New-Jersey-Real-Estate-Salesperson New Jersey Real Estate Salesperson Exam Questions and Answers

Deed restrictions (restrictive covenants) are private controls that can impose stricter requirements than local zoning or codes.

The general rule: the more restrictive regulation prevails (whether deed restriction or zoning).

Deed restrictions do not automatically expire after 10 years unless the restriction itself specifies an expiration.

Since zoning allows fences but the deed restriction prohibits chain link fences, the restriction takes precedence.

Correct answer = D.

Radon is a colorless, odorless, radioactive gas linked to lung cancer.

The EPA and NJDEP recommend testing homes for radon regardless of location.

Licensees should never minimize the risk or falsely suggest it is detectable by odor.

The best professional response is to recommend that buyers test for radon because it is a known health risk.

Correct answer = C.

For federally-related transactions (most residential loans regulated by federal agencies), the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA, 1989) requires an appraisal by a state-licensed or certified appraiser.

Brokers and salespersons may prepare CMAs (Comparative Market Analyses) or BPOs, but these are not acceptable for federally-related loans.

Correct answer = A.

The chain of title is the recorded history of property ownership from one owner to the next. It is the most reliable way to determine prior ownership.

Lien records show financial claims but not ownership sequence.

An abstract of title summarizes the chain of title and liens but is not the original source.

Grantor indexes are tools used in researching title but do not themselves provide the full sequence.

Thus, the best method is the chain of title.

All listings are taken in the name of the broker, not the salesperson.

When a salesperson leaves a brokerage, the listing remains the property of the broker.

The client may choose to cancel the listing and re-list with the new broker, but the listing file cannot be taken by the departing salesperson.

Correct answer = B.

Under New Jersey agency and contract principles taught in the NJ Real Estate Salesperson Pre-Licensure Course Study Guide (Listings & Offers/Contracts chapters), a seller who has a listing (including an exclusive right to sell) is never obligated to accept any offer and is not required to make a counteroffer. The listing is an employment contract with the broker; it does not compel acceptance of buyer terms. An offer may be accepted, rejected, or countered at the seller’s discretion. There is no automatic acceptance period like “72 hours,” unless explicitly written into the offer itself.

• Therefore, B is correct.

• A is wrong—sellers owe no “commission or offer price” to a buyer for rejecting an offer.

• C is wrong—no default 72-hour rule exists by law.

• D is wrong—no duty to counter exists.

(Reference: NJ Real Estate Salesperson Pre-Licensure Course Study Guide, Agency & Listings; Contracts—Offer and Acceptance.)

HUD Fair Housing Advertising Guidelines prohibit words that indicate preference or limitation based on protected classes (race, sex, religion, familial status, etc.).

“Female seeking female roommate” = gender preference → discriminatory.

“No pets or children allowed” = familial status discrimination.

“Catholic school” = religious preference.

“Ideal for any family with children” = permitted because it is descriptive and not exclusionary.

Correct answer = B.

A promissory note (purchase money note) is the borrower’s written promise to repay a loan. It must include:

The principal amount of the loan.

The interest rate.

The time and method of repayment.

The loan-to-value ratio (LTV) is a lender’s underwriting guideline but is not a required element of the promissory note.

Correct answer = C.

The Consumer Information Statement (CIS) must be used in all sales of 1–4 family residential properties and all residential lease transactions of 1–4 units that are for terms longer than 125 days.

A short-term rental or sublease (two months) does not require a CIS.

Correct answer = C.

Under federal Fair Housing Law (1988 Amendments) and NJ Law Against Discrimination:

Licensees are prohibited from disclosing that a property was occupied by someone with HIV/AIDS. Such disclosure is considered discrimination against persons with disabilities.

Material defects (e.g., roof leaks) must be disclosed.

Stigmatized property issues (e.g., crime scenes) do not legally require disclosure in NJ, but agents may discuss if asked.

Disclosing the seller’s willingness to accept less is allowed only with the seller’s consent.

Correct prohibited disclosure = B.

Puffing = exaggeration or subjective opinion that no reasonable person would take as fact (e.g., “most beautiful view”).

Statements of fact (e.g., predicted appreciation %, test scores, or utility costs) could be misrepresentation if untrue.

Thus, “This lot has the most beautiful view of the lake” = puffing.

Correct answer = B.

Once an offer is rejected or countered, the original offer is terminated and cannot be revived unless resubmitted.

A counteroffer legally cancels the original offer.

Therefore, the buyer’s initial offer is null and void once the seller counters.

Correct answer = B.

Under New Jersey Real Estate Commission rules and antitrust law, commissions are always negotiable between the broker and the client. A broker may set a general office policy or customary rate, but legally the rate cannot be mandatory or fixed without negotiation. It must be negotiated in each listing agreement.

• Options A, B, and C would constitute unlawful practices or misleading advertising.

• Only D is correct: all commissions must be negotiated with sellers.

(Reference: NJ Real Estate Salesperson Pre-Licensure Course Study Guide, Commission Rates & Antitrust; NJAC 11:5 on advertising and business conduct.)

The New Jersey Real Estate Commission advertising rules (N.J.A.C. 11:5-6.4) state that:

All ads must clearly indicate the name of the employing broker.

A salesperson’s name may appear, but not more prominently than the broker’s name.

Ads cannot suggest that a salesperson is operating independently.

Linking a salesperson’s personal webpage to their broker’s official website is permissible, provided the broker’s name is prominently displayed and supervision is maintained.

Therefore, the only correct permitted action is D.

Steering = Directing or discouraging buyers from certain neighborhoods based on race, religion, or other protected classes. This violates the Federal Fair Housing Act.

Blockbusting = Inducing owners to sell by suggesting a protected class moving into the neighborhood will lower values.

Redlining = Refusing loans or insurance in certain neighborhoods.

Puffing = Exaggerated sales talk, not discriminatory.

Therefore, the action described = steering.

FHA, VA, and other federally-insured loan programs require an appraisal by a certified appraiser before loan approval.

Property transfers, inheritances, or divorces may involve appraisals, but they are not mandated by law in the same way FHA loans require.

Correct answer = C.

Electronic signatures are legally enforceable under the federal Electronic Signatures in Global and National Commerce Act (E-SIGN Act, 2000) and the New Jersey Uniform Electronic Transactions Act (UETA, N.J.S.A. 12A:12-1 et seq.).

These laws confirm that electronic signatures are valid and binding in real estate contracts, listings, leases, and other documents.

They are not restricted to deeds, and do not require witnessing to be valid.

Therefore, the correct answer is B.

An easement in gross benefits a person or entity, rather than another parcel of land. Unlike an easement appurtenant, which requires a dominant and servient estate (two adjoining parcels), an easement in gross does not require ownership of adjacent property.

Utility companies (electric, gas, water, sewer, cable) typically hold easements in gross, allowing them to install and maintain lines across multiple properties. The easement is granted to the utility company, not to a neighboring landowner.

Therefore, the correct answer is C.

In New Jersey, the Realty Transfer Fee (RTF) is typically paid by the seller, but the question specifies that the tax is paid by the grantee (buyer). When the buyer pays the transfer tax, the seller does not owe any amount at closing for transfer fees.

Additionally, the RTF is calculated based on the consideration amount (sale price), not the appraised or assessed value. But since liability is shifted to the buyer here, the seller’s responsibility = $0.

The New Jersey Real Estate Commission rules clarify that brokers typically have no power to accept offers on behalf of the owner without authorization. However, in this case, the seller granted a limited power of attorney expressly authorizing the broker to accept all-cash offers of $108,000 or more.

A (may not accept) is incorrect because the authorization is clear.

B (forward to attorney) is not required since the broker has direct authority.

D (sign deed of conveyance) is beyond the broker’s authority; only the seller can convey title unless a formal attorney-in-fact arrangement authorizes deed execution, which was not given here.

Therefore, the correct answer is C.

The sales comparison approach relies on comparing recently sold similar properties, adjusting for differences (e.g., lot size, square footage, date of sale).

The capitalization rate is used in the income approach, not the sales comparison approach.

Correct answer = B.

Under New Jersey Real Estate Commission (NJREC) Regulations , licensed brokers and salespersons are required to provide the Consumer Information Statement (CIS) to clients and customers at the first substantive discussion about the price, terms, or motivation regarding a specific property .

The purpose of the CIS is to disclose to the consumer the various types of business relationships available in New Jersey (seller’s agent, buyer’s agent, disclosed dual agent, and transaction broker) and to clarify how the licensee intends to work with them.

Important rules from N.J.A.C. 11:5-6.9 :

The CIS must be given before any confidential information is disclosed or before an offer is written , whichever occurs first.

A “first substantive contact” means when a buyer or seller begins discussing financial or personal motivation about the transaction.

Failing to provide the CIS at the proper time is considered a violation of agency disclosure requirements and can subject the licensee to disciplinary action by NJREC.

Therefore, the correct answer is A , because the CIS must be provided immediately at the first substantive discussion.

According to NJREC Rules and Regulations (N.J.A.C. 11:5-6.4 & 6.5):

A branch office must be supervised by a broker or broker-salesperson designated by the employing broker.

The supervisor’s name must be recorded with the Commission.

The supervising broker/broker-salesperson must work full-time at that location.

The employing broker remains ultimately responsible for all licensees.

It is not permitted to designate two salespersons to share supervisory responsibilities.

Thus, the incorrect statement is C.

Under TILA-RESPA Integrated Disclosure (TRID) rules, the lender is primarily responsible for preparing and delivering the Loan Estimate and Closing Disclosure.

Brokers and licensees do not prepare these forms.

However, licensees must be knowledgeable about the disclosures so they can help clients understand the process and provide necessary information for lender compliance.

Thus, the best practice is B: brokers should ensure licensees are aware of what the lender requires.

Material facts affecting a property’s value (such as a planned highway) must always be disclosed to buyers.

If a seller instructs the licensee not to disclose such facts, the licensee must refuse the listing to avoid violating state disclosure laws and fiduciary duties.

Continuing with the listing and concealing the fact would expose the licensee to disciplinary action.

Correct answer = C.

Under the Truth in Lending Act (Regulation Z), advertising is regulated to prevent misleading credit offers.

If an ad uses “triggering terms” (such as monthly payment amount, interest rate, down payment, or loan term), then full disclosure of all financing terms must be provided.

“Buy for less than $650 per month” is a triggering term because it specifies a monthly payment.

General terms like “assumable loan,” “owner financing,” or “FHA/VA available” are permissible without full disclosure.

Correct answer = D.

The Freshwater Wetlands Protection Act (1987) gives the New Jersey Department of Environmental Protection (NJDEP) the authority to regulate activities in freshwater wetlands and transition areas (buffer zones). Its primary purpose is to restrict development in wetlands and certain protected areas to preserve environmental resources.

It does not require environmental impact statements prior to transfer of title, does not authorize below-market condemnation, and is unrelated to DCA residential project registration.

Under IRS Section 121 Exclusion (Home Sale Exclusion Rule):

Married couples filing jointly can exclude up to $500,000 of capital gains.

They must have owned and occupied the property as their primary residence for 2 of the past 5 years.

Age 65 requirement is obsolete (repealed).

They don’t need to reinvest in another home.

The exclusion can be used once every 2 years.

Correct answer = D.

According to NJREC Rules and Regulations (N.J.A.C. 11:5-4.1) and the Broker-Salesperson employment agreement requirements:

Brokers must provide a full written accounting of monies due.

Any undisputed commission due must be paid within 10 business days of the broker receiving the funds.

The broker must honor the compensation provisions of the terminated salesperson’s written employment agreement.

However, salespersons are not permitted to remove original sales or listing contracts, which remain the property of the broker.

Therefore, the action the broker is NOT required to take is B.

Under New Jersey Real Estate License Law and NJREC disclosure rules:

Licensees must disclose all known material facts about a property to potential buyers, regardless of what the seller states.

Asbestos is considered a material defect and a potential environmental hazard.

Licensees cannot withhold disclosure, nor leave it solely to inspectors.

Thus, the licensee must disclose the asbestos.

Under an Exclusive Buyer Agency Agreement, the buyer agrees that the broker is their exclusive representative during the term. This creates a contractual right for the broker to be compensated regardless of who finds the property. If the buyer purchases any property during the agreement period (even one they personally locate or one listed by another brokerage), the broker is still entitled to commission as agreed.

The broker is not restricted from showing properties to other buyers at the same time, as fiduciary obligations run individually to each client.

According to N.J.A.C. 11:5-6.9, every written offer must be presented to the seller by the licensee immediately, but never later than 24 hours after receipt.

This ensures timely communication and protects the client’s interests.

Delays beyond 24 hours would violate the rules.