§ 11:5-7.2 Prohibition Against Kickbacks for Related Business Referrals +16New Jersey · Real Estate · English

A licensee who solicits or accepts any fee, kickback, compensation, or thing of value merely for referring a customer or client to a lender, mortgage broker, or other provider of related services is subject to Commission sanction for conduct demonstrating unworthiness, bad faith, and dishonesty. Any compensation received under N.J.A.C. 11:5-7.1(e) for services in related transactions must be for services actually performed beyond mere referral. Compliance with the anti-kickback provisions of RESPA (12 U.S.C. § 2607), its regulations, or any HUD opinion regarding RESPA is deemed compliance with this subsection.

• ✓Accepting a fee, kickback, or thing of value merely for referring to a lender, mortgage broker, or related service provider is prohibited and sanctionable
• ✓Compensation for related transactions must be for services actually performed beyond mere referral
• ✓Compliance with RESPA (12 U.S.C. § 2607) and HUD opinions is deemed compliance with this rule

Compensation paid by a broker to a salesperson (referral) is limited to compensation for referring prospective consumers of real estate brokerage services to the broker. Brokers are prohibited from offering incentives to referral salespersons, salespersons, or broker-salespersons for merely referring clients to a particular lender, mortgage broker, or other provider of related services. A broker may not award prizes or bonuses to salespersons based on the number of customer referrals made to an in-house mortgage service or to a particular lender.

• ✓Broker compensation to a salesperson (referral) is limited to compensation for referring consumers of real estate brokerage services
• ✓Brokers cannot offer incentives for merely referring clients to a particular lender, mortgage broker, or related service provider
• ✓Brokers cannot award prizes or bonuses based on the number of referrals to an in-house mortgage service or particular lender

When acting as any type of agent, a brokerage firm owes duties to its principal AND to all parties that may not be waived, including strict compliance with agency law, reasonable skill and care, honesty and good faith, timely presentation of all written offers/counteroffers with written confirmation of receipt, and disclosure of material physical condition information.

• ✓These duties may NOT be waived
• ✓Must present all written offers and counteroffers in a timely manner unless directed otherwise in writing
• ✓Must provide written confirmation of receipt of each offer/counteroffer
• ✓Must disclose all existing material information concerning the physical condition of the property

In residential transactions the firm must obtain a signed property condition disclosure statement (C.56:8-19.1) from a seller, provide the Consumer Information Statement and obtain signed acknowledgment, and disclose in writing (no later than when the principal signs the brokerage services agreement) which relationship the firm has and any compensation offered to another firm.

• ✓Must obtain a signed property condition disclosure statement where the principal is the residential seller
• ✓Must provide the Consumer Information Statement and obtain a signed acknowledgment of receipt
• ✓Agency relationship must be disclosed in writing no later than when the principal signs the brokerage services agreement, in a separate 'Agency Disclosure' paragraph

The firm must make a reasonable effort to obtain material information about the property's condition and the financial qualifications of any buyer for whom it submits an offer, but is not held to the standard of a licensed property inspector unless separately licensed.

• ✓Must undertake reasonable effort to obtain material property condition information
• ✓Must obtain financial qualifications of any buyer for whom the firm submits an offer
• ✓Not held to licensed property inspector standard unless separately so licensed

Defined terms govern the entire chapter. 'Act' means the Real Estate License Act, N.J.S.A. 45:15-1 et seq. 'Commission' means the NJ Real Estate Commission. 'Broker of record' means the individual broker licensed as, and acting as, the broker authorized to transact business for a licensed business entity. 'Employing broker' means the broker by, through, or with whom a broker-salesperson, salesperson, or salesperson (referral) is licensed.

• ✓'Act' = the Real Estate License Act, N.J.S.A. 45:15-1 et seq.
• ✓'Broker of record' = the individual broker authorized to transact business on behalf of a licensed business entity
• ✓'Employing broker' = the broker by, through, or with whom a licensee is licensed
• ✓Definitions of broker, broker-salesperson, salesperson, referral company, and salesperson (referral) derive from N.J.S.A. 45:15-3

Effective January 20, 2026, the Commission eliminated the 'referral agent' license category by name and replaced it with 'real estate salesperson licensed with a real estate referral company' (short form 'salesperson (referral)'). A real estate referral company and salesperson (referral) both have the meaning set forth in N.J.S.A. 45:15-3.

• ✓The former 'referral agent' category is now 'salesperson (referral)' — a salesperson licensed with a real estate referral company
• ✓'Real estate salesperson licensed with a real estate referral company' has the meaning set forth in N.J.S.A. 45:15-3

This subsection ensures total separation between instructional activity by licensed schools and any solicitation of students (recruiting efforts or brokerage activity directed at students). Violations are considered conduct demonstrating unworthiness for licensure, subjecting offenders to sanctions under N.J.S.A. 45:15-17(e) and (t), and possibly under N.J.S.A. 45:15-10.11 and N.J.A.C. 11:5-12.15.

• ✓There must be total separation between instruction and student solicitation
• ✓Violations demonstrate unworthiness for licensure and subject licensees to sanctions

At the beginning of the first class session of all salesperson or salesperson (referral) prelicensure courses, schools must distribute in writing the prescribed Commission notice. The notice explains Commission policy on complete separation between instruction and broker recruitment/listing solicitation, directs students to report violations, and provides the Commission's Trenton mailing address (20 West State Street, PO Box 328, Trenton, NJ 08625-0328, Attn: Director, Real Estate Education). If a student misses the first session, the notice must be delivered at the first session they attend.

• ✓The prescribed solicitation notice must be distributed at the first class session
• ✓Students not attending the first session must receive the notice at the first session they attend
• ✓Notice must inform students they are free to negotiate employment terms with any broker

Except for posting/distributing written materials as allowed, no school director, instructor, guest lecturer, or staff member may solicit a student to become a salesperson or salesperson (referral) for any particular broker prior to, or within seven days following, the student's successful completion of the course. Nor may any such person ever accept a fee or compensation for soliciting/recruiting students to apply for employment with a particular broker.

• ✓No soliciting students before or within seven days after successful course completion
• ✓No school personnel may ever accept fees for recruiting students for a particular broker

No in-person or electronic solicitation of students to work for a particular broker is permitted at a licensed school location during prescribed class hours or breaks. Such recruiting (e.g., a voluntary 'career night') may be scheduled before, after, or separate from class hours, provided students are notified in writing that attendance is voluntary. Still, no school personnel may engage in such activity before or within seven days after successful completion. Licensed instructors who are also brokers/salespersons may teach so long as presentations do not solicit students.

• ✓No in-person or electronic solicitation during class hours or breaks
• ✓Voluntary recruitment events must be separate from class and disclosed as voluntary in writing
• ✓The seven-day post-completion restriction still applies to any recruitment activity

No licensed school may offer a reduced tuition rate where eligibility depends on a student committing to becoming licensed through a particular broker after qualifying, and no school may otherwise make or imply any promise or guarantee of employment to any student.

• ✓Reduced tuition may not be contingent on committing to a particular broker
• ✓Schools may not promise or imply guaranteed employment to students

No oral statement or written text referring to a licensed school may be included in any real estate licensee's advertisement, and no school advertisement may refer to the brokerage operation or include a licensee's phone number—except a school owned by a licensee or franchisor may use that name in its school name. Such affiliated-name advertisements must include a disclosure legend stating attendance won't obligate employment or guarantee an interview/job with the affiliated broker. No school advertisement may appear in the Help Wanted classified section.

• ✓School and brokerage advertisements must generally stay separate
• ✓Affiliated-name school ads must include the required disclosure legend about no employment obligation
• ✓No school advertisement may be placed in Help Wanted classified sections

No licensed school may conduct prelicensure sessions in any area that is part of a location licensed as a broker's main or branch office; an area is part of a licensed office if any brokerage activity occurs there. In multi-floor buildings, courses may be held if primary access/egress does not require walking through brokerage-activity areas. On single-floor licensed offices, a separate entrance is required. Where courses share a building with affiliated brokerage activity, the broker must post signs directing students to the school entrance.

• ✓Prelicensure sessions may not occur in any area where brokerage activity takes place
• ✓Access/egress to course areas must not require passing through brokerage-activity areas
• ✓Affiliated brokers must post directional signs guiding students to the school location

No licensed school may allow any person to solicit students (enrolled or considering enrollment in prelicensure or CE courses) to list, purchase, or lease property, or to make referrals of prospective sellers/purchasers/lessees, at any time while such students are on school premises. Schools providing CE courses must comply with all provider requirements in N.J.A.C. 11:5-12.

• ✓No property listing/purchase/lease solicitation of students while on school premises
• ✓CE-providing schools must comply with all CE provider requirements under N.J.A.C. 11:5-12

'Brokerage activity' means any activity that under N.J.S.A. 45:15-1 and 45:15-3 would require a broker, salesperson, or salesperson (referral) license. 'Solicit' means to recruit, invite or urge a student to seek employment with a particular broker, or to list, purchase or lease through, or make referrals to, a particular broker. 'Successful completion' means the student's receipt of a Real Estate Commission school certificate form, signed by the instructor and director and stamped by the school, certifying completion and passing.

• ✓'Solicit' covers recruiting for employment or urging listings/purchases/referrals to a particular broker
• ✓'Successful completion' requires a signed and stamped Commission school certificate form

Any licensed school that posts, distributes, or displays written material soliciting students for a particular broker must similarly post/distribute/display comparable material from any broker who requests it. No such written material soliciting employment with a particular broker or a referral program may be distributed during prescribed class hours.

• ✓A school displaying one broker's recruitment material must display comparable material from any requesting broker
• ✓No recruitment written material may be distributed during prescribed class hours

Any person who, before a lease is fully executed (or before possession where no lease is drawn), charges or accepts any fee, commission, or compensation for providing assistance in locating rental housing—including written lists or telephone information on purportedly available units—without a license is a disorderly person subject to a fine of not less than $200 or imprisonment for not more than 30 days, or both.

• ✓Charging fees for locating rental housing without a license is a disorderly persons offense
• ✓Penalty is a fine of at least $200, imprisonment up to 30 days, or both
• ✓The offense applies to charging before a lease is executed or before tenant takes possession

The statute does not prohibit a licensed broker, or an owner of rental properties (or their agents/employees), from requiring a deposit to reserve a unit or charging a fee for processing a rental application, credit check, or investigation of prospective tenants prior to lease execution or possession.

• ✓Owners and licensed brokers may charge deposits to reserve a unit
• ✓Application processing, credit check, and tenant investigation fees are permitted prior to lease execution

Every application for a real estate instructor license must include a $50 application fee plus a non-refundable criminal history record check fee. Applicants must submit name, address, fingerprints, and written consent for a background check. Instructor licenses expire on a commission-fixed date, no more than two years from issuance. Renewal requires payment and evidence of completing any continuing education requirements.

• ✓Instructor application fee is $50, non-refundable
• ✓First 12 months of cycle: $200 license fee; second 12 months: $100
• ✓Instructor license renewal fee is $100 for a two-year term
• ✓Instructor licenses expire no more than 2 years from issuance
• ✓Renewal requires evidence of satisfactory completion of any CE requirements

Continuing education courses may be delivered in a classroom setting or via the Internet or video modalities, subject to NJREC approval of the providers, course content, and the security/integrity measures of the delivery process. The commission may approve courses with periodic progress assessments requiring a satisfactory performance level to continue to the next segment, but it cannot require a licensee to pass a comprehensive final exam covering the entire course as a condition of receiving credit.

• ✓CE may be delivered in classroom, Internet, or video modalities, subject to NJREC approval
• ✓The commission may require periodic progress assessments but shall NOT require passing a comprehensive final examination for attendance credit

The Commission holds individual brokers (employing brokers and brokers of record) responsible for actions of the broker licensee or any person employed by or licensed through the broker licensee that violate the license law or regulations, regardless of where those actions take place. Every transaction in which a broker licensee participates must be under the ultimate supervision of the individual broker.

• ✓Individual brokers are responsible for law/regulation violations by the broker licensee or anyone employed by or licensed through it
• ✓This responsibility applies regardless of where the licensed persons act in pursuit of the brokerage business
• ✓Every real estate transaction must be under the ultimate supervision of the individual broker

The individual broker must ensure a separate account is maintained for the funds of others and must make certain that no such funds are disbursed or used without his or her express authorization and knowledge. These supervisory subsection provisions do not apply to brokers licensed as broker-salespersons.

• ✓Individual broker must ensure no funds of others are disbursed without his/her express authorization and knowledge
• ✓These oversight provisions do not apply to brokers licensed as broker-salespersons

Any single act, transaction, or sale constitutes 'engaging in business' within the meaning of the article. This means even one real estate transaction triggers the licensing requirement.

• ✓A single act, transaction, or sale is sufficient to constitute engaging in business
• ✓Licensing requirements apply even to a one-time real estate act

Continuing education requirements set by NJREC must be completed on or before April 30 of the year the biennial license expires. A licensee who fails to complete CE before May 1 of the second year of the biennial term is subject to a reasonable processing fee determined by the commission, not to exceed $200.

• ✓CE must be completed on or before April 30 of the year the biennial license expires
• ✓Failure to complete CE prior to May 1 of the second year subjects the licensee to a processing fee of not more than $200

In a residential transaction, the firm must enter into a brokerage services agreement with the buyer before or as soon as reasonably practical after services begin. It is NOT required in commercial transactions. The agreement must contain specified terms including compensation and dual/designated agency consent.

• ✓Residential buyer brokerage services agreement is required; commercial is not
• ✓Dual agency or designated agency consent requires separate initialing/signature
• ✓Must include a disclosure that broker compensation is fully negotiable and not set by law
• ✓Must state the term, whether exclusive or nonexclusive, and compensation details

A firm performing brokerage services for a buyer is a buyer's agent UNLESS it represents the seller (seller's agent), represents both (disclosed dual agent), agreed to be a transaction broker, or the affiliated licensee is the seller.

• ✓Default is buyer's agent when performing services for a buyer
• ✓Representing both parties makes it a disclosed dual agent
• ✓If the affiliated licensee is a seller, the firm is not the buyer's agent

The Education Bureau processes waivers for: salesperson or salesperson (referral) prelicensure education requirement; partial waiver of broker prelicensure education and/or complete waiver of broker experience requirement; waiver of broker experience and certain prelicensure education based on qualifying disabled veteran status under N.J.S.A. 45:15-11; and waiver of CE requirement under N.J.A.C. 11:5-12.5.

• ✓Qualifying disabled veterans may obtain waivers under N.J.S.A. 45:15-11
• ✓Partial broker education waivers and complete experience waivers are processed by the Education Bureau

The Education Bureau of the Real Estate Commission processes applications for: real estate instructor license; real estate school license; additional teaching location license; approval of school director; approval of experience report for broker license applicant; approval of CE provider; approval of CE instructor; and approval of CE course.

• ✓The Education Bureau processes instructor, school, and additional teaching location licenses
• ✓The Education Bureau processes CE provider, instructor, and course approvals and broker experience reports

A broker may not knowingly sponsor an applicant who lacks a good reputation for honesty and fair dealing. Salesperson (referral) applications and renewals must include a broker certification confirming that both parties reviewed the legal restrictions on referral activity and that the referral agent acknowledged those limits. Non-renewal referral applications also require the applicant's own certification.

• ✓No broker may knowingly sponsor an applicant lacking a good reputation for honesty and fair dealing
• ✓Referral applications/renewals must include broker certification of reviewed restrictions and acknowledged limits
• ✓Referral agent activity is limited to referring prospective consumers per N.J.A.C. 11:5-6.10(a)2
• ✓Non-renewal referral applications also require applicant's certification of statements (b)1 and 2

The Commission maintains public licensing records available for inspection/copying during business hours with sufficient notice. Records are generally kept a minimum of three years. Copies are purchasable at Right to Know Law fees (N.J.S.A. 47:1A-2). Certified copies require a written request specifying records and time period, and staff needs at least 10 working days to produce them. Complete records of unadopted rule proposals are available one year; adopted rules three years after effective date.

• ✓Records are maintained for a minimum of three years unless otherwise noted
• ✓Certified copies require a written request and at least 10 working days to produce
• ✓Copies of records are purchased at Right to Know Law fees, N.J.S.A. 47:1A-2
• ✓Records of unadopted proposals available 1 year; adopted rules available 3 years after effective date

Certain licensee records are nonpublic under N.J.S.A. 47:1A-1 et seq.: criminal complaints/indictments/convictions submitted with applications, criminal history check results, bankruptcy pleadings, orders of suspension/revocation from other authorities, medical disability records, pending or non-disciplinary investigative files, personal data (home address, phone, DOB), Social Security numbers, and purchaser information under N.J.S.A. 45:15-16.38.

• ✓Criminal history records and Social Security numbers of applicants/licensees are confidential
• ✓Personal data such as home address, home telephone, and date of birth are confidential
• ✓Investigative files in pending matters, or completed investigations with no formal action, are nonpublic

A school cannot be licensed as a real estate school unless it is under the management and supervision of a director approved by the commission who is a licensed real estate instructor. If the director dies or becomes incapacitated with no other licensed instructor available, the commission may issue temporary authorization to another person to continue the director's duties. A school cannot start new courses until a qualified director is designated and approved.

• ✓School director must be commission-approved and a licensed real estate instructor
• ✓Commission may issue temporary authorization if director dies or is incapacitated
• ✓School cannot commence new courses until a qualified director is approved
• ✓Section does not apply to public adult education programs or accredited colleges/universities

To challenge the salesperson or salesperson (referral) exam, a candidate must first complete a 75-hour course at a Commission-licensed school (N.J.S.A. 45:15-10.4). To challenge the broker exam, a candidate must complete 150 hours (a 90-hour general broker course plus two 30-hour courses). No credit crosses between salesperson and broker prelicensure courses.

• ✓Salesperson/salesperson (referral) prelicensure course = minimum 75 hours at a licensed school
• ✓Broker prelicensure requirement = 150 hours total (90-hour general course + two 30-hour courses)
• ✓No credit toward salesperson requirement for a broker course, and vice versa
• ✓All 150 broker hours must be completed within a two-year period or the candidate must retake and re-qualify

Except for qualified disabled veterans, no person receives credit for the 150 hours of broker's courses unless that person held a salesperson's license at the time of enrollment in the course. Disabled veterans may have an alternative program approved if it meets the required hours (75 for salesperson, 225 for broker) at an accredited college/university for credit.

• ✓A person must hold a salesperson's license at time of enrollment to get credit for broker courses (except qualified disabled veterans)
• ✓Disabled veterans: 75-hour (salesperson) or 225-hour (broker) accredited college program may be approved

The prelicensure course requirement is waived for: out-of-state broker licensees with 3+ years active brokerage experience immediately before applying; attorneys admitted in NJ (broker) or NJ/other state (salesperson); salesperson applicants with qualifying college degrees/hours in real estate (75+ hours within 3 years, or a bachelor/associate in real estate); out-of-state salesperson licensees meeting specified conditions; and former NJ brokers whose license expired more than two but less than five years prior.

• ✓Out-of-state brokers with 3+ years active experience are exempt from the prelicensure course
• ✓Attorneys at law are exempt (NJ admission for broker; NJ or other-state admission for salesperson)
• ✓College-degree waiver requires 75+ real estate classroom hours completed within 3 years
• ✓Out-of-state salesperson waiver requires active licensure in that state within 3 years of applying

The 75-hour salesperson prelicensure course must cover: Property rights (9), Contracts and property instruments (12), Leases and landlord-tenant relations (6), Mortgages and other liens (12), Business opportunity sales (2), Laws of agency (12), Appraising (2), License Act and regulations (9), Other state/Federal/municipal laws (5), Salesperson duties and pitfalls (3), and Quizzes and final exam (3).

• ✓Laws of agency and Contracts each require 12 hours; Mortgages/liens require 12 hours
• ✓License Act and regulations require 9 hours; Property rights require 9 hours
• ✓Course totals 75 hours including a 3-hour quizzes and final examination block

The 90-hour general broker prelicensure course may be taught in up to 23 modules covering 23 subject areas (license laws, contracts, deeds, financing, agency, valuation, math, fair housing law, etc.). After completing it, candidates must complete a 30-hour ethics/agency course and a 30-hour office management course, each taught by licensed instructors at licensed schools with a final exam of at least one hour.

• ✓The 90-hour general broker course may be divided into a maximum of 23 modules
• ✓After the 90-hour course, candidates must complete a 30-hour ethics/agency course and a 30-hour office management course
• ✓Each 30-hour course requires a final examination of not less than one hour with a passing grade
• ✓Agency/ethics and office management courses must be taught by licensed instructors at licensed schools

The 30-hour ethics/agency course covers: fiduciary duties owed by agents to principals; disclosed and undisclosed dual agency; conflicts of interest and self-dealing; risks/benefits of sub-agency; restrictions and disclosure requirements for acting for more than one party (including mortgage services); disclosure to non-principals; issues for licensees acting as non-agents; and obligations to qualify/pre-qualify prospective purchasers.

• ✓Ethics/agency course covers fiduciary duties owed by agents to principals
• ✓Course addresses disclosed and undisclosed dual agency and conflicts of interest/self-dealing
• ✓Course covers disclosure requirements when acting for more than one party to a transaction

The 30-hour office management course covers: office management duties of supervising brokers of main and branch offices; recordkeeping with heavy emphasis on escrow account records; the importance of supervising and training licensees for compliance; proper qualification/pre-qualification techniques; statutory/rule requirements for contracts, leases, listing agreements, and advertising; closings; environmental concerns; and licensure/transfer/office procedures.

• ✓Office management course emphasizes recordkeeping and escrow account records
• ✓Course covers supervising broker responsibilities for main and branch offices
• ✓Course covers statutory/rule requirements for contracts, leases, listings, and advertising

Broker applicants must demonstrate commitment to real estate brokerage as their primary, full-time vocation. Except for out-of-state licensed brokers, applicants must have been continuously licensed and employed full-time as a salesperson during the three years immediately preceding application. Full-time means at least 40 hours/week over five days each week roughly 10 AM–8 PM, with any other job limited to part-time not exceeding 25 hours/week.

• ✓Applicants (except out-of-state brokers) must be continuously licensed and full-time employed as a salesperson for the 3 years immediately preceding application
• ✓Full-time = at least 40 hours/week during approximately 10 AM to 8 PM across five days each week
• ✓Any other occupation during the period must be part-time and not exceed 25 hours per calendar week
• ✓Brokerage activity limited to solely making referrals does NOT satisfy the full-time experience requirement

No application to approve experience may be made until the applicant has been continuously licensed as a salesperson for at least three years immediately preceding, and has completed the 90-hour general broker prelicensure course plus the two 30-hour courses (150 total hours). Applicants must apply within one year of completing the 150-hour requirement or retake all courses and the exam.

• ✓Must complete the 90-hour general broker prelicensure course and two 30-hour courses (150 hours total)
• ✓Must be continuously licensed as salesperson for at least 3 years immediately preceding experience application
• ✓Must apply for broker license within one year of completing the 150-hour education requirement
• ✓Failure to apply within one year requires retaking all courses, the exam, and re-fulfilling the experience requirement

A person currently licensed as a broker in another state who has been actively licensed and engaged full-time in real estate brokerage (as broker, broker-salesperson, or salesperson) for at least three years immediately preceding application qualifies for a waiver of the New Jersey experience requirement.

• ✓Requires current active broker license in another state
• ✓Requires at least 3 years of full-time active brokerage engagement immediately preceding application
• ✓Waiver applies only to the experience requirement, not other licensing requirements

Broker-salespersons must meet the same qualifications as brokers but must be employed by and act under the supervision of a licensed broker. They may not independently maintain an office or escrow account, though they may serve as an office or branch supervisor per N.J.S.A. 45:15-12.

• ✓Broker-salespersons must meet the same qualifications as brokers
• ✓Must be employed by and act under supervision of a licensed broker
• ✓May not independently maintain an office or escrow account
• ✓May be authorized to serve as an office or branch office supervisor

To verify experience, applicants must submit written statements from the brokers with whom they were licensed certifying their salesperson activity. Applicants and brokers may also be required to submit closed-transaction documentation showing compensation, or other evidence of full-time specialized activity.

• ✓Written broker certifications of the applicant's salesperson activity must be submitted
• ✓Supporting documentation of closed transactions and compensation may be required
• ✓Referral-only brokerage activity never fulfills the active involvement requirement