Chapter

Chapter

1

License Required to Provide

Real Estate Brokerage Services

1-1

GENERAL

The New Jersey Real Estate License Act,1 which also is known as

the Real Estate Brokers and Salesmen¡¯s Act, makes clear that only

a person licensed by the New Jersey Real Estate Commission (the

¡°Commission¡±) may engage in the activities of a real estate broker,

broker-salesperson or salesperson:

No person shall engage either directly or

indirectly in the business of a real estate broker,

broker-salesperson or salesperson, temporarily

or otherwise, and no person shall advertise or

represent himself as being authorized to act

as a real estate broker, broker-salesperson or

salesperson, or to engage in any of the activities

described in R.S. 45:15-3, without being licensed

so to do as hereinafter provided.2

¡°The licensing act is a regulatory measure and represents the

strong public policy of ¡± New Jersey.3 As such, it makes clear that its

application is broad, providing that ¡°[a]ny single act, transaction

N.J.S.A. 45:15-1, et seq.

N.J.S.A. 45:15-1. The Real Estate License Act was amended in August 2018 to eliminate

the category of licensees known as ¡°referral agents,¡± who now are salespersons (licensed

with a real estate referral company). See ¡ì 1-5 for a discussion about this amendment.

3.

Tanenbaum v. Sylvan Builders, Inc., 29 N.J. 63, 71 (1959).

1.

2.

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License Required to Provide Real Estate Brokerage Services

or sale shall constitute engaging in business within the meaning of

this article.¡±4

Finally, the Commission may investigate and sanction ¡°any

person who assumes, advertises or represents himself as being

authorized to act as a real estate broker, broker-salesperson

or salesperson engages in any of the activities described in

R.S. 45:15-3 without being licensed to do so.¡±5 For such a violation,

the Commission may impose 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.¡±6

1-2

REAL ESTATE BROKERS

The Real Estate License Act defines a ¡°real estate broker¡± as:

a person, firm or corporation who, for a fee,

commission or other valuable consideration, or

by reason of a promise or reasonable expectation

thereof, lists for sale, sells, exchanges, buys or

rents, or offers or attempts to negotiate a sale,

exchange, purchase or rental of real estate or an

interest therein, or collects or offers or attempts to

collect rent for the use of real estate or solicits for

prospective purchasers or assists or directs in the

procuring of prospects or the negotiation or closing

of any transaction which does or is contemplated

to result in the sale, exchange, leasing, renting

or auctioning of any real estate or negotiates, or

offers or attempts or agrees to negotiate a loan

secured or to be secured by mortgage or other

encumbrance upon or transfer of any real estate

for others, or any person who, for pecuniary gain

or expectation of pecuniary gain conducts a public

or private competitive sale of lands or any interest

4.

N.J.S.A. 45:15-2. Note that the Commission has taken the position that this broad

application of brokerage activities that require licensure covers property management,

including such activities as showing a property, having leases signed, collecting rent and the

like. Unlicensed employees therefore cannot undertake such activities, which must be done

by licensed agents affiliated with a broker.

5.

N.J.S.A. 45:15-17.

6.

N.J.S.A. 45:15-17. For a full discussion of the prohibited activities set forth in

Section 17 of the New Jersey Real Estate License Act, see Chapter 18, ¡ì 18-1.

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in lands . . . . A real estate broker also shall include

any person, firm, or corporation who supervises a

real estate referral company.7

In connection with the sale of lots, the statute further provides

that ¡°the term ¡®real estate broker¡¯ includes any person, partnership,

association or corporation employed or contracted by or on

behalf of the owner or owners of lots or other parcels of real

estate, at a stated salary, or upon a commission, or upon a salary

and commission, or otherwise, to sell such real estate, or any parts

thereof, in lots or other parcels, and who shall sell or exchange, or

offer or attempt or agree to negotiate the sale or exchange, of any

such lot or parcel of real estate.¡±8

No person may engage, either directly or indirectly, in any of

these activities unless licensed as a real estate broker.9 In addition,

in order to bring and maintain an action in a New Jersey court

for collection of compensation for brokerage services, a plaintiff

must allege and prove that he or she was a duly licensed real estate

broker at the time the services were rendered.10

7.

N.J.S.A. 45:15-3. The Commission has interpreted ¡°offers or attempts or agrees to

negotiate a loan secured or to be secured by mortgage¡± to allow real estate licensees to

broker commercial mortgages.

8.

N.J.S.A. 45:15-3; see also Boise Cascade Home & Land Corp. v. Div. of the N.J. Real

Estate Comm¡¯n in the Dep¡¯t of Ins., 121 N.J. Super. 228, 235 (Ch. Div. 1972) (¡°[T]he exception

[to the license requirement for owners of property] does not apply, in the case of the sale of

lots, to persons employed by the owner to sell such lots, and who sell or exchange them, or

offer or attempt or agree to negotiate for their sale.¡±). Based upon N.J.S.A. 45:15-3 and the

Boise Cascade decision, the Commission has taken the position that property management

in New Jersey, including showing and leasing the property and similar activities to rent

properties (but not including overseeing normal maintenance issues), must be done by real

estate licensees acting under a licensed real estate broker. According to the Commission,

such property management activities cannot be done in New Jersey by unlicensed entities

or employees of the owner of the property.

9.

See N.J.S.A. 45:15-1.

10.

N.J.S.A. 45:15-3 (¡°No person, firm, partnership, association or corporation shall

bring or maintain any action in the courts of this State for the collection of compensation

for the performance of any of the acts mentioned in this article without alleging and

proving that he was a duly licensed real estate broker at the time the alleged cause of action

arose.¡±). However, see Chapter 8, ¡ì 8-1:3, regarding a narrow exception to this licensure

requirement created in Sammarone v. Bovino, 395 N.J. Super. 132 (App. Div. 2007).

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License Required to Provide Real Estate Brokerage Services

REAL ESTATE SALESPERSONS

The Real Estate License Act defines a ¡°real estate salesperson¡±

as follows:

Any person who, for compensation, valuable

consideration or commission, or other thing of

value, or by reason of a promise or reasonable

expectation thereof, is employed or contracted by

and operates under the supervision of a licensed

real estate broker to sell or offer to sell, buy or offer

to buy or negotiate the purchase, sale or exchange

of real estate, or offers or attempts to negotiate

a loan secured or to be secured by a mortgage or

other encumbrance upon or transfer of real estate,

or to lease or rent, or offer to lease or rent any real

estate for others, or to collect rents for the use of

real estate, or to solicit for prospective purchasers

or lessees of real estate, or who is employed or

contracted by a licensed real estate broker to sell

or offer to sell lots or other parcels of real estate,

at a stated salary, or upon a commission, or upon

a salary and commission, or otherwise to sell real

estate, or any parts thereof, in lots or other parcels,

or in the case of a salesperson licensed with a

real estate referral company refers prospective

consumers of real estate brokerage services to a

particular broker. For the purposes of R.S. 45:15-1

et seq., the definition of real estate salesperson shall

include a salesperson licensed with a real estate

referral company unless otherwise indicated.11

A person is statutorily prohibited from engaging in these activities

unless duly licensed as a real estate salesperson.12

11.

N.J.S.A. 45:15-3. The Commission has interpreted ¡°offers or attempts or agrees

to negotiate a loan secured or to be secured by mortgage¡± to allow real estate licensees

to broker commercial mortgages. The Commission also adopted a regulation effective

July 3, 2017 clarifying its position with regard to employment versus independent contract

relationships as follows: ¡°The Commission interprets ¡®employment agreement,¡¯ ¡®employee,¡¯

and ¡®employing broker¡¯ in N.J.S.A. 45:15-1, et seq., and this section to permit an employment

relationship or an independent contractor relationship between a broker and a brokersalesperson salesperson, or referral agent.¡± N.J.A.C. 11:5-4.1(j).

12.

See N.J.S.A. 45:15-1.

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Only a licensed broker, not a salesperson, may bring a claim for

a commission.13 However, a salesperson may file suit for collection

of compensation against ¡°the licensed broker with whom the

salesperson . . . was employed at the time the alleged cause of

action arose.¡±14 No such lawsuit for compensation may be brought

or maintained without ¡°the claimant alleging and proving that

he was a duly licensed real estate salesperson . . . at the time the

alleged cause of action arose.¡±15

1-4

REAL ESTATE BROKER-SALESPERSONS

A real estate broker-salesperson as is defined in the Real Estate

License Act as:

any person who is qualified to be licensed as a real

estate broker but who, for compensation, valuable

consideration or commission, or other thing of

value, or by reason of a promise or reasonable

expectation thereof, is employed or contracted by

and operates under the supervision of a licensed

real estate broker to perform the functions of a real

estate salesperson as defined herein.16

A person is barred from acting as a broker-salesperson unless he

or she is duly licensed.17 A broker-salesperson cannot file suit to

seek compensation for real estate brokerage services but is entitled

to file suit against ¡°the licensed broker with whom the . . . brokersalesperson was employed at the time the alleged cause of action

arose.¡±18 Similarly, a broker-salesperson may not bring and

maintain a cause of action for compensation ¡°without alleging

See N.J.S.A. 45:15-3.

N.J.S.A. 45:15-3.

15.

N.J.S.A. 45:15-3.

16.

N.J.S.A. 45:15-3. The Commission adopted a regulation effective July 3, 2017 clarifying

its position with regard to employment versus independent contract relationships as follows:

¡°The Commission interprets ¡®employment agreement,¡¯ ¡®employee,¡¯ and ¡®employing broker¡¯

in N.J.S.A. 45:15-1, et seq., and this section to permit an employment relationship or an

independent contractor relationship between a broker and a broker-salesperson, salesperson,

or salesperson licensed with a real estate referral company.¡± N.J.A.C. 11:5-4.1(j).

17.

See N.J.S.A. 45:15-1.

18.

N.J.S.A. 45:15-3.

13.

14.

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