Governor Phil Murphy signed into law the “Real Estate Consumer Protection Enhancement Act” (Bill S3192/A4454). This legislation was effective August 1, 2024 and introduced crucial protections and requirements that impact both consumers and real estate professionals.

Key Changes and Implications

The Real Estate Consumer Protection Enhancement Act aims to enhance transparency and fairness in real estate transactions, providing clearer guidelines and protections for all parties involved. Below are the six major changes introduced by this law:

1. Mandatory Property Condition Disclosure:

Sellers are now required to provide a fully completed property condition disclosure form before buyers sign a contract. This change is designed to ensure that buyers have a comprehensive understanding of the property’s condition, reducing the risk of unexpected issues after the purchase.

2. Explicit Representation Disclosure at Open Houses:

Listing agents must clearly disclose their representation at open houses, specifying whether they represent the seller or potential buyers. This transparency is crucial in helping prospective buyers understand the nature of the agent’s role and ensuring they can make informed decisions.

3. Permissible Designated Agency:

The law now permits designated agency, allowing a brokerage to appoint separate agents to represent both sides of a transaction at the client’s request. This flexibility can benefit clients seeking to work with a particular agency while ensuring that each party receives dedicated representation.

4. Mandatory Brokerage Agreements:

All real estate licensees are required to use brokerage agreements that outline the specific services provided during a transaction. This requirement aims to standardize the level of service across the industry, ensuring that clients understand the scope of the agent’s responsibilities.

5. Restrictions on Disclosure of Compensation:

Sellers’ agents can no longer disclose compensation details in Multiple Listing Services (MLS) or notify MLSs about cooperative compensation arrangements. This change seeks to eliminate potential conflicts of interest and promote fair dealing within the market.

6. Continuing Education Requirements:

Real estate licensees must now complete continuing education classes focused on agency, ensuring that all professionals remain current with ethical standards and industry best practices.

Preparing for the Changes

For all parties involved in a real estate transaction, it is essential to understand these new requirements and how they affect your dealings. Whether you are buying or selling property, or if you are a real estate professional, these changes are designed to enhance transparency and protect your interests.

This new legislation represents a significant step forward in protecting the interests of consumers and real estate professionals alike. We encourage everyone to familiarize themselves with these changes and to seek professional advice as needed to ensure a smooth transition under the new regulations.

Our firm has been closely monitoring the implementation of this new law and its impact on the real estate market. If you have questions about how the new regulations apply to you and your next real estate transaction, we are here to provide guidance and support. Contact attorney Blair C. Lane for help understanding and complying with these new changes.

Blair C. Lane, Sr. has over 35 years of diverse legal experience, with a focus on serving clients with complex real estate needs.