DESIGNATED
REALTOR
®
ISSUE 3: June 2018
DISCLOSURE: WHAT TO KNOW NJREALTOR.COM
I M P O R TA N T D AT E S
JUNE
AUGUST
12
Executive Committee Meeting 11 a.m. Board of Directors Meeting 1 p.m.
14
Realtors® Day in Trenton njrealtor.com/trentonday
17
Father’s Day
15
SEPTEMBER 3
26
Realtors® Financial Literacy – Level 200 9 a.m. - 12 p.m. njrealtor.com/financial
5
28
Realtors® Financial Literacy – Level 300 9 a.m. - 12 p.m. njrealtor.com/financial
12 24
JULY 4
NJ Realtors® office closed Independence Day observed
9
Realtors® Care Day homeowner application due rcd.njrealtor.com
24
26
National Association of Real Estate Brokers Convention Atlanta, GA
DECISIONS
ARE MADE BY THOSE WHO
SHOW UP
REALTORS® Day in Trenton
June 14, 2018 Tickets available at njrealtor.com/trentonday Designated REALTOR® | June 2018 | 1
Realtors® Care Day volunteer and sponsor applications due rcd.njrealtor.com
NJ Realtors® Office Closed Labor Day Observed Quarter Century Club application due 5 p.m.
Board of Directors Meeting 11 a.m. Trenton, NJ Good Neighbor Award Application due 5 p.m.
Realtors® Care Day rcd.njrealtor.com
CONGRATS CHARLIE OPPLER on being elected as the 2019 National Association of REALTORS® First Vice President!
At This Year’s Mid-Year Meetings… P
ast President Charlie Oppler was elected as NAR’S 2019 First Vice President, becoming the first NJ Realtor® member to have a seat on the NAR Leadership Team in over seven decades. The board of directors also passed a $30 dues increase for members, amounting to $150 per year. $17 of the increase will go towards the Realtor® Party advocacy programming and the remaining $13 will fund programs such as the new Commitment to Excellence initiative. The board also approved two amendments to the Code of Ethics. Local associations will be allowed to publish the names of members who have two or more ethics violations,
along with their photo and a summary of what they did wrong. Also, listing brokers or agents are now required to provide written affirmation that an offer was submitted to the seller or written notification that the seller has waived the obligation to have the buyer’s offer presented. In the midst of these important happenings, NJ Realtor® members also met with state legislators, including Sen. Robert Menendez, Rep. Josh Gottheimer, and Rep. Bill Pascrell to discuss important issues like tax policy, net neutrality, and flood insurance.
NJ Realtors® Leadership Team with Rep. Bill Pascrell.
NJ Realtors® Leadership Team with Rep. Lance Leonard. Designated REALTOR® | June 2018 | 2
Should You Use and Sign Seller Disclosure Statements?
A Q&A with NJ Realtors® Chief Counsel Barry Goodman Do seller disclosure statements provide more protection or create more liability? Do you need to sign a seller disclosure statement? Do you have to inspect the property if there is a seller disclosure statement? If you do not know the answers to these questions, it is important for you to understand what liability you have for treble damages under the Consumer Fraud Act (the “Act”) and how a seller disclosure statement can protect you. The following questions and answers will hopefully help you understand these issues.
Q
Let’s start with the basics. What does the Consumer Fraud Act really provide?
A
The Act includes a very broad phrase that makes it unlawful to use any “unconscionable commercial practices” concerning the advertising and sale or rental of real estate. Such practices include a knowing concealment of a material fact and an affirmative misrepresentation, even if it is made innocently. A consumer who prevails under the Act is entitled to treble damages (three times the amount of any damages actually suffered by the consumer) and payment of all the consumer’s attorneys’ fees and costs.
Q
I often include information in the MLS and other advertising from the seller. Are you saying that I might be liable if that information is wrong even though I had no idea that it was wrong?
A
Unfortunately, yes. The New Jersey Supreme Court significantly expanded the liability under the Act for real estate licensees in a case known as Gennari v. Weichert Co. In Gennari, the developer lied to the broker about the quality of material that would be used in the homes being built, the developer’s experience, and the level of craftsmanship that would go into building the homes, among other things. When the buyers moved into their new homes, they discovered
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these lies and sued the developer and broker. The Court held that a broker is liable under the Act for repeating misrepresentations of the seller, even if the broker has no knowledge that the representations are false or deceptive. As a result, the broker in Gennari was liable for treble damages and the buyers’ attorneys’ fees and costs.
Q
If I am going to be liable for innocently repeating a seller’s misrepresentation, why should I provide the seller’s representations in a property disclosure statement that the buyer will have as proof of the misrepresentation if the buyer files a lawsuit against me?
A
After the broad interpretation of the Act in the Gennari case, New Jersey Realtors® lobbied for an exception to the Act if a real estate licensee repeated a seller’s misrepresentation without knowing it is false or misleading. As a result, the Act was amended to create an exception for real estate licensees in N.J.S.A. 56:8-19.1. Under this exception, a real estate licensee is not liable for punitive damages, attorneys’ fees or both for communicating any false, misleading or deceptive information provided by or on behalf of the seller if the licensee did not have actual knowledge the representation was false, misleading or deceptive, and also made a “reasonable and diligent inquiry” to ascertain if the information was false, misleading or deceptive.
Such an inquiry would have to include but would not be limited to disclosing information from (1) a report or representation by a person licensed or certified by New Jersey, (2) a report or representation by a governmental official or employee if the information is about a physical condition of the property that is likely to be within the knowledge of that person; or (3) the seller in an approved property condition disclosure statement, as long as the licensee (a) informed the buyer that the seller is the source of the information and (b) prior to making that communication to the buyer, “visually inspected the property with reasonable diligence to ascertain the accuracy of the information disclosed by the seller.” As a result, although seller disclosure statements are not mandatory, they provide significant protection for you if they are properly used because you will not be liable for treble damages or the attorneys’ fees incurred by the consumer.
Q
Are you now telling me that I have to become an inspector by visually inspecting the property and am liable if I miss something?
A
No, not all. You are not responsible under the Act to perform an inspection the way a home inspector would. However, do not forget that the Real Estate Commission’s regulations place a duty on licensees to make a reasonable effort to ascertain all “material” information concerning
the physical condition of a property, including inquiries of the seller or seller’s agent and conducting a visual inspection of the property. Licensees have the duty to ascertain this information regardless of whether or not a seller disclosure statement is used.
Q
Is that why the seller disclosure statement includes an acknowledgment that the seller’s agent visually inspected the property?
A
That’s exactly right. All that seller’s agents are doing by signing is confirming that they did the “visual inspection” that the Real Estate Commission requires them to do.
Q
What happens if I don’t sign the seller disclosure statement?
A
This is a good question. Although there are no cases or other law on this issue, you would run the risk of a court ruling that you are not entitled to the exception for the treble damages and attorneys’ fees in Section 19.1 of the Act because you did not properly fill out the statement. Is it worth that risk? In a final analysis, using seller disclosure statements therefore provides you with significant protections. You should not only have sellers fill them out but also sign them.
Designated REALTOR® | June 2018 | 4
Four New Partners Approved for Member Perks E
Free Prescription Drug Savings Card
During this year’s Member Perks Committee meeting, four new partners were approved: UPS, Prescription Drug Savings Card, Lenovo, and Post Café. Learn more about these new services by reading below or checking our Member Perks page.
Lenovo
very year, your Member Perks Committee strives to add new perks that you, the member, can enjoy for years to come. Now nearly 20 deals are available, which include discounts on technology, travel, finance services, and marketing companies.
UPS Discount
NJ Realtors® have been enjoying a UPS discount for several years but by switching vendors, members will now receive an average of 36 percent off. There is also a flat 30 percent discount in Canada and additional discounts for volume shoppers. Members operating small businesses can also effectively and affordably send packages under 150 pounds online or by phone.
By enrolling in the free prescription drug savings card, members will save an average of 23 percent on prescription drugs. Accepted at 93 percent of pharmacies nationwide, partners include CVS, Kroger, Wal-Mart, Walgreens, Rite Aid, and many more. This card is completely free to all members and covers the entire family!
Lenovo, the world’s second largest PC vendor, will offer savings ranging from 5 to 30 percent on the entire product line, along with monthly specials.
Post Café
Post Café curates and posts relevant content from established online real estate publications to social media platforms. Posts can also be customized to fit personal brands. Members receive 60 free days of service, which includes one post per day to Facebook, Twitter, and LinkedIn accounts.
Realtors® Care Day Sept. 26 On Sept. 26, local associations across the state will help homeowners in their community who need home repairs by participating in Realtors® Care Day. This is a truly collaborative effort that includes Realtors® who roll up their sleeves and get to work; local businesses who donate food, water, and building necessities; and professionals like builders, developers, and home inspectors who volunteer their time and expertise. Most importantly, the entire community comes together to
Designated REALTOR® | June 2018 | 5
help homeowners in need. Each participating board also receives a $1,000 donation from the New Jersey Realtors® Housing Opportunity Foundation to help with their projects. If you know of a home that needs repairs or want to get involved, visit rcd.njrealtor.com or email Alexandra Hoey at ahoey@njrealtor.com. The deadline for homeowner applications is July 9 and volunteer and sponsor applications are due by Aug. 15.
New Jersey Taking Action to Stand Up for Property Taxpayers By Bruce Shapiro
I
n the aftermath of the federal tax reform law enacted at the end of 2016 that limited the ability for homeowners to utilize the State and Local Income Tax (SALT) deduction, New Jersey began taking steps to protect homeowners who already pay some of the nation’s highest property taxes.
new law permits municipalities to establish charitable funds that taxpayers can donate to in return for receiving a credit on their property tax bill. This serves as another measure to assist New Jersey homeowners in counteracting the negative effects of the new federal tax law, as the $10,000 SALT cap would not apply to charitable deductions.
Beginning in 2018, the SALT deduction is capped at $10,000 for the total of state and local property taxes and income or sales taxes paid. In a high cost-of-living state such as New Jersey, this new cap will have an immense impact on New Jersey families who rely on this deduction. The National Association of Realtors® and New Jersey Realtors® raised numerous concerns and were able to preserve the deduction in some form, as the original tax reform legislation completely eliminated the SALT deduction.
Gov. Murphy also called for increasing the state property tax deduction from $10,000 to $15,000. Separately, Sen. Patrick Diegnan (D-18) introduced S-1879, which increases the state deduction to $35,000. Assemblywoman Amy Handlin (R-13) and Sen. Joseph Pennacchio (R-26) also introduced A-3314/S-413, which completely eliminates the maximum deduction level and deducts the total amount of property taxes paid.
In response to the $10,000 cap on the SALT deduction, New Jersey began enacting measures to offset the negative effects of the new federal tax law, which NJ Realtors® supports, to make owning a home more affordable in New Jersey, despite the new federal law. In April of this year, Gov. Phil Murphy signed the first law passed by the State Legislature aimed at helping New Jersey homeowners deal with the new federal tax law.
None of the aforementioned methods have been sanctioned by the IRS. In fact, the IRS has not conclusively stated how they will handle workarounds to the new tax law. Beyond that, these proposed measures do not address the underlying problem – that New Jersey has the highest property taxes in the nation.
On April 20, Gov. Murphy signed A-3382, sponsored by Assemblyman Roy Freiman (D-16) and Sen. Paul Sarlo (D36), which formally allowed New Jersey taxpayers to prepay their property taxes. At the end of 2017, many homeowners made the decision to prepay portions of their 2018 property taxes, prior to the $10,000 SALT cap, as a way to have a higher SALT deduction. A-3382 permitted property taxes to be prepaid without requiring homeowners to seek municipal authorization prior to doing so. In addition to this new state law, Gov. Murphy also called for allowing property taxes to be paid as a charitable contribution through funds established by municipalities. In response, the State Legislature passed and the Gov. signed S-1893 just last month, sponsored by Sen. Paul Sarlo (D-36) and Assemblyman John McKeon (D-27). This Designated REALTOR® | June 2018 | 6
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