Consumer Information Statement On New Jersey Real Estate Relationships
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CIS - Larry Fluehr, Coldwell Banker Otton Stone Harbor
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 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
business relationships:
seller's agent;
buyer's agent;
disclosed dual agent; and
transaction broker.
Each or 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 agent. 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 had
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 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 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 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 sigh 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)
or 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.
Acknowledgement of Receipt of Consumer Information Statement (CIS)
For Sellers and Landlords
"By signing this Consumer Information Statement, I acknowledge that I
received this Statement from
________________________
(Name of Brokerage Firm)
prior to discussing my motivation to sell or lease or my desired selling or
leasing price with one of its representatives."
Signed __________________
For Buyers and Tenants
"By signing this Consumer Information Statement, I acknowledge that I
received this Statement from
________________________
(Name of Brokerage Firm)
prior to discussing my motivation or financial ability to buy or lease with
one of its representatives."
Signed __________________
Declaration of Business Relationship
I, _______________________
(Name of Licensee)
as an authorized representative of
________________________
(Name of Brokerage Firm)
intend, as of this time, to work with you as a:
(indicate one of the following)
● seller's agent only
● buyer's agent only
● seller's agent and disclosed dual agent if the opportunity arises
● buyers agent and disclosed dual agent if the opportunity arises
● transaction broker only
● seller's agent on properties on which this firm is acting as the
seller's agent and transaction broker on other properties
Date ___________________