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, 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 GREATER THAN THE OFFERED PRICE.
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 types
of 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 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 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 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 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 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.
THE NEW
JERSEY REAL ESTATE COMMISSION
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