A4278

An Act concerning real estate contracts for wholesale transactions and supplementing chapter 15 of Title 45 of the Revised Statutes.

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

1. As used in this act:

“Commission” means the New Jersey Real Estate Commission.

“Licensee” means a real estate broker, real estate salesperson, or real estate broker-salesperson licensed by the New Jersey Real Estate Commission.

“Residential property” means real property located within New Jersey that consists of no less than one and not more than four residential dwelling units.

“Wholesale transaction” means undertaking to promote the sale, exchange, or purchase of an equitable interest or other interest in residential property with the intent to assign, sell, or otherwise transfer the interest for a fee, commission, or other valuable monetary consideration without having taken title as the owner of record of the interest.

2. An individual engaging in or attempting to engage in a wholesale transaction shall be licensed as a real estate broker, real estate salesperson, or a real estate broker-salesperson, as defined pursuant to R.S.45:15-3.

3. a. A consumer who is party to a wholesale transaction shall have the right to cancel a sales agreement or sales contract that contains the information required under subsection e. of this section until midnight of the 30th day after the date when the consumer executed the agreement or contract, or until conveyance, whichever occurs first. A sales agreement or sales contract for a wholesale transaction that does not contain the information required under subsection e. of this section may be canceled at any time prior to conveyance. The right to cancel the sales agreement or sales contract shall not be waivable.

b. Notice of cancellation shall be given by certified return receipt mail or by any other bona fide means of delivery, including electronic delivery or personal delivery, provided that the consumer obtains a receipt. A notice of cancellation given by a bona fide means of delivery shall be effective on the date postmarked, the date of electronic transmission or on the date of deposit of the notice with any bona fide means of delivery.

c. Within 10 business days after the receipt of a notice of cancellation, all payments of any kind made by the consumer shall be refunded to the consumer and an acknowledgment that the sales agreement or sales contract is void shall be sent by the broker or salesperson to the consumer. In the event of a cancellation under this section, any promotional prizes, gifts and premiums issued to the consumer shall remain the property of the consumer.

d. A consumer who exercises the right of cancellation shall not be liable for any damages as a result of the exercise of the right.

e. A sales agreement or sales contract for a wholesale transaction shall prominently include the following information which shall be disclosed in the manner and method that the commission shall establish by regulation:

(1) a statement that the agreement or contract is for a wholesale transaction in which the licensee intends to assign, sell or otherwise transfer the interest for a fee, commission or other valuable monetary consideration without having taken title as the owner of record of the interest;

(2) a statement that the consumer has the right to obtain an appraisal of the property from a real estate appraiser certified or licensed pursuant to P.L.1991, c.68 (C.45:14F-1 et seq.); to consult with a licensee not affiliated with the broker of the licensee; or to seek legal counsel before or after entering into the agreement or contract;

(3) a statement that the consumer has the right to cancel the agreement or contract until midnight of the 30th day after the date when the consumer executed the agreement or contract, or until conveyance, whichever occurs first, by certified return receipt mail or by any other bona fide means of delivery, including electronic delivery or personal delivery, provided that the consumer obtains a receipt; and

(4) a statement that within 10 business days after the receipt of a notice of cancellation, all payments of any kind made by the consumer shall be refunded to the consumer.

4. This act shall take effect on the first day of the fourth month next following the date of enactment and shall be applicable to contracts for the sale of real property in a wholesale transaction entered into on or after that date.

STATEMENT

This bill requires individuals engaging in or attempting to engage in a wholesale transaction to be licensed as a real estate broker, real estate salesperson, or a real estate broker-salesperson. “Wholesale transaction” is defined to mean undertaking to promote the sale, exchange, or purchase of an equitable interest or other interest in residential property with the intent to assign, sell, or otherwise transfer the interest for a fee, commission, or other valuable monetary consideration without having taken title as the owner of record of the interest. Under the bill, this applies to transactions involving no less than one and no more than four residential properties.

Additionally, the bill establishes rights for a consumer who enters into a contract to purchase a residential property through a wholesale transaction. This includes the right to cancel a contract until midnight of the 30th day after the date when the consumer executed the agreement or contract, or until conveyance of the property, whichever occurs first. A consumer who exercises the right to cancel will not be liable for any damages. The New Jersey Real Estate Commission is also tasked with promulgating regulations that address the various items a sales contract or sales agreement in a wholesale transaction is to include.