CONSUMER INFORMATION STATEMENT
Consumer Information Statement on New Jersey Real Estate Relationships
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 read as “tenants” and “landlords,”
1. 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.
2. 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
4. 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: (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.
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 buyer’s. 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 subªagents should so inform the seller’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
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 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 the seller will accept and the parties’ motivation
to buy and 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.
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 same 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
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 ADVISE ABOUT THESE BUSINESS RELATIONSHIPS FROM YOUR OWN LAWYER.
THIS STATEMENT IS NOT A CONTRACT AND IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY.
DECLARATION OF BUSINESS RELATIONSHIP.