Bill Text: NJ S1314 | 2024-2025 | Regular Session | Introduced
Bill Title: Creates requirements for certain long-term real estate listing contracts.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced) 2024-01-09 - Introduced in the Senate, Referred to Senate Commerce Committee [S1314 Detail]
Download: New_Jersey-2024-S1314-Introduced.html
STATE OF NEW JERSEY
221st LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2024 SESSION
Sponsored by:
Senator NELLIE POU
District 35 (Bergen and Passaic)
SYNOPSIS
Creates requirements for certain long-term real estate listing contracts.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act creating requirements for certain long-term real estate listing contracts, supplementing P.L.1995, c.360 (C.25:1-10 et seq.), and amending R.S.45:15-17.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. (New section) a. As used in this P.L. , c. (C. ) (pending before the Legislature as this bill):
"Right-to-list home sale agreement" means an agreement whereby the owner of residential real estate provides another with exclusive rights to list the real estate for sale at a future date in exchange for monetary consideration or an equivalent to monetary consideration.
b. A right-to-list home sale agreement:
(1) shall not be enforceable if the agreement:
(a) is for a period longer than ten years; or
(b) does not include an option allowing the owner to terminate the contract early in exchange for an amount that is not greater than the initial contract price, plus six percent of the initial contract price for each year that elapses following the effective date of the contract. The yearly amount shall be compounded from the previous year; and
(2) shall include the period for which the contract is effective and early termination clause in a clear and conspicuous manner and shall be compliant with the remaining provisions of P.L.1995, c.360 (C.25:1-10 et seq.) and provisions of P.L.1980, c.125 (C.56:12-1 et seq.).
2. R.S.45:15-17 is amended to read as follows:
45:15-17. The commission may, upon its own motion, and shall, upon the verified complaint in writing of any person, investigate the actions of any real estate broker, broker-salesperson, or salesperson, or any person who assumes, advertises or represents himself as being authorized to act as a real estate broker, broker-salesperson, or salesperson or engages in any of the activities described in R.S.45:15-3 without being licensed so to do. The lapse or suspension of a license by operation of law or the voluntary surrender of a license by a licensee shall not deprive the commission of jurisdiction to proceed with any investigation as herein provided or prevent the commission from taking any regulatory action against such licensee, provided, however, that the alleged charges arose while said licensee was duly licensed. Each transaction shall be construed as a separate offense.
In conducting investigations, the commission may take testimony by deposition as provided in R.S.45:15-18, require or permit any person to file a statement in writing, under oath or otherwise as the commission determines, as to all the facts and circumstances concerning the matter under investigation, and, upon its own motion or upon the request of any party, subpoena witnesses, compel their attendance, take evidence, and require the production of any material which is relevant to the investigation, including any and all records of a licensee pertaining to his activities as a real estate broker, broker-salesperson, or salesperson. The commission may also require the provision of any information concerning the existence, description, nature, custody, condition and location of any books, documents, or other tangible material and the identity and location of persons having knowledge of relevant facts of any other matter reasonably calculated to lead to the discovery of material evidence. Upon failure to obey a subpoena or to answer questions posed by an investigator or legal representative of the commission and upon reasonable notice to all affected persons, the commission may commence an administrative action as provided below or apply to the Superior Court for an order compelling compliance.
The commission may place on probation, suspend for a period less than the unexpired portion of the license period, or may revoke any license issued under the provisions of R.S.45:15-1 et seq., or the right of licensure when such person is no longer the holder of a license at the time of hearing, or may impose, in addition or as an alternative to such probation, revocation or suspension, a penalty of not more than $5,000 for the first violation, and a penalty of not more than $10,000 for any subsequent violation, which penalty shall be sued for and recovered by and in the name of the commission and shall be collected and enforced by summary proceedings pursuant to the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.), where the licensee or any person, in performing or attempting to perform any of the acts mentioned herein, is deemed to be guilty of:
a. Making any false promises or any substantial misrepresentation; or
b. Acting for more than one party in a transaction without the knowledge of all parties thereto; or
c. Pursuing a flagrant and continued course of misrepresentation or making of false promises through agents, broker-salespersons, or salespersons, advertisements or otherwise; or
d. Failure to account for or to pay over any moneys belonging to others, coming into the possession of the licensee; or
e. Any conduct which demonstrates unworthiness, incompetency, bad faith or dishonesty. The failure of any person to cooperate with the commission in the performance of its duties or to comply with a subpoena issued by the commission compelling the production of materials in the course of an investigation, or the failure to give a verbal or written statement concerning a matter under investigation may be construed as conduct demonstrating unworthiness; or
f. (1) Failure to provide his client with a fully executed copy of any sale or exclusive sales or rental listing contract at the time of execution thereof, or failure to specify therein a definite terminal date which terminal date shall not be subject to any qualifying terms or conditions; or
(2) Entering into a right-to-list home sale agreement in violation section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill); or
g. Using any plan, scheme or method for the sale or promotion of the sale of real estate which involves a lottery, a contest, a game, a prize, a drawing, or the offering of a lot or parcel or lots or parcels for advertising purposes. If a broker participates in a promotion or offering of free, discounted, or other services or products which confers upon the recipient a monetary benefit of greater than $1,000, the broker shall provide written disclosure of the benefit to the recipient and any information concerning the promotion or benefit as may be required by the commission. A broker shall disclose in writing any compensation received for such promotion or offer in the form and substance as required by the federal "Real Estate Settlement Procedures Act of 1974," 12 U.S.C. ss.2601 et seq., except that, notwithstanding the provisions of that federal act, written disclosure shall be provided no later than when the promotion or offer is extended by the broker to the consumer; or
h. Being convicted of a crime, knowledge of which the commission did not have at the time of last issuing a real estate license to the licensee; or
i. Collecting a commission as a real estate broker in a transaction, when at the same time representing either party in a transaction in a different capacity for a consideration; or
j. Using any trade name or insignia of membership in any real estate organization of which the licensee is not a member; or
k. Paying any rebate, profit, compensation or commission to anyone not possessed of a real estate license, except that: (1) free, discounted or other services or products provided for in subsection g. of this section shall not constitute a violation of this subsection; and (2) a real estate broker may provide a purchaser of residential real property, but no other third party a rebate of a portion of the commission paid to the broker in a transaction, so long as: the broker and the purchaser contract for such a rebate at the onset of the broker relationship in a written document, electronic document or a buyer agency agreement; the broker complies with any State or federal requirements with respect to the disclosure of the payment of the rebate; and the broker recommends to the purchaser that the purchaser contact a tax professional concerning the tax implications of receiving that rebate. The rebate paid to the purchaser shall be in the form of a credit, reducing the amount of the commission payable to the broker, or a check paid by the closing agent and shall be made at the time of closing; or
l. Any other conduct, whether of the same or a different character than specified in this section, which constitutes fraud or dishonest dealing; or
m. Accepting a commission or valuable consideration as a real estate broker-salesperson or salesperson for the performance of any of the acts specified in this act, from any person, except his employing or contracting broker, who must be a licensed broker; or
n. Procuring a real estate license, for himself or anyone else, by fraud, misrepresentation or deceit; or
o. Commingling the money or other property of his principals with his own or failure to maintain and deposit in a special account, separate and apart from personal or other business accounts, all moneys received by a real estate broker, acting in said capacity, or as escrow agent, or the temporary custodian of the funds of others, in a real estate transaction; or
p. Selling property in the ownership of which he is interested in any manner whatsoever, unless he first discloses to the purchaser in the contract of sale his interest therein and his status as a real estate broker, broker-salesperson, or salesperson; or
q. Purchasing any property unless he first discloses to the seller in the contract of sale his status as a real estate broker, broker-salesperson, or salesperson; or
r. Charging or accepting any fee, commission or compensation in exchange for providing information on purportedly available rental housing, including lists of such units supplied verbally or in written form, before a lease has been executed or, where no lease is drawn, before the tenant has taken possession of the premises without complying with all applicable rules promulgated by the commission regulating these practices; or
s. Failing to notify the commission within 30 days of having been convicted of any crime, including any sex offense that would qualify the licensee for registration pursuant to section 2 of P.L.1994, c.133 (C.2C:7-2) or under an equivalent statute of another state or jurisdiction, misdemeanor or disorderly persons offense, or of having been indicted, or of the filing of any formal criminal charges, or of the suspension or revocation of any real estate license issued by another state, or of the initiation of formal disciplinary proceedings in another state affecting any real estate license held, or failing to supply any documentation available to the licensee that the commission may request in connection with such matter; or
t. The violation of any of the provisions of R.S.45:15-1 et seq. or of the administrative rules adopted by the commission pursuant to the provisions of R.S.45:15-1 et seq. The commission is expressly vested with the power and authority to make, prescribe and enforce any and all rules and regulations for the conduct of the real estate brokerage business consistent with the provisions of chapter 15 of Title 45 of the Revised Statutes.
If a licensee is deemed to be guilty of a third violation of any of the provisions of this section, whether of the same provision or of separate provisions, the commission may deem that person a repeat offender, in which event the commission may direct that no license as a real estate broker, broker-salesperson, or salesperson shall henceforth be issued to that person.
(cf: P.L.2021, c.281, s.2)
3. This act shall take effect on the 30th day next following the date of enactment and shall apply to all contracts that are delivered, issued, executed or renewed in this State on or after the effective date of this act.
STATEMENT
This bill prohibits licensed real estate brokers, salespeople, and broker-salespeople from entering into contracts for the sale of real estate that give the licensee the exclusive right to act as listing agent for the real estate for a period longer than ten years. The bill also requires that such contracts include an option allowing the owner of the real estate to terminate the contract early in exchange for an amount that is not greater than the initial contract price, plus six percent of the initial contract price for each year that elapses following the effective date of the contract. Exclusive listing agreements typically do not last more than one year, and are not entered into unless the owner has immediate plans to sell the real estate. However, some licensees pay real estate owners nominal consideration in the form of cash upfront in exchange for the exclusive right to serve as the owner's listing agent in the event that the owner decides to sell their real estate at any time during a contract period. This contracted period can last for decades, and the contracts contain severe penalties for attempting to terminate the contracts early or list the home with another broker.
These contracts may be predatory in nature, and real estate licensees who engage in these contracts have been known to target people in desperate financial situations, including the sick and elderly. This bill protects New Jersey's most vulnerable real estate owners and promotes fair dealing in contracts.
