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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.)
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 misrepresentation 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
a 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 "subagents". Sellers who do not desire to have their
property marketed through subagents should so inform the seller's agent.
BUYER'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 to 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 THE 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 subagent.
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 affect 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 disclosed dual agent,
you are advised to sign 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 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) of 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.