbally informed the buyer of the four business relationships, deliver the written Consumer Information Statement to the buyer at their next meeting. However, if prior to their first business meeting after such a discussion, any material is mailed, faxed, or delivered by the licensee to the buyer, the Consumer Information Statement shall be included with such material.

iii. In cases where there have been no discussions on motivation or financial ability to buy prior to the first showing, licensees shall deliver the statement no later than the first showing.

iv. Those licensees who intend to enter into a buyer-brokerage relationship with such persons shall deliver the Consumer Information Statement no later than the commencement of their buyer-brokerage agreement presentation.

2. With respect to sellers:

i. All licensees shall verbally inform sellers of the four business relationships described in this rule prior to the first discussion at which the seller’s motivation or described selling price is discussed.

ii. If the first such discussion occurs during a business meeting on the seller’s real estate needs, licensees shall deliver the written Consumer Information Statement to the sellers prior to such a discussion. If the first such discussion is telephonic or in a social setting, licensees shall, after having verbal informed the of the four business relationships, deliver the written Consumer Information Statement to the seller at their next meeting. However, if prior to their first business meeting after such a discussion, any material is mailed, faxed, or delivered by the licensee to the seller, the Consumer Information Statement shall be included with such material.

iii. On unlisted properties, absent any discussions prior to their first showing of the property, all licensees shall deliver the statement no later than their first showing of the property.

(f) The purpose of (e) above and (h) below, is to require licensees to provide basic and introductory information to the public in a convenient and consistent manner, rather than a comprehensive explanation of agency law.

(g) The statement as supplied by the Commission shall be reproduced and delivered by licensees as required in this section, as a separate item, with no deletions or additions, other than the optional additional text referred to in (g) 1 and 2 below, and recited in (h) below.

1. Brokerage firms may acknowledge delivery of the Statement by procuring the signature of the party to whom it was delivered and the date of delivery in the appropriate place at the bottom of the statement.

i. On transaction which result in fully executed contracts of sale or consummated rental transactions, copies of Consumer Information Statements on which receipt has been acknowledged as set forth in (g) 1 above, shall be maintained as business records for six years in accordance with N.J.A.C. 11:5-1.12 (c).

2. Brokerage firms may also indicate on the Statement the capacity in which they intend to work with the party to whom they deliver the Statement.

3. Regardless of whether brokerage firms choose to include on the Statement the additional information referred to in (g) 1 and 2 above, all brokerage firms, as is required by (i) and (j) below, shall:

i. Indicate in all brokerage agreements the business relationship they intend to have with the other party to the agreement; and

ii. Indicate in all offers, contracts, or leases, prepared by licensees the business relationship the firm has with respect to the parties named in those documents.

(h) The mandatory text of the Consumer Information Statement to be delivered by licensees as provided in (e) above is as follows:

CONSUMER INFORMATION STATEMENT ON NEW JERSEY REAL ESTATE RELATIONSHIPS

In New Jersey, real estate licensees are required to disclose how they intend to work with buyers and sellers in a real estate transaction. (In rental transactions, the terms "buyers" and "sellers" should be read as "tenants" and "landlords," respectively.)

1. AS A SELLER’S AGENT OR SUBAGENT, I , AS A LICENSEE, REPRESENT THE SELLER AND ALL MATERIAL INFORMATION SUPPLIED TO ME BY THE BUYER WILL BE TOLD TO THE SELLER.

2. AS A BUYER’S AGENT, I, AS A LICENSEE, REPRESENT THE BUYER AND ALL MATERIAL INFORMATION SUPPLIED TO ME BY THE SELLER WILL BE TOLD TO THE BUYER.

3. AS A DISCLOSED DUAL AGENT, I, AS A LICENSEE REPRESENT BOTH PARTIES. HOWEVER, I MAY NOT, WITHOUT EXPRESS PERMISSION, DISCLOSE THAT THE SELLER WILL ACCEPT A PRICE LESS THAN THE LISTING PRICE OR THAT THE BUYER WILL PAY A PRICE GREATER THAN THE OFFERED PRICE.

4. AS A TRANSACTION BROKER, I, AS A LICENSEE, DO NOT REPRESENT EITHER THE BUYER OR THE SELLER. ALL INFORMATION I ACQUIRE FROM ONE PARTY MAY BE TOLD TO THE OTHER PARTY.

Before you disclose confidential information to a real estate licensee regarding a real estate transaction, you should understand what type of business relationship you have with that licensee.

There are four business relationships: (1) seller’s agent; (2) buyer’s agent; (3) disclosed dual agent; and (4) transaction broker. Each of these relationships imposes certain legal duties and responsibilities on the licensee as well as on the seller or buyer represented. These four relationships are defined in greater detail below. Please read carefully before making your choice.

SELLER’S AGENT

A seller’s agent WORKS ONLY FOR THE SELLER and has legal obligations, called fiduciary duties, to the seller. These include reasonable care, undivided loyalty, confidentiality and full disclosure. Seller’s agents often work with buyers, but do not represent the buyers. However, in working with buyers, a seller’s agent must work honestly. In dealing with both parties, a seller’s agent may not make any misrepresentations to either party on matters material to the transaction, such as they buyer’s financial ability to pay, and must disclose defects of a material nature affecting the physical condition of the property which a reasonable inspection by the licensee would disclose.

Seller’s agents include all persons licensed with the brokerage firm which has been authorized through a listing agreement to work as the seller’s agent. In addition, other brokerage firms may accept an offer to work with the listing broker’s firm as the seller’s agents. In such cases those firms and all persons licensed with such firms, are called "sub-agents". Sellers who do not desire to have their property marketed through sub-agents should so inform the seller’s agent.

BUYER’S AGENT

A buyer’s agent WORKS ONLY FOR THE BUYER. A buyer’s agent has fiduciary duties to the buyer which include reasonable care, undivided loyalty, confidentiality, and full disclosure. However, in dealing with sellers, a buyer’s agent must act honestly. In dealing with both parties, a buyer’s agent may not make any misrepresentations on matters material to the transaction, such as the buyer’s financial ability to pay, and must disclose defects of a material nature affecting the physical condition of the property which a reasonable inspection by the licensee would disclose.

A buyer wishing to be represented by a buyer’s agent is advised to enter into a separate written buyer agency contract with the brokerage firm which is to work as their agent.

DISCLOSED DUAL AGENT

A disclosed dual agent WORKS FOR BOTH THE BUYER AND THE SELLER. To work as a dual agent, a firm must first obtain the informed written consent of the buyer and the seller. Therefore, before acting as a disclosed dual agent, brokerage firms must make written disclosures to both parties. Disclosed dual agency is most likely to occur when a licensee with a real estate firm working as a buyer’s agent shows the buyer properties owned by sellers for whom that firm is also working as a seller’s agent or subagent.

A real estate licensee working as a disclosed dual agent must carefully explain to each party that, in addition to working as their agent, their firm will also work as the agent for the other party. They must also explain what effect their working as a disclosed dual agent will have on the fiduciary duties their firm owes to the buyer and to the seller. When working as a disclosed dual agent, a brokerage firm must have the express permission of a party prior to disclosing confidential information to the other party. Such information includes the highest price a buyer can afford to pay and the lowest price a seller will accept and the party’s motivation to buy or sell. Remember, a brokerage firm acting as a disclosed dual agent will not be able to put one party’s interests ahead of the other party and cannot advise or counsel either party on how to gain an advantage at the expense of the other party on the basis of confidential information obtained from or about the other party.

If you decide to enter into an agency relationship with a firm which is to work as a disclosed dual agent, you are advised to sign a written agreement with that firm.

TRANSACTION BROKER

The new jersey real Estate Licensing law does not require licensees to work in the capacity of an "agent" when providing brokerage services. A transaction broker works with a buyer or a seller, or both in the sales transaction without representing anyone. A TRANSACTION BROKER DOES NOT PROMOTE THE INTERESTS OF ONE PARTY OVER THOSE OF THE OTHER PARTY TO THE TRANSACTION. Licensees with such a firm would be required to treat all parties honestly and to act in a competent manner, but they would not be required to keep confidential any information. A transaction broker can locate qualified buyers for a seller or suitable properties for a buyer. They can then work with both parties in an effort to arrive at an agreement on the sale or rental of real estate and perform tasks to facilitate the closing of a transaction. A transaction broker primarily serves as a manager of the transaction, communicating information between the parties to assist them in arriving at a mutually acceptable agreement and in closing the transaction, but cannot advise or counsel either party on how to gain an advantage at the expense of the other party. Owners considering working with a transaction broker are advised to sign a written agreement with that firm which clearly states what services that firm will perform and how it will be paid. In addition, any transaction brokerage agreement with a seller or landlord should specifically state whether a notice on the property to be rented or sold will or will not be circulated in any or all Multiple Listing System (s) of which that firm is a member.

YOU MAY OBTAIN LEGAL ADVICE ABOUT THESE
BUSINESS RELATIONSHIPS FROM YOUR OWN LAWYER.

THIS STATEMENT IS NOT A CONTRACT AND IS
PROVIDED FOR INFORMATIONAL PURPOSES ONLY.

(OPTIONAL ACKNOWLEDGEMENT OF RECEIPT AFTER
TEXT OF CONSUMER INFORMATION STATEMENT) :

FOR SELLERS AND LANDLORDS

"By signing this Consumer Information Statement, I acknowledge that I received this Statement from (Name of Brokerage Firm) prior to discussing my motivation to sell or lease or my desired selling or leasing price with one of its representatives."

FOR BUYERS AND TENANTS

"By signing this Consumer Information Statement, I acknowledge that I received this Statement from (Name of Brokerage Firm) prior to discussing my motivation or financial ability to buy or lease with one of its representatives."

(OPTIONAL INDICATION OF IN WHAT CAPACITY FIRM INTENDS TO WORK WITH RECIPIENT OF CONSUMER INFORMATION STATEMENT AS PERMITTED BY (g) 2 ABOVE:)

I ________________________, as an authorized representative of __________________,
             (name of licensee)                                                                          (name of brokerage firm)
intend, as of this time, to work with you as a _________________.
                                                                           (indicate one of the following):

• buyer’s agent only
• seller’s agent only
• seller’s agent and disclosed dual agent if the opportunity arises
• buyer’s agent and disclosed dual agent if the opportunity arises
• transaction broker
  

(i) In all brokerage agreements, brokerage firms must include the following:

1. A statement acknowledging receipt of the Consumer Information Statement; and
2. A declaration of business relationship indicating the regular business name of the broker and in what capacity the licensee servicing the agreement and their firm will operate as real estate licensees with respect to the other party to the brokerage agreement. The declaration of business relationship in all brokerage agreements shall contain, in print larger than the predominant size print in the writing, the following language:

   I, __________________, as an authorized representative of __________________,
          (name of licensee)                                                                            (name of firm)
   intend, as of this time, to work with you as a _________________.
                                                                              (indicate one of the following):

• seller’s agent only
• buyer’s agent only
• seller’s agent and disclosed dual agent if the opportunity arises
• buyer’s agent and disclosed dual agent if the opportunity arises.
• transaction broker