Economic Characteristics of land: scarcity (limited supply), durability (indestructibility) and situs (location).

Littoral Rights – are rights concerning properties abutting an ocean, sea or lake, referred to as a non moving body of water up to the high water mark, rather than a moving body of water such as a river or stream. Littoral rights usually extent to the high water mark. Riparian Rights – are rights concerning properties abutting a river or stream, i.e. a moving body of water. If the water is not navigable riparian rights usually extend out to the middle of the stream. However if the sides of the lot have designated lengths the designated lengths prevail. Under riparian rights first priority is given to necessary household use and then to agricultural use then to commercial and industrial use. Doctrine of Prior Appropriation – simply that the first owner is privileged to the first claim on water however the owner must divert the water for his/her personal use and not for the use of another party.

Accretion – a slow build up of soil caused by natural occurrences such as water of wind. Erosion – a slow depletion of land caused by natural occurrences such as with water of wind. Avulsion – a rapid removal of land as a result of natural occurrences.

Eminent Domain – permits government to take property for public use with just compensation. Condemnation – the act of government taking possession of property by legal process for the benefit of the general public and for general public use. Escheat – reverting or lapsing of property back to the government through legal procedures. Represent the legal process of the state in taking possession of property. As an example, the state acquires land of an intestate person (one who dies without leaving a will) who has no heirs.

Mile – 5280 feet, Acre – 43560 square feet, Section – 640 acres, Township – 36 square miles

DEEDS

General Warranty Deed – highest conveyance of ownership. Grantor guarantees the deed against the world. 1) covenant of seizing, 2) quiet enjoyment, 3) freedom from encumbrances, 4) further assurances, 5) right to convey, and 6) covenant of warranty.

Special Warranty Deed – this deed guarantees the title through the seller and his/her heirs but not his/her predecessors. The net effect of this limitation is to relieve the seller from any liability for claims that do not arise through him/her.

Grant Deed – implied warranty. The seller implies that they have not conveyed the property to another. A grant deed is one of the more common types of deeds used to transfer property. In order to use a grant deed, the property must be clear of any claims.

Bargain and Sale Deed – similar to a quitclaim deed, i.e. no warrantees except the grantor acknowledges that they have an interest in the property.

Quitclaim Deed – gives no warrantees, except the grantor acknowledges that they have an interest in the property. Sometimes used to remove a cloud on the title or defects such as an incorrect description on the title. Out of all the deeds used to exchange ownership of a home, quitclaim deeds are used the least since they don’t give buyers a firm assurance that the seller is the home’s legal owner.

Deed of Trust – a deed held in trust, involves a third party called a trustee, who acts on behalf of the lender. When you sign a deed of trust, you are giving the trustee title (ownership) of the property. The lender or trustee holds the original deed of trust until you repay the loan. Unlike a mortgage, a deed of trust also gives the lender the right to foreclose on your property without going through the court systems.

Special Purpose Deed – Sheriffs deed, Tax deed, Administrators deed, Directors deed, etc.

LENDING

Truth-In-Lending - This federal law is implemented and enforced by the Federal Reserve Board. The key regulation is Regulation Z. Regulation Z requires disclosure of the true annual percentage rate (APR) and loan costs including, the number of months of the loan, the date payments are due, any prepayment penalties, total finance charges, and any late payment or default charges. The regulation requires the lender to gives the borrower a 3 day period to compare the loan terms and cancel the loan agreement. Exemptions to Regulation Z are business loans, commercial loans, assumption of a loan, and installment loans with 4 or fewer installments. Regulation Z determines how credit terms are advertised. Penalties in advertising are administered by the Federal Trade Commission.

Real Estate Settlement Procedures Act (RESPA) – administered by HUD is a consumer protection statute and standardized procedures in closing federally related mortgage loan. RESPA only applies to first mortgages on one to four family properties. RESPA requires a disclosure and settlement statement (HUD uniform settlement statement) be presented to the borrower within 3 days and a good faith estimate (GFE) of closing costs at loan application. RESPA regulates and limits the escrow amounts held and collected by the lender. RESPA limits escrow to 1/6th of real estate taxes and insurance. RESPA eliminates kickbacks and regulates referral fees that can increase the cost of obtaining a loan. For more information go to RESPA Real Estate Settlement Procedures Act.

The Federal Housing Administration (FHA) - HUD's mission is to increase homeownership, support community development and increase access to affordable housing free from discrimination. The Federal Housing Administration (FHA) does not make loans but insures loans made by approved lenders. For more information visit http://www.hud.gov/. FHA mortgage insurance provides lenders with protection against losses as the result of homeowners defaulting on their mortgage loans. The lenders bear less risk because FHA will pay a claim to the lender in the event of a homeowner's default. Congress created the Federal Housing Administration (FHA) in 1934. The FHA became a part of the Department of Housing and Urban Development's (HUD) Office of Housing in 1965.

FHA Mortgage Insurance Premium (MIP) - Mortgages may be subject to a monthly premium or a upfront premium. The upfront mortgage insurance premium (UFMIP) is paid on the loan amount and is paid in one fee. If the loan is paid off early then a portion of the upfront mortgage insurance premium is credited back to the borrower. The UFMIP is 2.25% for a 30 year loan and 2.00% for a 15 year loan.

FHA 234(c) - This program insures the loan for a person who purchases a unit in a condominium building. For more information on this program visit HUD the U.S. Division of Housing and Urban Developement website on "Mortgage Insurance for Condominium Units (Section 234(c)) ".

FHA 245 - This program provides a graduated payment plan whereby the interest rate and payment amounts increase gradually over the first 1 to 10 years depending on the program selected. Program insures mortgages for first-time (and other) buyers who have low and moderate incomes--and who thus cannot meet standard mortgage payments, but who expect that their income will increase substantially in the next 5-10 years. For more information on this program visit HUD the U.S. Division of Housing and Urban Development website on "Graduated Payment Mortgage Insurance (Section 245) ".

FHA 203(k) - This program provides for the rehabilitation and repair of 1 to 4 family dwellings. The loan may cover the purchase price of the property and the cost of rehabilitation. For more information on this program visit HUD the U.S. Division of Housing and Urban Developement website on "Rehab a Home w/HUD's 203(k) Rehab Program".

Department_of_Veteran_Affairs (VA) Loans - A minimum of 90 to 181 days of active service with an honorable discharge is required, depending on when the individual served. To qualify for a VA loan you need a Certificate of Eligibility. There are no down payment requirements with a VA loan and can be for 15 or 30 years. These loans are guaranteed by the VA with maximum guarantees as follows: 1) loans $45,000 or less, 50%. 2) loans above $45,000, 40%, up to $36,000 whichever is less, but not more than $22,500. 3) loans above $203,000, 25% up to $50,750 whichever is less. Loans may be restricted by the veteran's remaining entitlement. A buyer does not have to be a veteran to assume an existing VA loan. The funding fee is determined by the down payment:

For more information visit the United States Department of Veterans Affairs "Loan Guaranty Service Homepage".

Federal_Home_Loan_Mortgage_Corporation (FHLMC) - FHLMC buys standardized loans processed and written by approved lenders. By buying the loans from lenders this ultimately allows the lenders to make new loans and facilitates a process of intermediation. The main intent is to provide liquidity and in the end reduce the cost of financing to the borrower. FHLMC then packages the mortgages and sells them as investment paper thus further providing liquidity and funding to the mortgage market.

Government_National_Mortgage_Association (GNMA) - Ginnie Mae does not buy or sell loans or issue mortgage-backed securities (MBS). Ginnie Mae guarantees the timely payment of principal and interest. Ginnie Mae mortgage-backed securities MBS are created when eligible mortgage loans (those insured or guaranteed by FHA, the VA, RHS or PIH) are pooled and securitized. Because GNMA MBS consist of FHA and VA loans they are the only mortgage-backed securities in the market to carry the full faith and credit guaranty of the United States government.

Federal_National_Mortgage_Association (FNMA) - FNMA buys standardized loans processed and written by approved lenders. By buying the loans from lenders this ultimately allows the lenders to make new loans and facilitates a process of intermediation. The main intent is to provide liquidity and in the end reduce the cost of financing to the borrower. FNMA then packages the mortgages and sells them as investment paper thus further providing liquidity and funding to the mortgage market.

Mortgage-backed securities (MBS) - are pools of mortgages used as collateral for the issuance of securities in the secondary market.

TYPES OF LISTINGS

Open Listings - Here an owner lists his property with multiple brokers. The seller only pays a commission to selling brokers that sells the property. In addition the owner retains the right to sell without paying a brokerage fee.

Exclusive Agency - In an exclusive agency agreement between a broker and a seller the property is only listed with one broker but the owner retains the right to sell the property and not pay a commission to the broker.

Exclusive Right to Sell - Here the broker maintains the exclusive right to act as the agent for the sellers. This provides security to the broker knowing that if the owner finds a buyer through other efforts, the broker will still get a commission. This agreement works well for the broker because the commission is near guaranteed if a sale occurs within the time frame of the listing agreement.

Net Listing - When a seller introduces the requirement that he/she receive a fixed amount from the sale that is net of any commissions paid to the broker. Net listings are illegal in most states since they can lead to conflicts between the parties involved.

Flat Fee Listing - This agreement offers the broker a flat fee for their services. The fee is paid up front and is paid whether or not the property sells.

Terminating a Listing - A listing will remain in effect until the 1) property is sold or the 2) listing expires. Listings may be terminated if the principal and the brokerage firm have come to an agreement to end the listing early.

Multiple Listing Service (MLS) - This is an organization of realtors that allows for the co-brokering of property. The intent is to allow for the cooperation between brokers in achieving the sale of real estate. The MLS creates a sub agency relationship between the primary listing broker and other brokers that are a part of the MLS service.

TYPES OF LEASES

Net Lease - The lessor pays a base rent net of property expenses (taxes, maintenance, insurance, etc.). The tenant will pay a separate amount to cover the landlord's taxes, maintenance and insurance. The intent is for the landlord to receive a guaranteed base rent amount and for the tenants to assume responsibility for any fluctuations in property expenses (taxes, maintenance, insurance, etc.).

Gross Lease - The renter pays the landlord a fixed monthly rent which theoretically includes each tenant’s share of maintenance, utility, and other expenses as well as the base rent amount. The landlord is responsible for paying all other property expenses (taxes, maintenance, insurance, etc.). The landlord is subjected to short term fluctuations in property expenses (taxes, maintenance, insurance, etc.). An example would be a typical apartment buildings lease.

Percentage Lease - A lease that is based on flat rate but also includes a portion of the gross income or revenues that is generated from the business of the tenant. I have seen leases in large shopping malls that contain clauses requiring the tenant to pay a percentage of gross sales to the landlord.

Ground Lease - Land lease. Some commercial buildings rent the land they are affixed to.

TYPES OF LEASEHOLD INTERESTS

Tenancy for years - This type of lease has a stated expiration date. The lease could be weeks or years and the tenant must vacate upon expiration. Not terminated upon the death of either party.

Periodic tenancy - A lease of property which is period to period, either weekly, monthly or yearly. Lease is automatically renewed unless terminated in writing with 30 days notice.

Tenancy at Will - A lease that is at will and can be terminated at any time by either party, however some states may require prior notice. Automatically terminated upon death of either party.

Tenancy at Sufferance (Holdover Tenant) - When a tenant fails to vacate the premises after their lease has expired. If the landlord continues to accept rent from the tenant the leasehold interest becomes a periodic tenancy.

Lease (defined) - a contract between two parties (a lessee and a lessor) of real property which gives the right of possession to the tenant. Upon expiration of the lease, the lessor regains possession of the property. A lease is a conveyance of a leasehold interest in real property. A lease should include 1) names of the lessee and the lessor, 2) detailed description of the leased property, 3) the commencement and termination dates 4) rent amount, and 5) responsibilities of the parties. A lease can be terminated by expiration, agreement, condemnation, notice, or constructive eviction.

TYPES OF MORTGAGES

Open End Mortgage – borrower can extend the loan amount. Package mortgages – mortgage (financing) includes purchases of property other than just the intended real property such as furniture and appliances. Wrap Around Mortgages – two or more mortgages consolidated into one payment. Purchase Money Mortgages – seller takes back a note and finances the buyer for a portion or the entire purchase price. Blanket Mortgages – cover more than one piece of property. Open Mortgages – overdue and not yet foreclosed. Term Mortgages – are for specific periods such as a balloon loan.

TYPES OF LIENS

Specific Liens – a lien against a specific property. Mechanics Liens – a contractor that performs work for a property owner and is not paid may place a mechanics lean on the property. General Liens – are broader in scope and effect real and personal property. Property Taxes – tax lien come before all other liens and are usually sold at auction. A tax certificate is issued after the auction and after the redemption period expires a tax deed will be issued.

QUICK TERMS TO KNOW

Holographic - will is a hand written will. Bequest - is a gift of personal property. Legacy - is a gift of money. Devise - is a gift of real estate. Demise - is a transfer by lease. Width - is depth. Length - is frontage. Special Assessments – are liens to pay for improvements such as a sidewalk. Surrender and Acceptance – by mutual agreement the tenant and landlord can sever the lease. Condemnation – if a property is condemned under the right of eminent domain, the lessee must vacate the premises. Unlawful Retainer – a tenant’s failure to move is referred to as unlawful retainer. Rent Abatement – a tenant that deducts expenses from the rent due because of the landlord’s failure to maintain the property in a livable condition. Constructive Eviction – A lessee that breaks a lease because the owner violates the lease. Tacking On - is where the heirs can tack on years in meeting statutory requirement in establishing an easement. Assemblage - combining two or more parcels of land.

TYPES OF AGENCY RELATIONSHIPS

Seller Agency - When a seller lists their property, a seller agency is created between the real estate firm, the seller becoming the principal.

Buyer Agency - A buyer agency is created when an agent represents the buyer in a real estate transaction.

Special Agency - A relationship between the principal and the agent which allows the agent to perform one specific task, i.e. an agent assigned to despose of one specific item.

General Agency - Allows the agent to manage, make decisions and act on behalf of the principal for recuring responsiblities relating to a specific function, i.e. an agent responsible for buying materials on a recuring basis as needed by a manufacturer.

Universal Agency - This agent is authorized to act on the principals behalf for a wider variety of legal affairs.

An agency by estoppel can occur when a third party is mislead into believing that someone is acting as an agent in a transaction. No written agreement exists, however by the actions of the parties involved an agency relationship is created. An agency by estoppel can be ratified (confirmed, approved) when it is later put in writing.

TYPES OF EASEMENTS

Easement of Appurtenant - must be in writing and can not be revoked and must be in both deeds. In order to have an easement of appurtenant the properties must be adjoining and touching.

Implied Easement / Easement by Necessity - as an example is if a property is land locked and must have access to a road this could create a implied easement or easement by necessity.

Easement in Gross - an example is a utility easement which can be represented by a dotted line on a survey, referred to as a commercial easement.

Easement by Prescription - is an easement created by continual use and may be taken by adverse possession. Must be open and uninterrupted and hostile for the required statutory period: 20 years for open land, 30 years for improved land, and 60 years for woodlands.

TYPES OF APPRAISALS

Sales Comparisons Approach – This is a comparison of the subject property to that of similar properties sold. Cost Approach – quantity survey method which is all detailed materials labor and a percentage for profit (adjustments must be made to comparable properties and not to the subject property). Income Approach / Capitalization Approach – uses a mathematical method by applying a gross rent multiplier or capitalization rate.

TYPES OF MORTGAGES

Adjustable-Rate Mortgages (ARM) - In an adjustable-rate mortgage, the interest rate can move up or down to match current market interest rates. There is usually an introductory discounted rate, lower than fixed rates. Depending on the type of ARM, the first adjustment period can last for a period of one, three, five, or sevenyears before a change in rates occurs. Some ARMs adjust every year others will adjust every month or every six months.

Balloon Loans - Balloon loans are either not amortized or partially amortized short-term loans that become due in a period of usually three, five, seven, 10, or 15 years in one, large payment. In most cases the payment is based on a 30-year amortizing loan and has an attractive discounted rate similar to ARM rates. In some cases a balloon loan may have an interest-only payment.

Fixed-Rate Mortgages (FRM) - In a fixed rate mortgage the rate of interest remains the same for the life of the loan.

WHAT IS A MORTGAGE

A mortgage is an instrument that pledges property as collateral for debt. A note is a promise to repay debt and is required to state the due date and the interest rate. The note and mortgage are two separate legal documents, but both are executed in conjunction with one another to secure this type of loan.

MORTGAGE CLAUSES

FAIR HOUSING LAWS

Civil Rights Act of 1866 - prohibits discrimination based on race. Civil Rights Act of 1964 - prohibits discrimination if and when a federal program. The Fair Housing Act of 1968 - extention of the civil rights act of 1866 to further include color, religion, and national orgin. In 1974 gender was added. This act also outlaws blockbusting. The Fair Housing Amendment Act of 1988 - Protects people with disabilities and families with children from being discriminated against.

Exemptions To The Fair Housing Laws - property must be privately owned and owner must meets the following: 1) owns three or less homes, 2) no discriminatory ads used, 3) no realtors used, 4) must be a single family property, otherwise owner must occupy property and property must have four or fewer units. Other exceptions: 1) can be a non commercial religious organization or 2) can be a non commercial private club (race not exempt).

Americans with Disabilities Act - must allow for reasonable modifications to a property in order to accomodate a person with a disability, however that person must restore property back to original state upon expiration of lease.

Equal Credit Opportunity Act - Implemented by Congress in 1975, lenders who make residential real estate loans cannot discriminate by rigging the amount, interest, rate duration, terms, or conditions of a loan due to one’s sex, marital status, race, color, religion, national origin, or their engagement with public assistance. Although, a lender can always reject an applicant if they do not meet the financial needs of the agreement.

Redlining - an entity's refuses to do business in a specific neighborhood based on race, religion, gender, familial status, disability, or ethnic origin. . Blockbusting - provoking a party to sell their property because minorities are moving into the neighborhood. Steering - directing or influencing potential home buyers to favor specific neighborhoods according to their race, color or according to any other defined discriminatory classification.

Agent's Duties to Principal - disclosure, obedience, loyalty, honesty, confidentiality and professional skill. Agent's Duties to Customer - good service, information, and disclosure.

Usury - When a lender charges interests rates that exceed those that are permitted by law it is considered usury and is illegal.

Equitable Interest - As soon as an offer has been accepted by the owner in writing, the purchaser has an equitable interest in the property.

Loan to Value Ratio - this is the loan amount in relation to the value of the property. A lender will set limits on loan to value percentages in qualifing a borrower for financing terms.

NEW JERSEY REAL ESTATE LICENCE ACT
(REVIEW NOTES)

LICENSE REQUIRED TO ENGAGE IN BUSINESS AS RE BROKER OR SALESPERSON

APPLICATION FOR LICENSE FEE - $25

NJ BROKERS LICENSE - Requires three years as a license salesperson immediately preceding the date of application. Requirement may be waived where the applicant has been a holder of a broker's liscense in another state and actively engaged in the business for at least 3 years preceding the date and meets the educational requirements and qualifies by examination.

PROHIBITION AGAINST KICKBACKS FOR RELATED BUSINESS REFERRALS

Any compensation received by a licensee for services in related transactions must be for services actually performed by the licensee beyond mere referral.

DISCLOSURES FOR REFERRALS AND PROVIDING MORTGAGE FINANCING SERVICES

Mortgage Lender Referrals - A licencee must provide written disclosure to the buyer even though the licencee will receive no referral fee. "YOU ARE UNDER NO OBLIGATION TO USE THE MORGAGE SERVICES OF ____ WHO/WHICH IS AFFILIATED WITH THIS REAL ESTATE LICENSEE. YOU MAY OBTAIN YOUR MORTGAGE FROM ANOTHER SOURCE."

Dually licenced as Mortgage Broker and Real Estate Licensee - The Department_of_Banking_and_Insurance requires the following statement in the listing agreement "THE REAL ESTATE AGENCY MAY OFFER TO PROVIDE MORTGAGE FINANCING SERVICES TO THE BUYER FOR A FEE IN ADDITION TO THE SALES COMMISSION. AS AGENT OF THE SELLER THIS REAL ESTATE AGENCY HS A FIDUCIARY DUTY TO YOU, THE SELLER, WHICH WILL NOT CHANGE SHOULD MORTGAGE FINANCING SERVICES BE PROVIDED. IN THE EVENT THAT MORTGAGE FINANCING SERVICES BE PROVIDED TO THE BUYER, THIS AGENCY SHALL NOT UNDERTAKE REPRESENTATION OF THE BUYER IN THIS REAL ESTATE SALE.".

Providing Mortgage Financing Services for a Fee - A licencee must provide written disclosure to the buyer/borrower and the seller whenever the firm or any individual employeed by the firm or any division of the firm provides such services for a fee. The precise amount of the compensation must be disclosed to the seller and buyer and a copy sent to the listing broker. This must be done at or before the time a mortgage application is submitted on behalf of the buyer. Copies of all the above written disclosures must be maintained by the broker.

Real estate brokers who provide mortgage financing services are prohibited from limiting outside lenders reasonable access to solicit mortgage loans in their real estate office.

Dual Agency Disclosure - a firm must obtain the written consent of the buyer and seller.

PREREQUISITE TO ADMISSIONS TO EXAMINATION

License Salesperson

Every individual applicant for licensure as a real estate salesperson shall give evidence of satisfactory completion of 75 hours in the aggregate of such courses of education in real estate subjects at a school licensed by the commission. At least three hours of that course of study shall be on the subject of ethics and ethical conduct in the profession of a real estate salesperson.

License as a real estate broker or broker-salesperson

Every individual applicant for licensure as a real estate broker or broker-salesperson shall give evidence of satisfactory completion of 150 hours in the aggregate of such courses of education in real estate and related subjects at a school licensed by the commission.

The commission may waive some or all of the educational requirements for licensure in the case of an applicant whose education or experience is in the judgment of the commission substantially equivalent to those educational requirements. The commission shall prescribe by regulation the requirements, which an applicant shall meet in order to qualify for the waiver of educational requirements pursuant to this section.

TEMPORARY BROKERS'S LICENSE for salesperson on death or incapacity of licensed broker or broker-salesperson

In the event of the death or mental or physical incapacity of a licensed real estate broker where no other member is the holder of a broker-salesperson license, then the Real Estate Commission may issue a temporary broker’s license, upon filing of an application and a certified copy of the death certificate or a certification of mental or physical incapacity executed by a duly licensed physician. It is a prerequisite that a salesperson must be the holder of a real estate salesperson’s license for at least three years immediately preceding the date of the application and provided that said application shall have been made within 30 days from date of the demise or incapacity of said broker.

DISPLAY OF WORDS “ Licensed Real Estate Broker “

Every real estate broker shall maintain a designated main office open to the public. A real estate broker’s main office shall have prominently displayed therein the license certificate of the broker and all licensed persons.

In the case real estate broker maintains more than one place of business, a branch office license shall be issued to such broker for each branch office so maintained in the State.

No license shall be issued by the commission to any person known by it to have been, within 10 years theretofore, convicted of forgery, burglary, robbery, any theft offense shoplifting, criminal conspiracy to defraud, or other like offense or offenses.

MAINTENANCE OF ESCROW ACCOUNT

Every real estate broker shall maintain a escrow account in a State or federally chartered bank, savings bank, savings and loan association or other depository institution physically located and authorized to transact business in the state. The account shall be maintained in the name in which the individual, partnership or corporation is licensed to do business as a broker and shall be designated as either the broker’s “trust account” or “ escrow account “ and shall be maintained separate and apart from all other personal and business accounts.

Approval of depository institutions by commission

The commission shall approve a depository institution upon the institution providing written confirmation to the commission that it shall immediately notify the commission of any issuance of a notice to a licensed broker that a check or other instrument written upon the broker’s escrow or trust account has been dishonored or returned for insufficient funds.

Real estate agent acting as escrow agent

Every real estate licensee who receives monies of others as a representative of a broker acting as an escrow agent or as the temporary custodian of the funds of others in a real estate transaction shall only accept the monies if they are in the form of cash or a negotiable instrument payable to the broker through whom the individual is licensed.

RETURN OF LICENSE upon termination of employment; new license upon re-employment

Upon the issuance of a written notice of termination by a broker or his authorized representative, or upon receipt of a written resignation by a broker or his authorized representative, such employer shall within five business days of the effective date of the termination or resignation, either deliver to the commission such real estate licensee’s license and, at the same time, send a written communication to such real estate licensee at his last known residence, advising him that his license has been mailed to the commission.

LICENSE FEES - The biennial fee for each real estate broker’s license shall be $100 and biennial fee for each real estate salesperson’s license shall be $50. The biennial fee for a branch office shall be $50.

FEES FOR LOTS - The fee for an initial registration shall be $500 plus $35 for each lot, parcel, unit or interest which fee shall not exceed $3000. The initial registration shall be valid for a period of one year from the date of approval of the registration.

PROBATION, SUSPENSION or REVOCATION of licenses - 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 including 1) making any false promises or any substantial misrepresentation 2) acting for more than one party in a transaction without the knowledge of all parties thereto 3) pursuing a flagrant and continued course of misrepresentation or making of false promises through agents, broker-salespersons or salespersons, advertisements or otherwise 4) failure to account for or to pay over any moneys belonging to others 5) any conduct which demonstrates unworthiness, incompetency, bad faith or dishonesty 6) failure to provide his client with a fully executed copy of any sale or exclusive sales 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 7) 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 parcels for advertising purposes.

NONRESIDENT LICENSE- a license whose business address is outside this State shall file an irrevocable consent that suits and actions may be commenced against such applicant by the commission or by any person in any of the courts of record of the state.

REAL ESTATE GUARANTY FUND

A real estate guaranty fund is established as a special trust fund to be maintained by the state treasurer and administered by the New Jersey Real Estate Commission. Recovery of funds shall not exceed in the aggregate the sum of $10,000 in connection with any one transaction regardless of the number of claims. The maximum amount recoverable per transaction shall be increased to $20,000 for claims filed on the basis of causes of action which accrue after the effective date.

Upon the initial issuance of a biennial license as a real estate broker, broker-salesperson or salesperson the licensee shall pay into the real estate guaranty fund. The amount payable by a broker or broker-salesperson shall be $20 and by a salesperson $10.

Civil action which may result in court order for payment - Any civil action which may result in a court order for payment from the real estate guaranty fund shall be instituted within six years of the accrual of the cause of action and the New Jersey Real Estate Commission shall be joined as a necessary party to any such civil action.

Licensing - Commencing July 1, 1997, broker, broker-salesperson, salesperson and branch office licenses shall be issued on the basis of two year license terms. All licenses issued during each biennial term shall run from the date of issuance to the end of the biennial term. All licenses shall expire on June 30th of the second year following the year in which the license term commenced.

Qualifications for licensing; broker and broker salesperson - 1) The applicant has worked as a salesperson under the authority of the broker with whom they were licensed for at least 40 hours per week and during the hours of approximately 10:00 A.M to 8:00 P.M. 2) - Such work in the above was performed during any five days in each week of the three year period 3) If the applicant was employed in any other occupation during the three year period, such other employment was on a part-time basis and did not exceed 25 hours per calendar week.

EMPLOYMENT AGREEMENT (Should Contain The Following)

1) The rate of compensation to be paid to the salesperson during his or her affiliation with the broker.

2) A promise by the broker to pay to the salesperson his or her portion of commissions earned within 10 business days of their receipt by the broker or as soon thereafter as such funds have cleared the broker’s bank, or in accordance with another payment schedule explicitly set forth in the employment agreement.

3) The rate of compensation payable to the salesperson on transactions which close and, if applicable, on renewals which occur subsequent to the termination of the salesperson’s affiliation with the broker

4) A provision that any future changes to the agreement will not be binding unless the changes are contained in a writing signed by both parties.

5) In the event that any monies due a salesperson under the terms of the written agreement with their broker are not paid within 10 business days of the broker’s receipt of such funds or promptly thereafter upon their having cleared the broker’s account, the broker shall provide to the salesperson a complete and comprehensive written explanation of the failure to pay such monies.

6) Upon the termination of the affiliation of a salesperson with a broker, the broker shall make a complete accounting in writing of all monies due the salesperson as of the date of termination and/or which may become due in the future.

7) Copies of all written agreements are to be kept for a period of six years

Inspection of Records - Every license shall make available for inspection by the Commission or its designated representatives all records of transactions, books of account, instruments, documents and forms utilized or maintained by such license in the conduct of the licensed business, which may be pertinent to the conduct of the investigation of any specific complaint.

NEW YORK REAL PROPERTY LAW
(REVIEW NOTES)