A4326

An Act prohibiting imposition of certain brokerage costs on residential tenants, amending P.L.2024, c.32 (C.45:15-16.86 et al.), and supplementing P.L.1975, c.310 (C.46:8-43 et seq.) and P.L.1960, c.39 (C.56:8-1 et seq.).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 1 of P.L.2024, c.32 (C.45:15-16.86) is amended to read as follows:

1. As used in P.L.2024, c.32 (C.45:15-16.86 et al.):

"Agency relationship" means the agency relationship created under P.L.2024, c.32 (C.45:15-16.86 et al.) between a real estate brokerage firm and a principal relating to the performance of real estate brokerage services.

"Agent" means a real estate brokerage firm, including affiliated brokers, broker-salespersons, and salespersons who are duly licensed under R.S.45:15-1 et seq., that has an agency relationship with a principal.

"Brokerage firm" means a real estate brokerage firm, including real estate brokers, real estate broker-salespersons, and real estate salespersons licensed or otherwise authorized to provide brokerage services in this State pursuant to chapter 15 of Title 45 of the Revised Statutes who are affiliated with the brokerage firm, unless the context requires the terms to be considered separately. In accordance with section 2 of P.L.1989, c.239 (C.45:15-16.28), "broker" also includes any broker, broker-salesperson, or salesperson who performs within this State as an agent or employee of a subdivider any one or more of the services or acts as set forth in chapter 15 of Title 45 of the Revised Statutes.

"Brokerage services" means the rendering of services for which a real estate license is required under chapter 15 of Title 45 of the Revised Statutes.

"Brokerage services agreement" means a written agreement between a brokerage firm and principal that appoints a brokerage firm to represent the principal as an agent or work with a buyer or seller as a transaction broker. Broker services agreements include, but are not limited to, sale and rental listing agreements; buyer-lessee agency agreements; and transaction broker, dual agency, and designated agency agreements.

"Buyer" means an actual or prospective purchaser in a real estate transaction, or an actual or prospective tenant in a real estate rental or lease transaction, as applicable.

"Buyer's agent" means a brokerage firm, including brokers, broker-salespersons, and salespersons affiliated with the brokerage firm, that has an agency relationship and works only with the buyer in a real estate transaction and to whom the brokerage firm and its brokers, broker-salespersons, and salespersons owe fiduciary duties.

"Commercial real estate" means a fee title interest, possessory estate, or lease in real property located in the State of New Jersey, other than an interest in real property that is:

improved with one single-family residential unit or one multifamily structure with four or fewer residential units;

unimproved and the maximum permitted development is one to four residential units or structures under applicable zoning regulations;

classified as farmland, timberland, or other agricultural land for real estate tax assessment purposes;

improved with single-family residential units, such as condominiums, townhouses, timeshares, or stand-alone houses in a subdivision that may be legally sold, leased, or otherwise disposed of on a unit-by-unit basis;

subject to an agreement that provides that the real estate should be considered residential; or

within the definition in this section as of the date of its disposition.

"Confidential information" means information from or concerning a principal that, unless required to be disclosed by the brokerage firm pursuant to applicable law:

is acquired by the brokerage firm during the course of an agency relationship with the principal;

is information that, as advised by the principal to the brokerage firm, the principal reasonably expects to be kept confidential or that the brokerage firm otherwise knows is confidential;

would, if disclosed, operate to the detriment of the principal, except that the information may be disclosed if authorized by the principal; and

the principal personally would not be obligated to disclose to the other party.

"Designated agent" means, in any transaction where the buyer's agent and the seller's agent are affiliated with the same brokerage firm or are the same broker, broker-salesperson, or salesperson, the broker, broker-salesperson, or salesperson who has been designated by the brokerage firm, including, but not limited to, by a broker or managing broker of the brokerage firm, to solely represent the buyer as the buyer's agent and another broker, broker-salesperson, or salesperson who has been designated by the brokerage firm, including, but not limited to, a broker or managing broker of the brokerage firm, to solely represent the seller as the seller's agent in a particular real estate transaction.

"Disclosed dual agent" means a brokerage firm, including brokers, broker-salespersons, and salespersons affiliated with the brokerage firm, that has an agency relationship and is working for both the buyer and seller in the same transaction.

"Landlord" means any person, or a firm, corporation, or other business entity, including a property manager or other agent of a person, or a firm, corporation, or other business entity, that leases, rents, or offers to lease or rent, residential rental units to a tenant.

"Material information" means the existence or non-existence of information:

(1) to which a reasonable person would attach importance in deciding whether or how to proceed with a transaction; or

(2) that the agent knows or has reason to know that the recipient of the information regards or is likely to regard as important in deciding whether or how to proceed, although a reasonable person would not so regard it.

"Principal" means a buyer or a seller who has an agency relationship with a brokerage firm.

"Real estate transaction" or "transaction" means an actual or prospective transaction involving a purchase, sale, option, or exchange of any interest in real property or a lease or rental of real property. For purposes of P.L.2024, c.32 (C.45:15-16.86 et al.), a prospective transaction does not exist until a written offer has been signed by at least one party.

"Seller" means an actual or prospective seller in a real estate transaction or an actual or prospective landlord in a real estate rental or lease transaction, as applicable.

"Seller's agent" means a brokerage firm, including brokers, broker-salespersons, and salespersons affiliated with the brokerage firm, that has an agency relationship and works only with the seller in a real estate transaction and to whom the brokerage firm and its brokers, broker-salespersons, and salespersons owe fiduciary duties.

"Tenant" means any person who leases or rents, or who prospectively offers or applies to lease or rent, residential rental units from a landlord.

"Transaction broker" means a brokerage firm, including brokers, broker-salespersons, or salespersons affiliated with the brokerage firm, that works with a buyer or a seller, or both, in a real estate transaction without representing either party and has no agency relationship and owes no fiduciary duties to either party to the transaction.

(cf: P.L.2024, c.32, s.1)

2. Section 11 of P.L.2024, c.32 (C.45:15-16.96) is amended to read as follows:

11. a. In any real estate transaction, a brokerage firm's compensation may be paid by one or more of the following: the seller; the buyer; a third party; or by sharing the compensation between brokerage firms. Agreements on compensation shall be in writing signed by the seller or buyer, as applicable.

b. An agreement to pay or payment of compensation shall not establish an agency relationship between the party who paid the compensation and the brokerage firm.

c. A seller may agree that a seller's agent's or transaction broker's brokerage firm may share with another brokerage firm the compensation paid by the seller, provided that this type of agreement is in writing and signed by the seller.

d. A buyer may agree that a buyer's agent's or transaction broker's brokerage firm may share with another brokerage firm the compensation paid by the buyer, provided that this type of agreement is in writing and signed by the buyer.

e. Notwithstanding any provision of chapter 15 of Title 45 of the Revised Statutes or any other law, rule, or regulation to the contrary, including, but not limited to, subsection i. of R.S.45:15-17, a brokerage firm may be compensated by more than one party for real estate brokerage services in a real estate transaction regardless of the agency or transaction broker relationship the brokerage firm has with the parties.

f. A brokerage firm may receive compensation based upon a flat fee arrangement, a percentage of the purchase price, or other method permitted by law, all of which shall be a commission payment for any real estate brokerage services rendered, without breaching any duty to the buyer or seller.

g. To receive compensation for rendering real estate brokerage services from any party, firm, or third party, a brokerage firm shall have a written brokerage services agreement with the buyer or the seller, as applicable, in a residential real estate transaction and a written brokerage services agreement with the seller but not with the buyer in a commercial real estate transaction containing the following:

(1) the terms of compensation, including:

(a) the amount the principal agrees to compensate the brokerage firm;

(b) the principal's consent, if any, and any terms of the consent to compensation sharing between brokerage firms and parties sharing the payment of the compensation; and

(c) the principal's consent, if any, and any terms of consent to compensation of the brokerage firm by more than one party; and

(2) in a brokerage services agreement with a buyer, if there is no agreement, offer, or a limited offer by any other party or brokerage firm to pay compensation to the brokerage firm, if the buyer will pay the difference between the offer and the compensation the buyer has agreed is due to the buyer's agent and, if not, the buyer's agreement as to how to proceed in this situation, including, but not limited to, directing the buyer's agent not to introduce the buyer to properties where the seller is not offering compensation or is offering less compensation to the buyer's agent than the buyer agreed is due to the buyer's agent.

h. A brokerage firm may receive compensation, which shall be deemed to be the payment of a commission, without a brokerage services agreement for the provision of a broker's price opinion, comparative market analysis, or a referral by one firm to another firm if the referring firm provided no real estate brokerage services in the transaction.

i. (1) Notwithstanding any provision of law to the contrary, regarding residential real property, a brokerage firm shall not:

(a) impose upon, pass through to, or accept from, a tenant any fees, commissions, or charges, for or related to, brokerage services.

(b) require or condition the leasing of residential real property on a tenant engaging a brokerage firm or agent thereof; or

(c) post a listing for the rental of residential real property that represents that fees, charges, or commissions for brokerage services are required in violation of this subsection.

(2) A brokerage firm shall disclose in a real estate listing, in a clear and conspicuous manner, all fees to be paid by the tenant for the rental of the property.

(cf: P.L.2024, c.32, s.11)

3. (New section) a. As used in this section, the terms "brokerage firm," "brokerage services," "landlord," and "tenant" shall mean the same as those terms are defined pursuant to section 1 of P.L.2024, c.32 (C.45:15-16.86).

b. A landlord shall not:

(1) impose upon, pass through to, or accept from, a tenant, any fees, commissions, or charges, for or related to, brokerage services.

(2) require or condition the leasing of residential real property on a tenant engaging a brokerage firm or agent thereof; or

(3) post a listing for the rental of residential real property that represents that fees, charges, or commissions for brokerage services are required in violation of this section.

c. (1) A listing related to the rental of residential real property shall disclose in the listing in a clear and conspicuous manner all fees to be paid by the tenant for the rental of the property.

(2) Prior to the execution of an agreement for the rental of residential real property, the landlord or landlord’s agent shall provide to the tenant an itemized written disclosure of any fees that the tenant is required to pay to the landlord or to any other person at the direction of the landlord in connection with the rental. The itemized written disclosure shall include a short description of each fee, and the tenant shall sign any such itemized written disclosure prior to signing a lease for the rental of residential real property. The landlord or landlord’s agent shall retain the signed written disclosure required by this section for three years and shall provide a copy of the signed written disclosure to the tenant.

d. The following attestation shall be provided as set forth below in no less than size 12 and bold-faced type in a conspicuous manner in the landlord’s application for the residential rental unit, and in a conspicuous manner with the Truth-in-Renting Statement, required pursuant to P.L.1975, c.310 (C.46:8-43 et seq.):

"THE LANDLORD AFFIRMS, UNDER THE PENALTY OF PERJURY, THAT:

§ THE LANDLORD AND THE LANDLORD’S AGENTS, BY STATE LAW, ARE PROHIBITED FROM IMPOSING UPON, PASSING THROUGH TO, OR ACCEPTING FROM, A TENANT OR PROSPECTIVE TENANT, FOR OR RELATED TO, WHETHER DIRECTLY OR INDIRECTLY, ANY FEES, COMMISSIONS, OR CHARGES IN CONNECTION WITH THE LANDLORD’S AGREEMENT WITH A BROKERAGE FIRM, INCLUDING A REAL ESTATE AGENT. THE LANDLORD AFFIRMS THIS STATUTORY OBLIGATION, AND AFFIRMS THAT, IF THE LANDLORD VIOLATES THIS REQUIREMENT, THE LANDLORD IS SUBJECT TO THE PENALTIES SET FORTH IN SECTION 5 OF P.L.1975, C.310 (C.46:8-47) AND SECTION 4 OF P.L. , C. (C. ) (PENDING BEFORE THE LEGISLATURE AS THIS BILL), INCLUDING A PENALTY TO BE PAID TO THE TENANT OR PROSPECTIVE TENANT, EQUAL TO THE GREATER OF $5,000, OR THREE TIMES THE AMOUNT OF ALL FEES, COMMISSIONS, OR CHARGES IMPOSED UPON, PASSED THROUGH TO, OR ACCEPTED FROM, A TENANT OR PROSPECTIVE TENANT."

e. A landlord who violates this section shall be subject to the penalty provisions of section 5 of P.L.1975, c.310 (C.46:8-47) and section 4 of P.L. , C. (C. ) (pending before the Legislature as this bill).

4. (New section) a. A landlord or brokerage firm that violates section 3 of P.L. , .c (C. ) (pending before the Legislature as this bill) or subsection i. of section 11 of P.L.2024, c.32 (C.45:15-16.96) shall be liable to a penalty, for each offense, equal to the greater of $5,000, or three times the amount of all fees, commissions, or charges imposed upon, passed through to, or accepted from, a tenant. The penalty shall be collected and enforced by summary proceedings pursuant to the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.). The Superior Court, Law Division, Special Civil Part in the county in which the rental premises are located shall have jurisdiction over such proceedings. Process shall be in the nature of a summons or warrant, and shall issue upon the complaint of the commissioner or the Attorney General.

b. In addition to the penalty set forth pursuant to subsection a. of this section, and notwithstanding any provision of subsection a. of this section to the contrary, a landlord or brokerage firm who violates any provision of section 3 of P.L. , .c (C. ) (pending before the Legislature as this bill) or subsection i. of section 11 of P.L.2024, c.32 (C.45:15-16.96), shall be liable to a penalty, in an action brought at the discretion of a tenant, for each offense, equal to the greater of $5,000, or three times the amount of all fees, commissions, or charges imposed upon, passed through to, or accepted from, a tenant. The tenant shall be permitted to recover the penalty, reasonable attorney’s fees, court costs, expenses for expert witnesses, and other related fees and expenses incurred in proving a violation of section 3 of P.L. , .c (C. ) (pending before the Legislature as this bill) or subsection i. of section 11 of P.L.2024, c.32 (C.45:15-16.96). The Superior Court, Law Division, Special Civil Part in the county in which the rental premises are located shall have jurisdiction over such proceedings. Process shall be in the nature of a summons or warrant, and shall issue upon the complaint of the tenant.

c. A violation of section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill) by a landlord, or a violation of subsection i. of section 11 of P.L.2024, c.32 (C.45:15-16.96) by a brokerage firm, shall constitute an unlawful practice pursuant to P.L. 1960, c.39 (C.56:8-1 et seq.), and shall be subject to all remedies and penalties available pursuant to P.L. 1960, c.39 (C.56:8-1 et seq.), in addition to the remedies provided pursuant to this section.

5. (New section) A violation of section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill) by a landlord, and a violation of subsection i. of section 11 of P.L.2024, c.32 (C.45:15-16.96) by a brokerage firm, shall constitute an unlawful practice.

6. This act shall take effect immediately.

STATEMENT

This bill prohibits the imposition of certain costs for brokerage services, including realtor fees, on residential tenants or prospective residential tenants (tenants).

Specifically, the bill prohibits a landlord and a brokerage firm from: (1) imposing upon, passing through to, or accepting from, a tenant, any fees, commissions, or charges, for or related to brokerage services, as defined in the bill; (2) requiring or conditioning the leasing of residential real property on a tenant engaging a brokerage firm or agent thereof; or (3) posting a listing for the rental of residential real property that represents that fees, charges, or commissions for brokerage services are required in violation of the bill.

The bill requires that every listing related to the rental of residential real property is to disclose in a clear and conspicuous manner any fee to be paid by the tenant for the rental of such property. The bill requires that the landlord or landlord’s agent provide to the tenant, prior to the execution of an agreement for the rental of residential real property, an itemized written disclosure of any fees that the tenant is required to pay to the landlord or to any other person at the direction of the landlord in connection with such rental, as described in the bill.

The bill requires that a landlord provide an attestation, as set forth in the bill, in a conspicuous manner in the landlord’s application for the residential rental unit, and with the Truth-in-Renting Statement, required under existing law, in which the landlord affirms, under the penalty of perjury, compliance with certain provisions of the bill and penalties for noncompliance.

A violation of the bill is to constitute an unlawful practice pursuant to the New Jersey consumer fraud act, P.L.1960, c.39 (C.56:8-1 et seq.), and subjects a landlord or brokerage firm to a penalty, for each offense, equal to the greater of $5,000, or three times the amount of all fees, commissions, or charges imposed upon, passed through to, or accepted from, a tenant. The penalty would be collected and enforced by the Commissioner of Community Affairs or the Attorney General. Notwithstanding the civil penalty described above, the bill also provides a private cause of action for a tenant, who, for a landlord or brokerage firm’s violation of the bill, would be permitted to recover a penalty for each offense equal to the greater of $5,000, or three times the amount of all fees, commissions, or charges imposed upon, passed through to, or accepted from, a tenant, in addition to reasonable attorney’s fees, court costs, expenses for expert witnesses, and other related fees and expenses incurred in proving a violation of the bill.

The bill would take effect immediately.