N.J. Admin. Code § 11:5-6.2
Current through Register Vol. 56, No. 8, April 15, 2024
Section 11:5-6.2 - Contracts of sale, leases and listing agreements(a) The following paragraphs specify licensees' obligations to obtain written confirmation of the intentions of, and to deliver copies of documents to, parties to a real estate transaction. 1. Where a licensee memorializes the terms of an offer or counter-offer on a writing which will itself become an "instrument" as defined in (a)3 below, the licensee shall deliver to the maker of such an offer or counter-offer a clear copy of the executed offer or counter-offer immediately upon its being signed, and initialed if necessary as provided in this section, by the maker of the offer or counter-offer. Any addition, deletion, or other change in any such offer or counter-offer shall be initialed by the party proposing such a revision and, if accepted, by the other party to the transaction.2. Where a licensee records the terms of an offer or counter-offer on a writing which is not intended to be binding upon either party, and which so states on its face, in the event that the licensee secures the signature and/or initials of any party on such a writing, the licensee shall provide to the signing and/or initialing party a clear copy of the writing as signed and/or initialed by them.3. As used in this subsection, the term "instrument" means any complete and fully executed written contract of sale, lease, option agreement, or other writing affecting an interest in real estate, or any complete and fully executed addendum or amendment to any such contract, lease, option agreement or writing. The term instrument as used in this subsection does not include listing agreements and buyer brokerage agreements.4. Licensees shall immediately deliver to all parties to any fully executed instrument a clear copy with original signatures of any such fully executed instrument. Licensees shall provide their clients with a fully executed copy of any sale or exclusive sale or rental listing contract at the time of execution thereof.5. Licensee-prepared revisions or additions reflected on the instrument itself shall be initialed by all parties to the transaction. Licensee-prepared revisions or additions to an instrument not memorialized by changes on the instrument itself shall be reflected on amendments or addenda to the instrument signed by all parties to the transaction. i. Licensees shall immediately deliver to the party proposing a revision or addition to an instrument a clear copy of any proposed revised instrument initialed by that party and a clear copy of any proposed amendment or addendum signed by that party.ii. All revisions, amendments and addenda to any fully executed instrument which are prepared by licensees must comply with New Jersey law as it pertains to the attorney review of contract and lease documents prepared by real estate licensees.6. This rule is to ensure prompt communication of the executed evidence of a transaction to all interested parties.(b) No listing agreement or contract for the sale of real property, or any interest therein, shall contain a prescribed or predetermined fee, commission rate, or commission amount; nor shall any such writing contain a commission clause or provision which suggests (such as with a small blank space and percent sign) to a seller that the commission is a prescribed rate or amount.(c) The commission clause or provision in all listing agreements for the sale of one to four family dwelling units or interest therein, or in all contracts for such sale, if there is no listing agreement, shall contain in print larger than the predominant size print in the writing, the language: "As seller you have the right to individually reach an agreement on any fee, commission, or other valuable consideration with any broker. No fee, commission or other consideration has been fixed by any governmental authority or by any trade association or multiple listing service." Nothing herein is intended to prohibit an individual broker from independently establishing a policy regarding the amount of fee, commission or other value consideration to be charged in transaction by the broker.(d) Upon request, the listing broker shall advise the seller of the rate or amount of any commission split or distribution.(e) All listing agreements of any licensed individual, partnership, firm or corporation which provide for the listing of property with any real estate multiple listing service operation shall specify the complete name of that listing service.(f) No licensed individual, partnership, firm or corporation shall enter into a "net listing" contract for the sale of real property, or any interest therein. A "net listing" is defined as an agency agreement in which a prospective seller lists real estate for sale with an authorization to a broker to sell at a specified net dollar return to the seller, and which provides that the broker may retain as commission the difference between the specified dollar return to the seller and the actual sales price.(g) Licensees shall comply with the following provisions: 1. All contracts prepared by licensees for the sale of residential real estate containing one to four dwelling units and for the sale of vacant one-family lots in transactions in which the licensee has a commission or fee interest shall contain, at the top of the first page and in print larger than the predominant size print in the writing, the following language: THIS IS A LEGALLY BINDING CONTRACT THAT WILL BECOME FINAL WITHIN THREE BUSINESS DAYS. DURING THIS PERIOD YOU MAY CHOOSE TO CONSULT AN ATTORNEY WHO CAN REVIEW AND CANCEL THE CONTRACT. SEE SECTION ON ATTORNEY REVIEW FOR DETAILS.
2. The contract shall also contain the following language within the text of every such contract. ATTORNEY REVIEW:
1. Study by Attorney The Buyer or the Seller may choose to have an attorney study this contract. If an attorney is consulted, the attorney must complete his or her review of the contract within a three-day period. This contract will be legally binding at the end of this three-day period unless an attorney for the Buyer or Seller reviews and disapproves of the contract.
2. Counting the Time You count the three days from the date of delivery of the signed contract to the Buyer and the Seller. You do not count Saturdays, Sundays or legal holidays. The Buyer and the Seller may agree in writing to extend the three-day period for attorney review.
3. Notice of Disapproval If an attorney for the Buyer or the Seller reviews and disapproves of this contract, the attorney must notify the Broker(s) and the other party named in this contract within the three-day period. Otherwise this contract will be legally binding as written. The attorney must send the notice of disapproval to the Broker(s) by certified mail, by telegram, or by delivering it personally. The telegram or certified letter will be effective upon sending. The personal delivery will be effective upon delivery to the Broker's office. The attorney may but need not also inform the Broker(s) of any suggested revisions in the contract that would make it satisfactory.
3. The contract shall also contain the names and full addresses of all persons to whom a Notice of Disapproval must be sent in order to be effective as provided in item three of the Attorney Review Provision.4. All leases prepared by licensees for a term of one year or more for residential dwelling units in transactions in which they have a commission or fee interest shall, at the top of the first page and in print larger than the predominant size print of the writing, contain the following language: THIS IS A LEGALLY BINDING LEASE THAT WILL BECOME FINAL WITHIN THREE BUSINESS DAYS. DURING THIS PERIOD YOU MAY CHOOSE TO CONSULT AN ATTORNEY WHO CAN REVIEW AND CANCEL THE LEASE. SEE SECTION ON ATTORNEY REVIEW FOR DETAILS.
5. The lease shall also contain the following language within the text of every such lease. ATTORNEY REVIEW:
1. Study by Attorney The Tenant or the Landlord may choose to have an attorney study this lease. If an attorney is consulted, the attorney must complete his or her review of the lease within a three-day period. This lease will be legally binding at the end of this three-day period unless an attorney for the Tenant or the Landlord reviews and disapproves of the lease.
2. Counting the Time You count the three days from the date of delivery of the signed lease to the Tenant and the Landlord. You do not count Saturdays, Sundays or legal holidays. The Tenant and the Landlord may agree in writing to extend the three-day period for attorney review.
3. Notice of Disapproval If an attorney for the Tenant or the Landlord reviews and disapproves of this lease, the attorney must notify the Broker(s) and the other party named in the lease within the three-day period. Otherwise this lease will be legally binding as written. The attorney must send the notice of disapproval to the Broker(s) by certified mail, by telegram, or by delivering it personally. The telegram or certified letter will be effective upon sending. The personal delivery will be effective upon delivery to the Broker's office. The attorney may but need not also inform the Broker(s) of any suggested revisions in the lease that would make it satisfactory.
6. The lease shall also contain the names and full addresses of all persons to whom a Notice of Disapproval must be sent in order to be effective, as provided in item three of the Attorney Review Provision.7. The failure of any licensee to include such language in any such contract of sale or lease agreement prepared by the licensee shall be construed by the Commission as engaging in the unauthorized practice of law and shall be considered by the Commission as conduct which demonstrates the licensee's unworthiness and incompetency, thereby subjecting the licensee to sanctions pursuant to 45:15-17(e).N.J. Admin. Code § 11:5-6.2
Amended by R.1977 d.84, effective 3/10/1977.
See: 9 N.J.R. 91(d), 9 N.J.R. 178(a).
Amended by R.1977 d.391, effective 10/19/1977.
See: 9 N.J.R. 344(a), 9 N.J.R. 536(a).
Amended by R.1979 d.461, effective 11/26/1979.
See: 10 N.J.R. 499(a), 12 N.J.R. 44(b).
Amended by R.1980 d.51, effective 1/31/1980.
See: 12 N.J.R. 127(e).
Amended by R.1980 d.214, effective 5/14/1980.
See: 12 N.J.R. 342(d).
Amended by R.1980 d.274, effective 6/19/1980.
See: 12 N.J.R. 423(d).
Amended by R.1980 d.408, effective 9/23/1980.
See: 12 N.J.R. 340(b), 12 N.J.R. 665(c).
(c) substantially amended.
Amended by R.1980 d.409, effective 9/24/1980.
See: 12 N.J.R. 665(d).
(c) compliance date amended from November 1, 1981 to January 2, 1981.
Amended by R.1983 d.471, effective 11/7/1983.
See: 15 N.J.R. 1343(a), 15 N.J.R. 1865(c).
Time limits on compliance deleted.
Amended by R.1987 d.159, effective 4/6/1987.
See: 18 N.J.R. 1677(a), 18 N.J.R. 2112(a), 19 N.J.R. 551(a).
Added (g).
Amended by R.1987 d.359, effective 9/8/1987.
See: 19 N.J.R. 503(b), 19 N.J.R. 1646(a).
Added (h) "Agreement to Honor".
Invalidity Annotation
N.J.A.C. 11:5-1.16(h) held invalid as an intrusion upon the State Supreme Court's constitutional authority to regulate the practice of law. Carmagnola v. Hann, 233 N.J.Super. 547 (App. Div. June 12, 1989), 559 A.2d 478.
Amended by R.1989 d.539, effective 10/16/1989.
See: 21 N.J.R. 2438(b), 21 N.J.R. 3299(a).
Subsection (h) deleted due to Appellate Court decision ... N.J.Super. ..., Dkt. No. A-2211-88T2F (App.Div.1989).
Amended by R.1993 d.10, effective 1/4/1993.
See: 24 N.J.R. 3485(a), 25 N.J.R. 179(a).
Text at (a) substantially amended to specify licensees' obligations to parties in a real estate transaction involving offers or counter-offers.
Petition for Rulemaking.
See: 25 N.J.R. 4523(c), 26 N.J.R. 505(b).
Petition for Rulemaking.
See: 32 N.J.R. 850(a), 32 N.J.R. 1085(b).
Petition for Rulemaking.
See: 40 N.J.R. 3758(b), 40 N.J.R. 4361(a).