CONSUMER
INFORMATION STATEMENT
REAL ESTATE RELATIONSHIPS IN NEW JERSEY
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.)
- AS A SELLER’S AGENT OR SUB-AGENT, THE LICENSEE
REPRESENTS THE SELLER AND ALL MATERIAL INFORMATION SUPPLIED TO THE AGENT BY THE BUYER WILL
BE TOLD TO THE SELLER.
- AS A BUYER’S AGENT, THE LICENSEE REPRESENTS THE
BUYER AND ALL MATERIAL INFORMATION SUPPLIED TO THE AGENT BY THE SELLER WILL BE TOLD TO THE
BUYER.
- AS A DISCLOSED DUAL AGENT, THE LICENSEE REPRESENTS BOTH
PARTIES, HOWEVER, THE AGENT 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.
- AS A TRANSACTION BROKER, THE LICENSEE DOES NOT REPRESENT
EITHER THE BUYER OR THE SELLER. ALL INFORMATION THE AGENT ACQUIRES 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 act honestly. In dealing with both parties, a Seller’s Agent may not make
any misrepresentations to either party on matters material to the transaction, such as the
Buyer’s financial ability to pay, and must disclose defects of a material nature
affecting the physical condition of the property which a reasonable inspection by the
licensee would disclose.
Seller’s Agents include all persons licensed with
the brokerage firm which has been authorized through a listing agreement to work as the
Seller’s Agent. In addition, other brokerage firms may accept an offer to work with
the Listing Broker’s firm as the Seller’s Agents. In such cases, those firms and
all persons licensed with such firms, are called "Sub-Agents". Sellers who do
not desire to have their property marketed through 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 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 Seller. Therefore, before acting as a Disclosed Dual Agent, brokerage firms
must make written disclosure to both parties. Disclosed Dual Agency is most likely to
occur when a licensee with a real estate firm working as a Buyer’s Agent shows the
Buyer properties owned by Sellers for whom that firm is also working as a Seller’s
Agent or Sub-Agent.
A real estate licensee working as a Disclosed Dual
Agent must carefully explain to each party that, in addition to working as their Agent,
their firm will also work as the Agent for the other party. They must also explain what
effect their working as a Disclosed Dual Agent will have on the fiduciary duties their
firm owes to the Buyer and to the Seller. When working as a Disclosed Dual Agent, a
brokerage firm must have the express permission of a party prior to disclosing
confidential information to the other party. Such information includes the highest price a
Buyer can afford to pay and the lowest price a Seller will accept and the parties’
motivation to buy or sell. Remember, a brokerage firm acting as a Disclosed Dual Agent
will not be able to put one party’s interest ahead of those of the other party and
cannot advise or counsel either party on how to gain an advantage at the expense of the
other party on the basis of confidential information obtained from or about the other
party.
If you decide to enter into an Agency Relationship with
a firm which is to work as a Disclosed Dual Agent, you are advised to sign a written
agreement with that firm.
TRANSACTION
BROKER
The New Jersey Real Estate Licensing Law does not
require licensees to work in the capacity of an "Agent" when providing brokerage
services. A Transaction Broker works with a Buyer or a Seller or both in the sales
transaction without representing anyone. A TRANSACTION BROKER DOES NOT PROMOTE THE
INTERESTS OF ONE PARTY OVER THOSE OF THE OTHER PARTY TO THE TRANSACTION. Licensees with
such a firm would be required to treat all parties honestly and to act in a competent
manner, but they would not be required to keep confidential any information. A Transaction
Broker can locate qualified Buyers for a Seller or suitable properties for a Buyer. They
can then work with both parties in an effort to arrive at an agreement on the sale or
rental of real estate and perform tasks to facilitate the closing of a transaction. A
Transaction Broker primarily serves as a manager of the transaction, communicating
information between the parties to assist them in arriving at a mutually acceptable
agreement and in closing the transaction, but cannot advise or counsel either party on how
to gain an advantage at the expense of the other party. Owners considering working with
Transaction Brokers are advised to sign a written agreement with that firm which clearly
states what services that firm will perform and how it will be paid. In addition, any
transaction brokerage agreement with a seller or landlord should specifically state
whether a notice on the property to be rented or sold will or will not be circulated in
any or all Multiple Listing System(s) of which that firm is a member.
YOU MAY OBTAIN LEGAL ADVICE ABOUT THESE
BUSINESS RELATIONSHIPS FROM YOUR OWN LAWYER.
THIS STATEMENT IS NOT A CONTRACT
AND IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY.
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