N.J. Admin. Code § 11:5-7.1

Current through Register Vol. 56, No. 19, October 7, 2024

Section 11:5-7.1 - Prohibition against licensees receiving dual compensation for dual representation in the sale or rental transaction

(a) Real estate licensees are prohibited from receiving compensation from both a seller and a buyer for representing both seller and buyer in the same real estate sales transaction. This prohibition applies even when the dual agency has been fully disclosed by the licensee to both parties.

(b) Real estate licensees are prohibited from receiving compensation from both a landlord and a tenant for representing both the landlord and the tenant in the same rental transaction. This prohibition applies even when the dual agency has been fully disclosed by the licensee to both parties.

(c) Within the meaning of this section, the phrases "sales transaction" and "rental transaction" do not include any related transactions whether or not they are contingencies in the contract or lease. For example, where there is a mortgage contingency in a contract of sale, the mortgage loan is a related transaction between the buyer and lender; it is not the same transaction as the sale.

(d) A licensee who represents only one party to a sale or rental transaction may receive the entire compensation for such representation from either party or a portion of that compensation from both parties to the transaction, provided that where a licensee prepares a contract or lease full written disclosure of the agency relationship and of the compensation arrangement is made to both parties to the transaction in the contract or lease. Where a licensee does not prepare the contract or lease, but seeks compensation from a party whom he or she does not represent, that licensee's agency relationship and proposed compensation arrangement shall be disclosed to all parties in a separate writing prior to execution of the contract or lease.

(e) A licensee who represents any party to a sale or rental transaction may receive compensation from either party for providing actual services in related transactions, provided that the licensee discloses the related services, sources and amounts of compensation in writing to the parties to the sale or rental transaction. Where the related services to be provided by the licensee are mortgage financing services provided to the buyer for compensation or reimbursement, the written disclosures must comply with 11:5-6.7. The broker shall maintain records of such related transactions including all required written disclosures, which records shall be available to the Commission for inspection pursuant to 11:5-5.5.

(f) Except as provided at (g) below, when providing mortgage financing services related to the purchase or sale of a one to six family residential dwelling, a portion of which may be used for non-residential purposes, located in New Jersey:

1. A real estate broker shall not solicit or receive compensation or reimbursement pursuant to (e) above greater than the expense amount permitted at closing by rule of the Department of Banking and Insurance unless licensed as a mortgage broker or mortgage banker by the Department of Banking and Insurance pursuant to the Consumer Finance Licensing Act, N.J.S.A. 17:11C-1 et seq.; and

2. A real estate referral agent, salesperson or broker-salesperson shall not solicit or receive any compensation or reimbursement pursuant to (e) above from any person other than his or her employing real estate broker unless licensed as a residential mortgage broker or mortgage banker or a mortgage loan originator by the Department of Banking and Insurance pursuant to the New Jersey Residential Mortgage Lending Act, 17:11C-51 et seq.

(g) Any real estate licensee who is individually employed as a mortgage solicitor by a licensed mortgage banker or mortgage broker and registered in compliance with applicable law and the rules of the Department of Banking and Insurance may solicit and accept compensation from his or her licensed mortgage employer for providing mortgage services in residential mortgage transactions.

N.J. Admin. Code § 11:5-7.1

New Rule, R.1992 d.232, effective 6/1/1992.
See: 23 N.J.R. 3424(b), 24 N.J.R. 2058(b).
Amended by R.1992 d.468, effective 11/16/1992.
See: 24 N.J.R. 1957(a), 24 N.J.R. 2129(a), 24 N.J.R. 4268(a).
Added (f), limiting solicitation and receipt of compensation for mortgage financing services to $ 250.00; and (g), permitting solicitation of mortgage banker or broker by real estate licensee who is also employed as a mortgage solicitor by said banker or broker.
Amended by R.1998 d.497, effective 10/5/1998.
See: 30 N.J.R. 2333(a), 30 N.J.R. 3646(a).
In (e), changed N.J.A.C. references; and rewrote (f) and (g).
Amended by R.2012 d.006, effective 1/3/2012.
See: 43 N.J.R. 1791(a), 44 N.J.R. 86(b).
In (f)2, inserted "referral agent", "residential" and "or mortgage loan originator", and substituted "Residential Mortgage Lending Act, N.J.S.A. 17:11C-51 et seq." for "Licensed Lenders Act, N.J.S.A. 17:11C-1 et seq.".

Amended by 55 N.J.R. 302(a), effective 2/21/2023