listing agreements & contracts

Listing Agreements & Sales Contracts

Estate Continuing Education Course Reference Number

C20169659

The Professional School of Business 22 East Willow Street Millburn, NJ 07041

proschool.com

http://proschool.com

This manual is intended for real estate licensing continuing education purposes. It is the participants responsibility to assure that this course will satisfy a portion of their continuing education needs. The Professional School of Business and its instructors assume no responsibility in this regard. Effort has been made to make this material accurate, however, no warranties of any kind are made. Topics discussed are necessarily brief and do not represent comprehensive training in any area. This material also does not cover all NJREC applicable rules or statutes applicable to NJ real estate licensees. Participants are advised to investigate and research any topic discussed herein that applies to them or a transaction they are involved in. All information contained herein is subject to change at anytime. This material may be used as a review for real estate licensing exam preparation but is not a licensing course nor is it a complete review of all exam related topics. Under no circumstances should this material be used as a substitute for competent legal or other professional advice.

Listing Agreements & Sales Contract Real Estate Continuing Education

Elements of a Valid Contract To be valid, binding and enforceable, contracts must contain certain essential elements. The essential elements for a valid contract are mutual agreement, competent parties, consideration and lawful objective. In real estate contracts the additional elements of property description and signatures are required. We will now discuss each individually. A. Mutual agreement - An offer by one party (the offeror) and an acceptance by another (the offeree).

Two minds must meet and mutually assent. This is called a meeting of the minds.

For mutual agreement to exist the parties must willingly offer and accept. In other words, they must not be under duress, which is the use of fear to get the other party to act; or undue influence, which is the use of an unfair advantage to influence the other party to act. Misrepresentation, which is an innocent or accidental misstatement of fact and fraud which is a deliberate misstatement of fact to gain a superior position over another, must also not be present. In contracts where duress, undue influence, misrepresentation or fraud exist, the contract would be voidable. An offer to purchase real estate should be reduced to writing in accordance with the Statute of Frauds. The licensee should explain to the purchaser that when accepted by the seller, and all contingencies have been met including attorney review if applicable, his/her offer becomes a firm and binding contract. The offeror may revoke his offer at any time before it is accepted by proper notice to the other party. This is known as revocation. The offeror should state a specific period of time during which the offer will be valid. For example, a buyer allows five days for the seller to accept his offer. He could revoke the offer anytime within the five days and before accepted by the seller. Upon the passing of five days the offer would automatically expire due to a lapse of time. If the seller changes the terms of the offer it is considered a rejection of the original offer and becomes a counter offer. Oral offers and acceptances are not binding (except as provided for under the Statute of Frauds), therefore a written offer could be withdrawn before it was accepted in writing even though it may have been accepted orally.

LISTING AGREEMENTS & SALES CONTRACTS

B. Competent parties - All parties to the contract must have contractual ability that is they must be of

legal age and sound mind. Generally speaking contracts with minors, insane persons or intoxicated persons are not binding on them.

C. Consideration - There must be something of value committed by each party to a contract. Each

party must give up something to which she/he has a legal right, such as money, valuable goods, services etc.

Consideration may be either of two types: Valuable consideration is one that can be objectively measured in terms of how it either benefits the party receiving it or detracts the one providing it. Examples of valuable consideration are money, property, services, forbearance, and in most cases even the promise of these. Good consideration is based on subjective or emotional value such as "love and affection." It has value only to the person receiving it. In most cases good consideration is acceptable but valuable consideration is always best. The phrases "sufficient consideration " and "legal consideration" are sometimes used instead of the term consideration.

D. Lawful Objective - To be valid and enforceable a contract must have a definite legal objective. An

agreement to violate the law would be void. Examples might include gambling contracts, a contract which is in violation of usury statutes or any contract that would violate public policy.

E. Property Description - The contract must contain a reasonably accurate description of the

location of the property such as a street address and/or lot and block number. F. Signatures - All parties to the contract must sign it. When co-owned property is sold the signatures

of all owners are necessary if their interest is affected. Spouses signatures are necessary to release the marital rights of dower, curtesy or joint possession.

Contract Types A. Valid contracts satisfy all legal requirement of a contract.

B. Void contracts have no legal status whatsoever. That is, a valid contract never existed and therefore never binding on the parties involved. A contract for an illegal purpose would be an example of a void contract.

C. Voidable contracts may be declared null and void by one or more of the parties involved. A contract between an adult and a minor may be voided by the minor but not the adult.

© 2017 THE PROFESSIONAL SCHOOL OF BUSINESS 3


D. Implied contracts are created by a person's acts and conduct alone. Spoken or written words are not necessary. For example, when ordering food in a restaurant it is implied that edible food will be served and that the party that place the order will pay the bill when presented.

E. Expressed contracts exist when the terms of the agreement are openly stated either orally or in writing.

F. Executory contracts exist when something remains to be done by one or more of the parties. A valid contract exists, however, all the terms have not yet been carried out.

G. Executed contracts are when all parties have completely fulfilled their obligations under the contract and nothing remains to be done. Executed also means that the contract has been signed.

H. Unilateral contracts A. impose obligations on one party only. The second party is not obligated to act. However, if he does, the first party is obligated to keep the promise. In an insurance contract, for example, the insurance company promises to pay the insured upon the happening of a specified event if the insured pays the premium. The insured, however, does not actually promise to pay the premiums.

I. Bilateral contracts impose obligations on both parties. Promises of one party are exchanged for the promises of the other.

J. Unenforceable contracts exist when a valid contract has been created, however, neither party can force performance because of some particular fact. This could happen when one party has gone bankrupt or the statute of limitations has expired.

Listing Agreements A listing agreement or listing contract is an agreement for the employment of a broker by the owner of real estate to sell or lease the property. The listing agreement is usually a bilateral contract; the broker agrees to diligently search for a buyer and the seller agrees to pay a commission when a buyer is found. Basically there are three types of listings in use today: (A) open listing; (B) exclusive agency; (C) exclusive right to sell.

1. Open listings can be given to one or several brokers at the same time. Any one of these brokers may sell the property and earn the commission, or the owner himself may sell the property and owe a commission to no one. A definite termination date is not required in an open listing because the sale of the property by one broker will automatically terminate all outstanding listings with other brokers. The agreement usually provides that the broker will receive a commission if she/he secures a buyer, however, she/he is not obligated to search for a buyer therefore an open listing may be considered a unilateral contract.

2. Exclusive agency listings are given exclusively to one broker for a specific period of time. The owner may not employ another broker, however, she/he does retain the right to sell the property him/herself without paying a commission to the broker.



3. Exclusive right to sell listings give one broker the sole and exclusive right to sell the property for a specific period of time. Even if the owner sells the property she/he is still obligated to pay a commission to the broker. Obviously this is the most desirable of the three for a broker to obtain. It may also be considered the most advantageous for the seller since the broker can put his best effort into selling the property confident that he will recover his expenses when the property sells.

NOTE: Definite termination dates are required in all exclusive type listing agreements.

Net Listings A net listing is a listing in which the seller specifies a net figure he wants for the property after all commissions are paid. Any amount the broker can get over and above that figure is his commission. This type of listing is illegal in New Jersey.

Multiple Listings A multiple listing is not actually a type of listing at all. It is essentially a marketing tool. Generally, all brokers who belong to the multiple listing service (MLS) agree to pool all their listings in an effort to gain greater exposure to their client's property. Any member of the service may then sell the property. The commission is divided between the listing broker and the selling broker with a small fee going to the MLS. While any type of listing could be placed in multiple, most services require the listing be written on a standard MLS form which is an exclusive right to sell with an additional authority given to the listing broker to enter the listing into the multiple service.

Oral Listing Agreements In New Jersey, according to the Statute of Frauds, any real estate broker selling or leasing real estate for or on account of the owner, shall not be entitled to a commission unless the authority for selling or exchanging is in writing and signed by the owner or his authorized representative; or unless such authority is recognized in a writing or memorandum so signed, either before or after the sale or exchange, and the rate of commission or the amount of commission must be stated therein. There is an additional provision in the statute which provides that any real estate broker or agent selling or exchanging real estate pursuant to an oral agreement with the owner and who shall actually effect such


N.J.A.C. 11:5-6.2(f) reads as follows: No licensed individual, partnership, firm or corporation shall enter into a "net listing" contract for the sale of real property, or any interest therein. A "net listing" is defined as an agency agreement in which a prospective seller lists real estate for sale with an authorization to a broker to sell at a specified net dollar return to the seller, and which provides that the broker may retain as commission the difference between the specified dollar return to the seller and the actual sales price.


sale or exchange before the oral agreement is repudiated or terminated by the owner in writing, may recover from the owner, the amount of commission, if the broker or agent, within five (5) days after the making of the oral agreement and prior to the actual sale or exchange of the real estate, serves upon the owner in person or by registered mail, a writing setting forth the terms of the oral agreement. If the owner does not repudiate or terminate the oral agreement prior to the actual sale of the real estate the terms of the contract shall stand. A formal contract is not necessary since the statute only requires a writing authorizing the sale. However, if the writing does not set forth the complete terms of the agreement, it will not be sufficient. It should contain the sale price, identify the property and confirm the oral commission agreement. The broker must show not only the required five days notice in order to obtain the commission but he must also show that he actually effected the sale. The owner may at any time after receiving the notice mentioned above, repudiate or terminate the oral agreement by serving on the broker or agent, prior to the actual sale, a notice in writing to that effect. In such case, the oral agreement is null and void and commissions may not be recovered by the broker.

Contents of a Listing Agreement When taking a listing the licensee should get as much information as possible to avoid confusion and anticipate all possible contingencies. New Jersey Real Estate Commission regulations require that "every licensee shall make reasonable effort to ascertain all pertinent information concerning every property for which she/he accepts an agency.” Listing agreements can vary in the amount or type of information they include. The following is a list of items that should, or is required, to be included. 1. Date of the agreement

2. Parties to the agreement

3. Right to sell - the extent of the right to sell, i.e. open, exclusive agency, exclusive right to sell

4. Declaration of business relationship - Licensees must indicate the type of business relationship they intend to have with the property owner and include a statement whereby the owner acknowledges receipt of the Consumer Information Statement on Real Estate Relationships (CIS). The declaration of business relationship shall contain, in print larger than the predominant size print in the writing, the following language: I, (name of licensee) , as an authorized representative of (name of firm) , intend, as of this time, to work with you as ______________________. In the blank space the licensee must indicate one of the following: seller's agent only, seller's agent and disclosed dual agent if the opportunity arises, transaction broker.

5. A definite termination date for all exclusive listings is required

6. Complete and accurate description of the property



7. Listing price

8. Acknowledgment of receipt of a copy of the Attorney General's Memorandum on Discrimination when the listing is for residential property. If the owner refuses to abide by the terms of the Memorandum, or asserts an intention to violate, the licensee should decline the listing.

9. Consideration - the amount or rate of commission must be expressed. No listing agreement or contract for the sale of real property, or any interest therein, shall contain a prescribed or predetermined fee, commission rate, or commission amount; nor shall any such writing contain a commission clause or provision which suggests (such as a small blank space and a percent sign) to a seller that the commission is a prescribed rate or amount.

The commission clause or provision in all listing agreements for the sale of one to four family dwelling units or an interest therein, or in all contracts for such sale, if there is no listing agreement, shall contain in print larger than the predominant size print in the writing, the language: Nothing herein is intended to prohibit an individual broker from independently establishing a policy regarding the amount of fee, commission or other consideration to be charged in transactions by the broker.

Nothing herein is intended to prohibit an individual broker from independently establishing a policy regarding the amount of fee, commission or other consideration to be charged in transactions by the broker.

10. All written listing agreements prepared by licensees shall include the following provision regarding commission splits and shall be in print larger than the predominant size print in the agreement. Alternatively, the provision may be attached to the listing as an addendum to it if it is signed by the owner at the same time that the owner signs the listing agreement.

Commission Splits Listing brokers usually cooperate with other brokerage firms by sharing information about their listings and offering to pay part of their commission to the firm that produces a buyer. This is generally referred to as the “commission split.” Some listing brokers offer to pay commission splits of a portion of the gross commission, usually expressed as a percentage of the selling price, less a significant dollar amount. Other listing brokers offer a portion of the gross commission less only a minimal listing fee or less zero. The amount of commission split your broker offers can affect the extent to which your property is exposed to prospective buyers working with licensees from other brokerage firms.


"As seller you have the right to individually reach an agreement on any fee, commission, or other valuable consideration with any broker. No fee, commission or other consideration has been fixed by any governmental authority or by any trade association or multiple listing service."


On this listing, the broker is offering a commission split of ______ minus _________ to potential cooperating brokers. If you feel that this may result in your property receiving less than maximum exposure to buyers, you should discuss those concerns with the listing salesperson or his/her supervising broker. By signing this listing agreement the owner(s) acknowledge having read this statement on commission splits.

The listing broker must specify the complete formula for determining the commission split in the indicated location prior to securing the owner’s signature.

11. All listing agreements of any licensed individual, partnership, firm or corporation which provide for the listing of property with any real estate multiple listing service shall specify the complete name of that listing service. The listing office must notify the multiple listing service of having acquired the listing within 48 hours of the effective date of the listing.

12. All other pertinent information such as, financing, personal property included, possession date, tenancies etc.

13. Signatures of the broker (or his agent, the salesperson) and the seller. Signatures of both the husband and wife are necessary when marital rights such as dower, curtesy, or joint possession are a concern.

A licensee must provide a client with a fully executed copy of any sale or rental listing contract at the time of execution. If an offer on any real property or interest therein is made orally, the licensee must advise the offeror that she/he is not obligated to present the offer to the owner or authorized representative unless it is made in writing. Unless a writing containing or confirming the terms of the listing agreement otherwise provides, the licensee shall transmit every written offer on any real property or interest therein presented to or obtained by the licensee during the term of the listing to the owner or authorized representative within twenty-four (24) hours of receipt of the offer by their firm. The term of the listing shall be deemed to expire either on the termination date established in the listing agreement, or upon the closing of a pending sale or lease. If any acceptance is given orally, the licensee shall secure forthwith the acceptance in writing within twenty-four (24) hours.

Responsibility to Ascertain Material Information Licensees are required to disclose material information regarding the physical condition of the property to potential buyers. There is no better time to ascertain this information then when taking a listing. Not being familiar with the property, the licensee must gather information from the seller as well as personally inspecting the property. New Jersey Real Estate Commission regulations require that:

Every licensee shall make reasonable effort to ascertain all material information concerning the physical condition of every property for which he or she accepts an agency or which he or she is



retained to market as a transaction broker, and concerning the financial qualifications of every person for whom he or she submits an offer to his or her client or principal.

A reasonable effort to ascertain material information shall include at least:

• Inquiries to the seller or seller's agent about any physical conditions that may affect the property; and

• A visual inspection of the property to determine if there are any readily observable physical conditions affecting the property.

As used in this section, information is "material" if a reasonable person would attach importance to its existence or non-existence in deciding whether or how to proceed in the transaction, or if the licensee knows or has reason to know that the recipient of the information regards, or is likely to regard it as important in deciding whether or how to proceed, although a reasonable person would not so regard it.

When a real estate licensee has actual knowledge of the false, misleading or deceptive nature of information they provide concerning a property, or if the licensee knowingly, conceals, suppresses, or omits any material fact with intent that others rely upon the concealment, suppression or omission, in connection with the sale or advertisement of real estate, they are in violation of the Consumer Fraud 1

Act . This risk of violation can be greatly reduced if the licensee can demonstrate that he/she had no 2

actual knowledge of the false, misleading or deceptive character of the information and that they made reasonable and diligent inquiry to ascertain whether the information they provide is of a false, misleading or deceptive character. Reasonable and diligent inquiry includes, but is not limited to, information the licensee received:

• in a report by a person licensed or certified by the State of New Jersey such as an appraiser, home inspector, plumber or electrical contractor

• in a report by any governmental official or employee, if the information is likely to be within the knowledge of that government official or employee

• in a Property Condition Disclosure Statement (see a sample of this form at njretest.com/forms/pcds.pdf) obtained from the seller. The disclosure statement must be in a form that complies with regulations promulgated by the Division of Consumer Affairs in consultation with the New Jersey Real Estate Commission and the licensee must inform the buyer that the seller is the source of the information. Prior to communicating the information in the statement to a potential buyer, the licensee must visually inspect the property with reasonable diligence to ascertain the accuracy of the information disclosed by the seller.

Use of a Seller’s Property Condition Disclosure Statement is not mandatory under New Jersey law, however, the law does provide that its proper use will reduce the agent’s liability exposure.

Does not apply to the owner or publisher of newspapers, magazines, publications or printed matter wherein such advertisement 1

appears, or to the owner or operator of a television station which disseminates such advertisement when the owner, publisher, or operator has no knowledge of the intent, design or purpose of the advertiser.

“Intent” is a keyword. Whether or not any person has in fact been misled or damaged thereby, it is considered to be a violation 2

of the law.




REAL ESTATE LISTING/COMMISSION AGREEMENT (Page 1 of 2)

NEWMLS, L.L.C. d/b/a GARDEN STATE MULTIPLE LISTING SERVICE, L.L.C.

1. THE FOLLOWING TERMS ARE DEFINED AND, WHEN MENTIONED IN THIS AGREEMENT, SHALL MEAN:

"Service" or "GSMLS": GARDEN STATE MULTIPLE LISTNG SERVICE, L.L.C.

"Owner(s)", “Seller/Landlord” or "you"_________________________________________ "Listing Broker"____________________________________________

____________________________________________________________________ ____________________________________________ Owner's Address __________________________________________________________ Broker's Address. ___________________________________________ __________________________________________________________ ___________________________________________ Owner's Tele # _________________________ Fax #____________________ LB Tele# _______________________ Fax #____________________ "Property" ______________________________________________________________ “Listing Price" SALE $________________________________ ______________________________________________________________ RENTAL $________________________________

2. TERM OF AGREEMENT: From "Commencement Date" ___________________________ to "Expiration Date" __________________________________

3. DISCLOSURE OF BUSINESS RELATIONSHIP: I, ___________________________________________ as an authorized (Name of Licensee) representative of ______________________________________________

(Name of Listing Broker) intend, as of this time, to work with you as a: (Check only one line) ___ Seller's / Landlord's Agent only (SA) ___ Seller's / Landlord's Agent and Disclosed Dual Agent if the opportunity arises (DD) ___ Transaction Broker (TB)

4. OFFER OF COOPERATION / COMPENSATION: The Seller / Landlord authorizes and the Listing Broker offers Cooperation / Compensation as follows: (Check and Complete Appropriate Line(s)) TO: SUBAGENTS: YES:_______@_____________ NO:_______ Cooperation Compensation Cooperation TO: BUYER BROKERS: YES:_______@_____________ NO:_______ Cooperation Compensation Cooperation TO: TRANSACTION BROKERS: YES:_______@_____________ NO:_______ Cooperation Compensation Cooperation

5. The “Commission” shall be as follows: The “Sale Commission:”_______________________________________ The “Rental Commission:”___________________________________ If this Listing/Commission Agreement is for the sale of the Property only, Owner agrees not to list the Property for rental with any other Broker during the term of this Listing/Commission Agreement. If this Listing/Commission Agreement is for the rental of the Property only, Owner agrees not to list the property for sale with any other Broker during the term of this Listing/Commission Agreement.

6. Keybox. Owner ____ does ____ does not authorize the Listing Broker to place a GSMLS Keybox on the Property to aid in the showing of the Property.

7. COMMISSION SPLITS. LISTING BROKERS USUALLY COOPERATE WITH OTHER BROKERAGE FIRMS BY SHARING INFORMATION ABOUT THEIR LISTINGS AND OFFERING TO PAY PART OF THEIR COMMISSION TO THE FIRM THAT PRODUCES A BUYER. THIS IS GENERALLY REFERRED TO AS THE"COMMISSION SPLIT".

SOME LISTING BROKERS OFFER TO PAY COMMISSION SPLITS OF A PORTION OF THE GROSS COMMISSION, USUALLY EXPRESSED AS A PERCENTAGE OF THE SELLING PRICE, LESS A SIGNIFICANT DOLLAR AMOUNT. OTHER LISTING BROKERS OFFER A PORTION OF THE GROSS COMMISSION LESS ONLY A MINIMAL LISTING FEE OR LESS ZERO.

THE AMOUNT OF COMMISSION SPLIT YOUR BROKER OFFERS CAN AFFECT THE EXTENT TO WHICH YOUR PROPERTY IS EXPOSED TO PROSPECTIVE BUYERS WORKING WITH LICENSEES FROM OTHER BROKERAGE FIRMS.

ON THIS LISTING, THE BROKER IS OFFERING A COMMISSION SPLIT OF _____________________ MINUS __________________TO POTENTIAL COOPERATING BROKERS.

IF YOU FEEL THAT THIS MAY RESULT IN YOUR PROPERTY RECEIVING LESS THAN MAXIMUM EXPOSURE TO BUYERS, YOU SHOULD DISCUSS THOSE CONCERNS WITH THE LISTING SALESPERSON OR HIS/HER SUPERVISING BROKER.

BY SIGNING THIS LISTING AGREEMENT THE OWNER(S) ACKNOWLEDGE HAVING READ THIS STATEMENT ON COMMISSION SPLITS.

8. PAYMENT OF THE COMMISSION FOR SALE/LEASE, AGENCY ARRANGEMENTS. The Owner agrees to pay the Listing Broker (or as the Listing Broker may direct) the Commission if the Property is sold, leased, exchanged or otherwise transferred by/through the Listing Broker, or through any other source (including the direct sale/lease by the Owner) before the Expiration Date. The Commission shall be earned when a ready, willing and able Buyer/Tenant is produced and shall be paid at the time of the transfer of the Property or signing of the lease. By signing this Agreement the Owner instructs the title agent/attorney to pay the Commission at such time. In the event the Property is sold to the Tenant during the term of its Tenancy, the Sale Commission shall be paid by the Owner to the Listing Broker if sold to the Tenant by ___________.

(CONTRACTUAL PROVISIONS ARE CONTINUED ON THE REVERSE SIDE OF THIS PAGE, PLEASE REVIEW)

ListingAgent________________________________________________(L.S.) ______________________________________________________________ (Print Name) LA ID #________________________________________________________ __________________________________________________________(L.S.) Accepted By: Authorized Representative _________________________________________________________________ (Print Name) Broker ID #_____________________________________________________

Owner: _______________________________(L.S.) Date: _________ Owner: _______________________________(L.S.) Date: _________ Owner: _______________________________(L.S.) Date: _________ Owner: _______________________________(L.S.) Date: _________

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(Page 2 of 2)

The Listing Broker agrees that the Commission may be shared with any Broker who assists Listing Broker in causing a sale, lease, exchange or transfer of the Property as indicated in the offer of Cooperation/Compensation Box. In the event the Commission due the Listing Broker from the Owner is not paid per the terms of this Agreement, the Owner agrees to pay all expenses, including reasonable attorney’s fees incurred by the Listing Broker, relating to the collection of the Commission. 9. COMMISSION OR FEE DISCLOSURE. “AS SELLER YOU HAVE THE RIGHT TO INDIVIDUALLY REACH AN AGREEMENT ON ANY FEE, COMMISSION, OR OTHER VALUABLE CONSIDERATION WITH ANY BROKER. NO FEE, COMMISSION OR OTHER CONSIDERATION HAS BEEN FIXED BY ANY GOVERNMENTAL AUTHORITY OR BY ANY TRADE ASSOCIATION OR MULTIPLE LISTING SERVICE.” Nothing herein is intended to prohibit an individual Broker from independently establishing a policy regarding the amount of fee, commission or other valuable consideration to be charged in transactions by the Broker. 10. GRANT OF EXCLUSIVE RIGHT TO SELL, LEASE, EXCHANGE OR OTHERWISE TRANSFER AND TO MULTIPLE LIST PROPERTY. In consideration of the Listing Broker listing and endeavoring to find Buyers/Tenants for the Property at the Listing Price, OWNER (or their legally authorized representative) grants the Listing Broker the exclusive right to sell, lease, exchange or otherwise transfer the Property, at the Listing Price and on the terms as stated in this Agreement, or upon such other price and/or terms as may be acceptable to the Owner. The Listing Broker is directed by the Owner to list the Property with the Service and to distribute this listing to Service participants. 11. BROKER PROTECTION Owner agrees to pay the Listing Broker the Commission if the Owner, acting on the Owner's own behalf, within 180 days after the Expiration Date conveys or agrees to convey the Property to any Buyer shown the Property by the Listing Broker or any person during the term of this Listing Agreement. This clause shall not apply if the property has been listed by the Owner with another broker by written agreement. 12. OWNER(S) LIABILITY. The OWNER(S) hold harmless and indemnify the Listing and Cooperating Brokers against loss or damage resulting directly from any condition of the Property not disclosed to the Listing Broker or from the Owner’s use of/or acts in the showing and inspection of the Property. 13. OWNERSHIP, LIENS AND MORTGAGES. The Owner(s) represent that they are the sole owner(s) of the Property, the Owner(s) have the legal right to sell or lease the Property, and that to the best of their knowledge they have Marketable Title to the Property. The Owner(s) further represent that after a sale at the Listing Price there will be sufficient proceeds to discharge all liens and encumbrances and to pay the Commission stated in this Agreement. 14. NO ENVIRONMENTAL HAZARDS. The Owner(s) are not aware of any environmental hazards relating to the Property, or proceedings regarding such hazards which are now pending or threatened with regard to the Property. 15. SIGN AUTHORIZATION. The Owner authorizes the Listing Broker to place a real estate sign on the Property. The Owner agrees not to place Owner’s or any other “For Sale/For Lease” sign on the Property during the term of this Agreement. 16. REFERRING INTERESTED BUYERS TO LISTING BROKER/NEGOTIATIONS THROUGH LISTING BROKER. The Owner shall refer to the Listing Broker every prospective Buyer/Tenant who contacts the Owner during the term of this Agreement. The Owner directs that all negotiations for the purchase or lease of the Property shall be conducted through the Listing Broker. 17. NOT CURRENTLY LISTED. The Owner represents that the Property is not currently listed with any other Broker. 18. ACCURACY OF INFORMATION. The information contained in this Agreement and on the attached Listing Input Sheets has been furnished by the Owner who states it is correct to the best of Owner’s knowledge and belief, and the compilation by the Broker for the Service is not to be deemed a representation as to the accuracy of the information provided. 19. ACKNOWLEDGMENT OF RECEIPT OF FULLY SIGNED AGREEMENT/LISTING INPUT SHEETS. The Owner acknowledges that this Agreement has been read by the Owner and that Owner understands its contents. Owner has received a copy of this Agreement and the attached Listing Input Sheets, which are incorporated herein and made part of this Agreement. Owner acknowledges having read and approved the attached Listing Input Sheet(s) and represents that they are accurate. 20. ACKNOWLEDGEMENT OF RECEIPT OF THE CONSUMER INFORMATION STATEMENT ON NEW JERSEY REAL ESTATE RELATIONSHIPS. Owner acknowledges receipt of a copy of the Consumer Information Statement on New Jersey Real Estate Relationships. 21. ACKNOWLEDGMENT OF RECEIPT OF THE NEW JERSEY ATTORNEY GENERAL’S SUMMARY OF THE NEW JERSEY LAW AGAINST DISCRIMINATION AND AGREEMENT TO ABIDE BY THE LAW. The Owner acknowledges receipt of the New Jersey Attorney General’s Summary of the New Jersey Law Against Discrimination, and further acknowledges that Owner has reviewed this Summary and agrees to abide by the terms and conditions of the Law Against Discrimination. THIS FORM OF AGREEMENT FOR THE LISTING OF REAL ESTATE AND THE PAYMENT OF A COMMISSION FOR THE SALE AND / OR LEASE OF REAL ESTATE HAS BEEN APPROVED SOLELY FOR THE EXCLUSIVE USE OF BROKERS WHO PARTICIPATE IN THE GSMLS, LLC. ANY USE OF THIS AGREEMENT BY ANY PERSON NOT AUTHORIZED OR PERMITTED TO UTILIZE THE SERVICE IS EXPRESSLY PROHIBITED. THIS AGREEMENT MAY ONLY BE REPRODUCED WITH THE WRITTEN CONSENT OF THE SERVICE. Revision: May, 2011

Copyright © 2001-2011 NEWMLS, LLC. d/b/a GSMLS, LLC. BROKER COPY /WHITE OWNER COPY /CANARY

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Seller Estimated Proceeds Frequently sellers are unaware of the costs involved in selling their property. Costs and expenses such as brokerage fees, mortgage balance payoff, and realty transfer fees can have a significant impact on the seller’s net proceeds. The seller’s financial position after the sale may be quite different from what they anticipated when first considering selling. Sellers agents can reduce the closing statement shock by estimating net proceeds at the time of taking the listing and/or when presenting an offer to purchase. Costs will vary from one transaction to the next and the accuracy will depend on the accuracy of the information provided by the seller and verified by the licensee. For this reason, agents need to stress that it is only an estimate.


Seller estimated proceeds worksheet


New Jersey Realty Transfer Fee 3

The Realty Transfer Fee is imposed upon the recording of deeds evidencing transfers of title to real property in the State of New Jersey. The Fee is required to be paid upon the recording of deeds conveying title to real property in New Jersey . The Realty Transfer Fee is calculated based on the amount of 4

consideration recited in the deed. Payment of the Fee is a prerequisite for recording the deed. The R.T.F. is usually collected at the real estate closing by the legal representatives or title insurance agents responsible for recording the deed at the county registry offices. The State of New Jersey and New Jersey’s twenty-one counties share Realty Transfer Fee proceeds.

The current Realty Transfer Fee Rate schedule for transfers with no exemption, partial exemption , and 5

new construction for total consideration not in excess of $350,000 can be found at: http://www.state.nj.us/treasury/taxation/pdf/lpt/feeschedunder350.pdf

The current Realty Transfer Fee Rate Schedule for no exemption, partial exemption5, and new construction for total consideration in excess of $350,000 can be found at: http://www.state.nj.us/treasury/taxation/pdf/lpt/feeschedover350.pdf

Transfers Over $1,000,000 Purchasers (grantee) of most residential and commercial properties, (other than vacant land) where the consideration paid is in excess of $1 million, are assessed a transfer tax of 1% of the purchase price. This tax is in addition to, and separate from, the RTF imposed upon sellers (grantor).

Gross Income Tax Estimated Payment The state of New Jersey, Division of Taxation is concerned that non-residents might transfer title to real estate located in New Jersey and fail to pay applicable income taxes on any gain realized. To prevent this, at the time of recording the deed the buyer must also submit the Seller's Residency Certification/Exemption (GIT/REP-3) form or the Nonresident Seller's Tax Declaration (GIT/REP-1) form . Failure 6

to do so will result in the deed not being recorded. At the time of title transfer and deed recording, a non-resident seller must make an estimated tax payment. This amount is usually withheld from the seller proceeds at the closing. The amount due is determined by multiplying the gain on the sale of the property by the highest New Jersey Gross Income Tax rate (presently 8.97%) but in no case can the payment be less than 2% of the consideration received (the amount paid for the property). Even if the property is sold at a loss, 2% of the sale amount must be

Source: State of New Jersey Division of Taxation3

N.J.S.A. 46:15-10 defines several transaction types which are totally exempt from the Realty Transfer Fee4

There are reduced Realty Transfer Fee rates for qualifying senior citizens aged 62 or older; blind persons; disabled persons; and 5

on property that is low and moderate income housing.

Or the Nonresident Seller’s Tax Prepayment Receipt (GIT/REP-2)6


http://www.state.nj.us/treasury/taxation/pdf/lpt/feeschedunder350.pdf

http://www.state.nj.us/treasury/taxation/pdf/lpt/feeschedover350.pdf


paid. When a non-resident tax return is filed by the seller for the tax year in which the sale took place, if an overpayment was made, a refund is issued. If the seller is a New Jersey resident, form GIT/REP-3 declaring residency or other exemption is completed and signed and no estimated tax is due at the time of deed recording. The seller will eventually file a resident tax return and pay any tax due on any gain from the disposition of the property. The definition of a “non-resident” is anyone who does not maintain a permanent place of abode (home, residence) in New Jersey. It also includes those who will not maintain a permanent place of abode in New Jersey on or after the day of transfer. Therefore, a resident selling their New Jersey home and relocating to another state is subject to the estimated withholding tax. This has come to be known as the New Jersey “exit tax” which may not create an accurate picture of the charge because the amount withheld is simply an enforcement tool used by the state to collect a tax that may be due on the sale anyway. When the seller eventually files a part-year resident tax return, any overpayment will be refunded. It does not amount to an additional tax simply because an owner has moved or is moving out of New Jersey. It may, however, tie up several thousand dollars of the seller’s money for several months.

Contracts For The Sale Of Real Estate The sales contract is perhaps the most important document in any real estate transfer. Normally the sales contract will start out as an offer to purchase which is prepared by the broker or salesperson and sets forth the buyer's offer and conditions. It is signed by the purchaser and must be presented to the seller within twenty-four (24) hours of receipt by the agent. If the seller accepts the offer and conditions, indicated by his signature, it ripens into a contract of sale. If the seller makes any changes or alterations to the contract it is referred to as a counter-offer and is presented to the buyer for consideration. If a seller’s acceptance of the offer is given orally, the licensee must secure the acceptance in writing within twenty-four (24) hours.

The sales contract states in detail, the agreement between the buyer and seller. It establishes their rights in the transaction and their obligations. The licensee should read and explain the terms of the contract to all interested parties but should refrain from giving legal advice. Ambiguities should be avoided. All provisions of the contract should be as clear and easy to understand as possible.

A down payment or deposit made by the purchaser usually accompanies the offer to purchase. This deposit, also known as earnest money, is evidence of good faith on the part of the purchaser. The total amount is usually 10 percent, often paid in stages, but may be any amount agreed upon by the buyer and seller. In some cases the deposit may be listed as liquidated damages so it should be sufficient to discourage the buyer from defaulting.

The down payment or deposit must be deposited in the brokers trust account within five business days of receipt. Brokers may accept payments to be held in trust or in escrow in a real estate transaction in the following forms: cash; a negotiable instrument payable to the broker's firm; a charge against a check debit card resulting in a credit to the broker's trust account; or a wire transfer of funds directly from an account



of the payor to the trust or escrow account of the broker. A check should never be made payable to the salesperson.

A licensee should not accept a post dated check unless the seller has consented. Sometimes, instead of cash or check, the buyer will want to give a short term promissory note. A broker is guilty of bad faith and jeopardizes his/her license if she/he accepts a note and does not disclose this fact to his/her principal. Credit cards may only be accepted in short term rental transactions. While any writing which accurately recited the conditions of the sale and contains all the essential elements necessary for a valid contract would probably be enforceable, the following information should, or in some cases must, be included in a sales contract:

1. The date the agreement was entered into 2. The parties to the agreement - the names, and legal status (corporation, partnership, natural

person, etc.) should be stated. 3. Location - the location of the property can be described in several different ways. 4. Sale price - the full purchase price should be stated as well as the amount of the earnest money

deposit. Provisions should be made for the escrowing and disbursement of the deposit. 5. The nature of the estate to be conveyed, i.e. fee simple or otherwise. The grantor (seller) cannot

convey more than he owns. 6. Financing - how the buyer will pay for the property

A. Obtaining a mortgage loan - if the contract is contingent on the buyer securing a mortgage loan, the conditions should be specific as to the amount, date of procurement, type of mortgage, rate of interest and term. For example, the contract may read: "The purchaser must make due application to any lending institution of the buyer’s choice for the procurement of a mortgage loan. Failure of the buyer to comply with the forgoing shall be deemed to be a breach of this contract. The amount and type of mortgage loan required by the buyer is a $______________ conventional 30 year direct reduction plan with an interest rate not exceeding ______% and not more than _____ points. In the event the buyer shall be unable to procure a definite commitment in writing upon said terms and conditions on or before __________________________, then this contract shall be null and void and all deposits returned to buyer unless the buyer notifies the seller of their decision to complete the transaction without obtaining a mortgage commitment.”

B. Assumption of an existing mortgage - if a mortgage is to be assumed, the contract should state the name of the mortgagee, the balance of the mortgage, interest rate, term and all other conditions pertaining thereto.

C. Purchase money mortgage - the seller may loan money to the purchaser and take back a mortgage as security.

D. Cash - the buyer may have his own cash for all or part of the purchase price. 7. Certain real estate transactions are subject to New Jersey’s Bulk Sale Law. If so, the buyer may be

required to withhold (escrow) a portion of the sale proceeds to cover the unpaid tax obligations of the seller. Not doing so could make the buyer responsible for the seller’s state tax debts. Although not required, the sales contract may address this possibility. One and two-family homes and



residential condominium or cooperative units (labeled a simple dwelling house under the law) are exempt from the Bulk Sale Law if the seller is an individual27, estate, or trust. See page 248 for more information regarding the Bulk Sale Law.

8. Tenancies, if any, must be described in detail; name, location, rent, term, security deposits and all other pertinent information should be included. Real estate is always sold subject to the rights tenants have under their lease unless they have subordinated their rights in which case the contract should so state. When nothing is mentioned in the contract concerning tenants, the purchaser is entitled to receive vacant premises.

9. The kind of deed to be given should be stated. If the type of deed is not mentioned in the sales agreement the grantee would be entitled to a bargain and sale deed.

10. The contract may be contingent on the purchaser selling a property they presently own. In many cases this may not be acceptable to the seller. If the seller does agree, the contingency should be specific as to the purchaser’s obligation to diligently search for an buyer and the seller’s right to continue to market the property.

11. Statements should be made in regard to compliance with zoning laws, tenement house laws, etc. 12. A contingency for the procurement of a variance or a building permit should be made if

necessary. 13. A contingency for a structural and pest infestation inspection should be included. During a home

inspection, the inspector will take an in-depth and impartial look at the property. Generally the inspector will:

• Evaluate the physical condition of the building: the structure, construction and mechanical systems

• Identify items that should be repaired or replaced • Estimate the remaining useful life of the major systems and equipment such as electrical,

plumbing, heating and air conditioning 14. It is customary for the seller to permit the buyer to do a “walk-through” inspection prior to closing

to confirm that the property is in the condition they expect it to be in when they eventually take possession, and to confirm that all appliances and systems are in working order if the seller represented they would be. A “walk-through” clause in the contract will specify the conditions and possibly the timing of these walk-through inspections.

15. The Private Well Testing Act requires that the contract of sale shall include a provision requiring, as a condition of the sale, the testing of the well water supply for at least the minimal parameters prescribed by the law. The Private Well Testing Act applies to:

• real property, the potable (suitable for drinking) water supply for which is a private well located on the property

• any real property the potable (suitable for drinking) water supply for which is a well that has less than 15 service connections or that does not regularly serve an average of at least 25 individuals daily at least 60 days out of the year Closing of title shall not occur unless both the buyer and seller have received and reviewed a copy of the water test results. At closing the buyer and seller must certify in writing that they have received and reviewed the water test results.



Closing of title shall not occur unless both the buyer and seller have received and reviewed a copy of the water test results. At closing the buyer and seller must certify in writing that they have received and reviewed the water test results.

16. Sellers must provide homebuyers a 10-day period to conduct a paint inspection or risk assessment for lead-based paint or lead-based paint hazards. Parties may mutually agree, in writing, to lengthen or shorten the time period for inspection. Homebuyers may also waive this inspection opportunity. Also required, is an attachment to the contract, or language inserted in the contract, that includes a "Lead Warning Statement" and confirms that the seller has complied with all notification requirements and the acknowledgment of the purchaser.

17. All restrictions, limitations, liens, encroachments or other encumbrances on the property should be mentioned, both those that are to remain and those that are to be removed prior to, or at the time of the passing of title

18. If personal property is to be included it should be clearly stated and described. Questionable items should be specifically excluded.

19. Provision should be made for apportionment of rents, taxes, water or sewer charges and other expenses. The actual computations usually cannot be made until the date the title passes.

20. Date and place of closing should be specified. 21. Where a contract provides that time is of the essence, then the terms of the contract must be

carried out on the date specified and without deviation unless an extension of time is mutually agreed upon.

22. Usually the grantor assumes the risks of damage to the property before title passes but if he does not do so in the contract the grantee may have to accept the property in the damaged condition.

23. The date the purchaser will take possession should be specified. It is usually not advisable to permit the purchaser to take occupancy prior to closing of title since it may be difficult to evict him if title does not pass. However, if it is agreed that the purchaser will occupy the premises prior to closing, the parties should enter into a separate occupancy agreement which establishes the duration and other terms. This is also true if it is agreed that the grantor (seller) will continue to occupy the property for a period after the closing.

24. The commission payable to the broker and the commission split when cooperating brokers are involved should be detailed in the contract of sale. Real estate brokers are entitle to an equitable lien on the property up to the time of closing and then on the funds due to the seller at closing. 7

This is particularly true when there is also a valid listing agreement in place. Including brokerage fees in the contract acknowledges the broker’s participation in the transaction and establishes liability for payment, both of which further protect the payment of the commission. Another reason to include the brokerage commission in the contract of sale is that licensees are permitted to enter into arrangements in which they are to be compensated, in whole or in part, by a party whom they do not represent. This is the case in many real estate transactions. They must,

A lien not created by expressed agreement or requiring possession of the property but created in fairness when one party has not 7

performed obligations in a contract and it is fair to attach the property of the debtor.



however, provide full written disclosure of the agency relationship and the compensation arrangement to both parties in the contract of sale . 8

25. Stipulation should be made in the contract to apply and bind the heirs, executors, administrators, successors and assigns of the respective parties.

26. Real estate licensees in New Jersey can fill in the blanks of contracts of sale for a one to four family dwelling, all residential leases, and sale contracts for one-family building lots. All other sales contracts and leases must be prepared by an attorney or the licensee runs the risk of the unlicensed practice of law. Any licensee-prepared residential contract of sale for one to four family dwellings, or vacant one-family building lots, or a residential lease for a term of one year or more, in which the licensee has a commission or fee interest, must include an Attorney Review Clause. The contract must include the following language at the top of the first page and in print larger than the predominant size print in the writing:

“This is a legally binding contract that will become final within three business days. During this period you may choose to consult an attorney who can review and cancel the contract. See section on attorney review for details.”

The contract shall also contain the following language within the text of every such contract.

ATTORNEY REVIEW

1. Study by Attorney The Buyer or the Seller may choose to have an attorney study this contract. If an attorney is consulted, the attorney must complete his or her review of the contract within a three day period. This contract will be legally binding at the end of this three day period unless an attorney for the Buyer or Seller reviews and disapproves of the contract.

2. Counting the Time You count the three days from the date of delivery of the signed contract to the Buyer and the Seller . You do not count Saturdays, Sundays or legal holidays. The 9

Buyer and the Seller may agree in writing to extend the three day period for attorney review.

3. Notice of Disapproval If an attorney for the Buyer or the Seller reviews and disapproves of this contract, the attorney must notify the Broker(s) and the other party named in this contract within the three day period. Otherwise this contract will be legally binding as written. The attorney must send the notice of disapproval to the Broker(s) by certified mail, by telegram, or by delivering it personally. The

In those situations where the contract or lease is prepared by someone other than the licensee, such as an attorney, this disclosure 8

must be made in a separate writing prior to the execution of the contract or lease.

The date of delivery to the parties is not counted. Peterson v. Estate of Pursell, decided April 10,20019



telegram or certified letter will be effective upon sending. The personal delivery will be effective upon delivery to the Broker's office. The attorney may but need not also inform the Broker(s) of any suggested revisions in the contract that would make it satisfactory.

In a lease requiring an attorney review provision, the words lease, tenant, and landlord shall be used in place of contract, buyer and seller. The clause need not be italicized as it is here.

The contract must also contain the names and full address of all persons to whom a Notice of Disapproval must be sent. It is not necessary for the Notice to include a reason for the rejection.

27. Certain off-site conditions may exist in an area that materially affect the value of a property being considered by a purchaser. These conditions include:

• being included on the National Priorities List pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA)

• sites known to and confirmed by the Department of Environmental Protection and included on the New Jersey master list of known hazardous discharge sites

• overhead electric utility transmission lines conducting 240,000 volts or more • electrical transformer substations • underground gas transmission lines • sewer pump stations of a capacity equal to, or in excess of 0.5 million gallons per day and

sewer trunk lines in excess of 15 inches in diameter • sanitary landfill facilities • public wastewater treatment facilities • airport safety zones

Pursuant to the "New Residential Construction Off-Site Conditions Disclosure Act”, when a real estate licensee or builder prepares a sales contract for newly constructed residential real estate they 10

must include the following statement in print as large as the predominant size print in the document.

A dwelling unit not previously occupied, excluding dwelling units constructed solely for lease.10


Attorney Review Also Required In Post-Contract Addenda When a licensee-prepared contract containing the required attorney review clause survives the review period, the contract is in full force and effect and becomes binding on the parties involved. In the event, that the real estate licensee prepares another writing which modifies the terms of the original contract, then this addendum or revision must also contain the attorney review language and will be subject to a three day attorney review period.


The statement shall either be included in the text of the contract itself or attached to the contract itself or attached to the contract as an Addendum.

Under the New Residential Construction Off-Site Conditions Disclosure Act, a seller's responsibility to disclose those off-site conditions that may materially affect the value of the property are fully met when the above notice is provided. The furnishing of the notice shall be available to the seller as a defense to any claim that the seller failed to disclose any conditions which are not part of the project . 11

The requirements are somewhat different when a real estate licensee prepares a residential contract of sale for property other than new construction. Resale transactions are not covered by the New Residential Construction Off-Site Conditions Disclosure Act, however, New Jersey Real Estate Commission regulations require the inclusion of the following statement in print as large as the predominant size print in the document.

This provision shall not be interpreted to affect the disclosure requirements for conditions off-site contained in "The Planned 11

Real Estate Development Full Disclosure Act," the "Air Safety and Zoning Act of 1983," or in any other statutory provision.


“NOTIFICATION REGARDING OFF-SITE CONDITIONS” Pursuant to the “New Residential Construction Off-Site Conditions Disclosure Act, “P.L. 1995, c. 253 (c.46 :3C-1 et seq.), sellers of newly constructed residential real estate are required to notify purchasers of the availability of lists disclosing the existence and location of off-site conditions which may affect the value of the residential real estate being sold. The lists are to be made available by the municipal clerk of the municipality within which the residential real estate is located and in other municipalities which are within one-half mile of the residential real estate. The address(es) and telephone number(s) of the municipalities relevant to this project and the appropriate municipal offices where the lists are made available are listed below. Purchasers are encouraged to exercise all due diligence in order to obtain any additional or more recent information that they believe may be relevant to their decision to purchase the residential real estate. Purchasers are also encouraged to undertake an independent examination of the general area within which residential real estate is located in order to become familiar with any and all conditions which may affect the value of the residential real estate. The purchaser has five (5) business days from the date the contract is executed by the purchaser and the seller to send notice of cancellation of the contract to the seller. The notice of cancellation shall be sent by certified mail. The cancellation will be effective upon the notice of cancellation being mailed. If the purchaser does not send a notice of cancellation to the seller in the time or manner described above, the purchaser will lose the right to cancel the contract as provided in this notice. MUNICIPALITY _____________________________ ADDRESS __________________________________ TELEPHONE NUMBER _______________________


The statement shall either be included in the text of the contract itself or attached to the contract itself or attached to the contract as an Addendum. There is no cancellation provision attached to resale property contracts as there is with new construction.

If a licensee has actual knowledge of an off-site condition which may materially affect the value of residential property other than new construction, they must disclose that information to prospective purchasers prior to the signing of a contract. If the licensee does not have actual knowledge of the off-site condition their disclosure obligation shall be deemed fulfilled simply by including the foregoing statement in the contract of sale.

28. Licensees are not free to make any inquiry about, or provide information on registered sex offenders. In response to requests for such information , licensees are required to inform the person making the inquiry that information about registered sex offenders is maintained by the county prosecutor. In all residential contracts and leases that licensees prepare, they must include the following statement in print as large as the predominant size print in the document.

Despite the fact that Real Estate Commission regulations provide for the preceding which licensees must follow, information regarding some, but not all, registered sex offenders is available online at www.njsp.org/info/reg_sexoffend.html. The New Jersey Legislature has found that the public safety will be enhanced by making information about certain sex offenders contained in the sex offender central registry available to the public through the internet.

29. If the buyer or the seller holds a New Jersey real estate license, their status as a licensee must be disclosed in the contract of sale.

30. All interested parties must sign the contract. The husband and wife must sign to release marital rights of dower and curtesy, or their right to joint possession, even though one of these names might not appear on the deed.


“NOTICE ON OFF-SITE CONDITIONS” Pursuant to the New Residential Construction Off-Site Conditions Disclosure Act, P.L. 1995, c. 253 the clerks of municipalities in New Jersey maintain lists of off-site conditions which may affect the value of residential properties in the vicinity of the off-site condition. Purchasers may examine the lists and are encouraged to independently investigate the area surrounding this property in order to become familiar with any off-site conditions which may affect the value of the property. In cases where a property is located near the border of a municipality, purchasers may wish to also examine the list maintained by the neighboring municipality.

MEGAN’S LAW STATEMENT Under New Jersey law, the county prosecutor determines whether and how to provide notice of the presence of convicted sex offenders in an area. In their professional capacity, real estate licensees are not entitle to notification by the county prosecutor under Megan’s Law and are unable to obtain such information for you. Upon closing, the county prosecutor may be contacted for such further information as may be disclosable to you.


When a partnership is a party to a contract, each partner should sign with the word "partner" after his/her name.

An agreement for the sale of real estate by a corporation should be executed in pursuance of a corporate resolution passed by the board of directors authorizing the particular conveyance. The agreement should be signed by two officers of the corporation who have been granted power of attorney.

If the document is to be recorded it must be properly acknowledged.

Neither the broker nor the salesperson must sign the sales contract unless they are a party to the contract.

New Jersey’s Uniform Electronic Transactions Act allows the use of an electronic signature (E-sign) in the sale, lease, exchange or other disposition of any interest in real property. Under this Act, an electronic signature is defined as, “an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.” A contract, record, or signature may not be denied legal effect or enforceability solely because it is in electronic form.

Closings Without Attorneys It is customary in some states to always use the services of an attorney when buying or selling real estate. It is the practice in many other states not to use an attorney and instead allow the real estate broker and the title company to perform the necessary steps involved in a closing. Strangely, the practice in New Jersey has been a combination of both. The Southern part of the state seems to have adopted the Philadelphia practice of not using attorneys while Northern New Jersey was influenced by the New York practice of using attorneys. There has been a question of whether the South Jersey practice constitutes the unauthorized practice of law. In addressing this question, in March, 1995, the New Jersey Supreme Court decided that the practice of conducting real estate closings or settlements without the presence of attorneys to represent the seller and the buyer shall not constitute the unauthorized practice of law so long as the broker conforms to specific conditions. The broker must notify both buyer and seller of the conflicting interests of brokers and title companies in these matters and of the general risk involved in not being represented by an attorney. If the conditions are not met, the broker and the title officer, if the title officer is aware of the broker's failure to meet the conditions, are engaged in the unauthorized practice of law. To achieve proper notice the court prescribed a written notice, sometimes referred to as the Opinion 26 Notice, that must be attached to residential contracts of sale as its cover page. Furthermore, the



broker must advise the buyer or seller at the point of presenting the contract, that he or she must read the notice before signing the contract. (A copy of the prescribed notice appears on the next page) It is not required that the broker obtain a written acknowledgment from the buyer or seller stating they received the notice, however, it is advisable for the broker to get written acknowledgment to prevent an assertion in the future that one was never provided by the broker. At the closing the title officer in charge must inquire of both the buyer and the seller whether, how, and when, the notice was given, and shall make and keep a record of the inquiry and the responses at that time.




NOTICETo Buyer and Seller

Read This Notice BeforeSigning The Contract

The Law requires real estate brokers to give you the following information before you sign this contract. Itrequires us to tell you that you must read all of it before you sign. The purpose is to help you in this purchase orsale.

� As a real estate broker, I represent � the seller, not the buyer; � the buyer, not the seller; � both the seller andthe buyer; � neither the seller nor the buyer. The title company does not represent either the seller or the buyer.

� You will not get any legal advice unless you have your own lawyer. Neither I nor anyone from the titlecompany can give legal advice to either the buyer or the seller. If you do not hire a lawyer, no one will representyou in legal matters now or at the closing. Neither I nor the title company will represent you in those matters.

� The contract is the most important part of the transaction. It determines your rights, risks, and obligations.Signing the contract is a big step. A lawyer would review the contract, help you to understand it, and to negotiateits terms.

� The contract becomes final and binding unless your lawyer cancels it within the following three business days.If you do not have a lawyer, you cannot change or cancel the contract unless the other party agrees. Neither canthe real estate broker nor the title insurance company change the contract.

� Another important service of a lawyer is to order a survey, title report, or other important reports. The lawyerwill review them and help to resolve any questions that may arise about the ownership and condition of theproperty. These reports and survey can cost you a lot of money. A lawyer will also prepare the documents neededto close title and represent you at the closing.

� A buyer without a lawyer runs special risks. Only a lawyer can advise a buyer about what to do if problemsarise concerning the purchase of this property. The problems may be about the seller's title, the size and shape ofthe property, or other matters that may affect the value of the property. If either the broker or the title companyknows about the problems, they should tell you. But they may not recognize the problem, see it from your pointof view, or know what to do. Ordinarily, the broker and the title company have an interest in seeing that the saleis completed, because only then do they usually receive their commissions. So, their interests may differ fromyours.

� Whether you retain a lawyer is up to you. It is your decision. The purpose of this notice is to make sure thatyou have the information needed to make your decision.

_________________________________Seller _________________________________Buyer

_________________________________Seller _________________________________Buyer

_________________________________Date _________________________________Date

_________________________________Selling Broker _________________________Date

Court prescribed notice regarding attorneys and real estate closings


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