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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 SUBAGENT, I, AS A LICENSEE,
REPRESENT THE SELLER AND ALL MATERIAL INFORMATION
SUPPLIED TO ME BY THE BUYER WILL BE TOLD TO THE SELLER.
- 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.
- 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.
- AS A TRANSACTON 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 act honestly. In dealing with
both parties, a seller's agent may not make any
misrepresentation 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 a
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
"subagents". Sellers who do not desire to have their
property marketed through subagents 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 to 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 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 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
affect 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 interests ahead of those of the other party
and cannot advise or counsel either party on how to gain an
advantage at the expense of the other party on the basis of
confidential information obtained from or about the other
party. If you decide to enter into an agency relationship
with a firm, which is to work as 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 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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