New Jersey real estate buyers and sellers gain more protections starting August 1.

In early July, Gov. Murphy signed Bill S3192/A4454, also known as the Real Estate Consumer Protection Enhancement Act, into law. The law, which goes into effect Aug. 1, 2024, strengthens both consumer and real estate licensee protections.

1. Seller's Property Condition Disclosure Statement Now Required

Sellers must provide a fully completed property condition disclosure statement before buyers are contractually obligated. This ensures buyers have all the necessary information, promoting informed decision-making and reducing potential disputes.

The new law mandates seller disclosures for better transparency and consumer protection. Sellers must provide buyers a signed and completed property condition disclosure statement before the buyer becomes contractually obligated to purchase a property. This applies to all residential sales, including bank-owned properties and estates.

2. Designated Agency Now Allowed

Designated agency, which enables a brokerage to appoint different agents to represent both the seller and the buyer with full fiduciary duties at the client's request, is now permissible.

This law allows for a fifth type of agency in the state of New Jersey—designated agency. The definitions for each type of agency (seller’s agent, buyer’s agent, disclosed dual agent, transaction broker, and now designated agent) are set forth in the Consumer Information Statement. Once updated by the New Jersey Real Estate Commission, the revised Consumer Information Statement will be available here.

Designated agency allows for different licensees within the same brokerage firm to represent either party—one licensee to represent the seller as the “seller’s designated agent” and one licensee to represent the buyer as the “buyer’s designated agent” in the same transaction.

To engage in Designated Agency, a brokerage firm must first obtain the informed written consent of the seller and the buyer.

New and updated forms are forthcoming to the New Jersey Realtors® Forms Library.

Creation of “Designated Agency”

• A Designated Agent works only for the party they were appointed to represent by their broker. Designated agency occurs when a broker appoints/designates different licensees within the same brokerage firm to represent two different parties: one licensee to represent the seller as ‘seller’s designated agent’ and a different licensee to represent the buyer as ‘buyer’s designated agent’ in the same transaction. To engage in Designated Agency, a brokerage firm must first obtain the informed written consent of the seller and the buyer.
• In the context of Designated Agency, the designating broker oversees the transaction and acts as a dual agent for the seller and buyer. The designating broker remains neutral about any conflicts of interest between the seller and buyer, maintains confidentiality and may not advocate or negotiate on behalf of a seller or buyer to the disadvantage of the other. Instead, the designating broker supervises the designated agents to ensure each designated agent is maintaining the agent’s full range of fiduciary duties which are ordinarily owed by a licensee who represents solely the seller as “Seller’s Agent”, and by a licensee who represents solely the buyer as “Buyer’s Agent”.
  
  

3. Brokerage Services Agreements Required

All real estate licensees will be required to use brokerage agreements, which outline services they will provide to all clients over the course of a respective transaction.

Brokerage services agreement means a written agreement between a brokerage firm and principal (i.e. the seller or buyer) that appoints a brokerage firm to represent the principal as an agent (i.e. seller’s agent, buyer’s agent, disclosed dual agent or designated agent) or work with a buyer or seller as a transaction broker. Broker services agreements include, but are not limited to, sale and rental listing agreements; buyer/lessee representation agreements; and transaction broker, dual agency and designated agency agreements.

• At a minimum, a brokerage services agreement must include: (a) the term of the agreement, (b) the name of the brokerage firm, (c) whether the agency relationship is exclusive or non-exclusive, (d) whether the principal consents to dual agency or designated agency, if the opportunity arises, (e) whether the principal consents to the broker acting as a disclosed dual agent, if necessary, (f) the brokerage’s compensation and how it’s calculated, and (g) a statement that broker compensation is fully negotiable and not set by law.
  
  

4. Signage Required at Open Houses

Listing agents will be required to explicitly disclose who they represent at open houses in the form of signage either at the entrance or sign-in sheet for all attendees to see.

The sign must state that the agent represents the seller only and has no relationship with the prospective buyer unless:

• The buyer does not have an exclusive buyer agency agreement with another firm, or
• The buyer agrees to the seller's agent becoming a disclosed dual agent or designated agent.

The sign must clearly read:

• “ATTENTION PROSPECTIVE PURCHASERS - PLEASE READ THIS SIGN CAREFULLY. This is to advise you that the agent who is conducting this Open House REPRESENTS THE SELLER AND IS REQUIRED BY LAW TO PROMOTE THE INTERESTS OF THE SELLER. ANY INFORMATION YOU GIVE THIS AGENT IS NOT CONSIDERED CONFIDENTIAL under New Jersey law and could be disclosed to the Seller of this property.  You, as the Buyer, are entitled to have someone represent you as a Buyer’s Agent if you are interested in this property.  The duties of a Buyer’s Agent include helping you evaluate the property, prepare an offer on the property and negotiate in your best interests.  If you, as the Buyer, are already exclusively represented by a Buyer’s Agent, you are required to disclose this representation on the sign-in sheet.  If you, as the Buyer, are not already exclusively represented by a Buyer’s Agent, please be advised that the Open House agent is not precluded from being a disclosed dual agent or designated agent and can enter into any relationship with you as explained in the Consumer Information Statement.”
  
  

5. Compensation Disclosure Changes in Multiple Listing Services

Sellers’ agents can no longer disclose compensation in Multiple Listing Services or notify MLSs about cooperative compensation, if prohibited by MLS policy.

6. New CE Requirement Added

Licensees must complete continuing education classes every two years to stay informed and best serve their clients. One course on agency will be added to New Jersey Real Estate Commission continuing education requirements.

The new law requires licensees complete continuing education classes every 2 years to stay informed and best serve their clients

Course Requirements/Guidelines are as follows:

• 50-60% of courses must cover core topics [Agency, Disclosure, Legal issues, 2 hours of Ethics, Fair housing, Rules and regulations, Real estate licensee safety, Financial literacy and planning, Other core topics prescribed by the New Jersey Real Estate Commission]
• One hour of instruction equals one credit.
• At least one hour of fair housing and housing discrimination
• One course on agency

This information is provided by New Jersey Realtors. For more detailed information on these changes, please visit New Jersey Realtors' official website.