Your FREE New Jersey Real Estate Flashcards 2026 – 200+ Cards

New Jersey Real Estate Exam Flashcards

New Jersey Real Estate Commission (NJREC)

The state body that licenses and regulates real estate brokers and salespersons, administering N.J.S.A. 45:15. It is housed within the Department of Banking and Insurance (DOBI).

Where the NJREC sits

Within the Department of Banking and Insurance (DOBI) — not the Division of Consumer Affairs and not the Department of State.

N.J.S.A. 45:15

The New Jersey Real Estate License Act — the statute governing the licensing and regulation of brokers and salespersons.

N.J.A.C. 11:5

The Commission's administrative rules implementing N.J.S.A. 45:15 — agency/CIS, trust accounts, advertising, records, CE, and conduct.

NJ salesperson pre-license education

75 hours at a Commission-licensed real estate school before sitting for the licensing exam.

Deadline to pass the NJ exam after the course

The exam must be passed and a complete license application submitted within one year of finishing the 75-hour course.

NJ salesperson minimum age & education

At least 18 years old with the equivalent of a high school education.

Can a NJ salesperson work without a broker?

No. A salesperson license is issued only through a sponsoring broker, who must certify the application; a salesperson cannot operate independently.

NJ broker experience requirement

Generally three years of full-time experience as a licensed New Jersey salesperson immediately preceding the broker application.

NJ testing provider

PSI administers the New Jersey real estate salesperson licensing examination.

NJ exam passing score

Generally 70% to pass; confirm the current passing score and question count in the PSI candidate bulletin.

NJ continuing education (CE) requirement

12 CE credits each two-year license term for actively licensed salespersons, broker-salespersons, and brokers.

NJ CE core requirement

At least 6 of the 12 CE credits must be in core topics, including 2 credits in ethics, 1 in agency, and 1 in fair housing and the NJ LAD.

NJ license term start date

The two-year (biennial) license term begins July 1 of odd-numbered years and ends June 30 two years later.

Consumer Information Statement (CIS)

The NJREC-approved disclosure explaining the possible business relationships; presented at first contact under N.J.A.C. 11:5-6.9.

When the CIS is provided

At first contact, before discussing motivation, finances, or price, and before any confidential information is disclosed.

Number of CIS business relationships

Five: seller's agent, buyer's agent, disclosed dual agent, designated agent, and transaction broker.

Seller's agent (CIS)

Represents and owes full fiduciary duties to the seller.

Buyer's agent (CIS)

Represents and owes full fiduciary duties to the buyer.

Disclosed dual agent (CIS)

Represents both buyer and seller — allowed only with the informed written consent of both parties.

Designated agent (CIS)

The broker of record appoints separate licensees within one firm to represent the buyer and the seller individually, each owing full loyalty.

Transaction broker (CIS)

Works with a buyer and/or seller without representing either party; honest and competent to all, but not a fiduciary.

Extra step before NJ dual agency

The firm must obtain the informed, written consent of both the buyer and the seller — the CIS alone is not enough.

NJ brokerage record retention

Brokers must keep business and transaction records, including acknowledged CIS forms, for six years (N.J.A.C. 11:5-5.4).

NJ attorney-review period

Three business days, excluding Saturdays, Sundays, and legal holidays, for either party's attorney to review a licensee-prepared contract.

When NJ attorney review starts

Only after a fully signed copy of the contract is delivered to both the buyer and the seller; counting begins the next business day.

Grounds to disapprove during NJ attorney review

For any reason — the attorney may disapprove, propose changes, or let the contract become binding by not objecting.

How NJ attorney-review disapproval is sent

By a method with proof of delivery: fax, e-mail, personal delivery, or overnight mail, to the broker and the other party.

Property types subject to NJ attorney review

Licensee-prepared contracts for one-to-four-family residential dwellings and vacant one-family lots.

NJ broker deposit-money rule

Promptly deposit funds of others into a special trust/escrow account at an authorized NJ financial institution, separate from the broker's own funds.

Meaning of 'promptly' for NJ escrow deposits

Not more than five business days following the broker's receipt of the money (N.J.A.C. 11:5-5.1).

Commingling

Improperly mixing a client's escrow funds with the broker's own money — prohibited under N.J.A.C. 11:5-5.1.

Disputed NJ escrow deposit

The broker keeps the funds in trust and does not disburse them until the parties agree in writing or a court orders disbursement.

NJ trust-account ledger requirements

Identify the payor, date and amount of each deposit, the persons for whom funds are held, and the dates, amounts, and payees of disbursements.

New Jersey Real Estate Guaranty Fund

Reimburses people who hold an unsatisfied final judgment against a licensee for embezzlement, conversion, or unlawfully obtaining money in a brokerage transaction.

NJ Guaranty Fund maximum per transaction

$20,000 per transaction for causes of action accruing after the 1993 amendment (the prior limit was $10,000).

Prerequisite to recover from the NJ Guaranty Fund

Obtain a final court judgment against the licensee, exhaust remedies, and show inability to collect from the licensee.

Paying an unlicensed person a commission in NJ

Prohibited under N.J.S.A. 45:15-16 — a licensee may not pay brokerage compensation to anyone not licensed; it is grounds for discipline.

Grounds for NJREC discipline

Substantial misrepresentation, fraud, dishonest dealing, conversion, and commingling of trust funds (N.J.S.A. 45:15-17).

NJ Off-Site Conditions Disclosure Act

For newly built homes — at contract signing, the seller gives notice that lists of off-site conditions are kept at the municipal clerk's office (N.J.S.A. 46:3C).

NJ off-site conditions distance

Within the municipality and within one-half mile of any adjoining municipality.

Megan's Law statement (NJ contract)

Advises that licensees cannot obtain sex-offender registry data; the buyer may consult the NJ State Police online registry.

NJ Private Well Testing Act (PWTA)

When property on a private potable well is sold, the untreated water must be tested and the results provided to and reviewed by the buyer before closing.

Nature of the NJ PWTA

A right-to-know disclosure law — it requires testing and disclosure but does not by itself require the seller to remediate exceedances.

Who pays the NJ Realty Transfer Fee

The grantor (seller) pays it to the county recording officer when the deed is recorded (N.J.S.A. 46:15-7).

Basis of the NJ Realty Transfer Fee

The consideration (sale price) recited in the deed, at graduated rates per $500, with an additional fee on consideration over $150,000.

NJ Law Against Discrimination (LAD) extra classes

Adds protections beyond the federal Fair Housing Act, such as sexual orientation and gender identity or expression.

NJ LAD source-of-income protection

Prohibits housing discrimination based on the source of lawful income used to pay rent or a mortgage, including Section 8 vouchers.

Who enforces the NJ LAD in housing

The Division on Civil Rights (DCR), within the Department of Law and Public Safety (Attorney General).

Steering in New Jersey

Refusing to show or sell homes to members of a protected class — violates the NJ LAD and is grounds for NJREC discipline.

NJ Bulk Sales Act and real estate

When income-producing/business real estate is sold, the buyer may need to notify the Division of Taxation so the State can claim the seller's unpaid tax.

Lead-based paint in NJ transactions

For pre-1978 housing, the seller discloses known lead paint, gives the EPA pamphlet, and allows a 10-day inspection window (federal law applied in NJ).

NJ duty for latent material defects

Disclose known latent material defects not readily observable; a licensee may not conceal or misrepresent them (Weintraub v. Krobatsch).

NJ advertising rule

Ads must name the brokerage firm (no blind ads) and be truthful; a salesperson advertises only with the sponsoring broker's authority (N.J.A.C. 11:5-6.1).

Tenancy by the entirety (NJ)

A co-ownership form for married couples and civil-union partners with right of survivorship and protection from one spouse's individual creditors.

Who holds a NJ salesperson's license

The sponsoring broker holds the salesperson's license; the salesperson works under the broker's supervision.

NJ mansion tax

An additional fee on certain residential sales above $1,000,000, generally paid by the buyer (separate from the Realty Transfer Fee).

Blind ad

An advertisement that fails to disclose the brokerage firm — prohibited in New Jersey.

Sponsoring broker certification

The employing broker must certify a salesperson's license application; the license is issued only through that broker.

NJ foreclosure type

New Jersey uses judicial foreclosure — the lender forecloses a mortgage through the courts.

Note vs. mortgage (NJ)

The promissory note is the borrower's promise to repay; the mortgage is the security instrument that creates the lien on the property.

NJ exam content areas

A national/general portion plus a New Jersey state-specific portion covering license law, agency, attorney review, escrow, and state disclosures.

Acknowledged CIS

The signed CIS the consumer returns; the firm keeps it as a transaction record for six years.

Conversion (NJ license law)

A licensee's unlawful appropriation of money or property of another — grounds for discipline and a basis for a Guaranty Fund claim.

NJ inactive license

A license that is not affiliated with a broker; a licensee may not practice or be paid commission while inactive.

NJ broker of record

The individual broker responsible for the brokerage's compliance and for designating agents within the firm.

Truth in advertising (NJ)

All real estate advertising must be honest and not misleading, in addition to naming the brokerage firm.

NJ CE late penalty

CE must be completed before the cycle deadline (June 30) to avoid a late fee or inactive status.

Federal vs. NJ protected classes

Federal Fair Housing Act: 7 classes. NJ LAD: those plus sexual orientation, gender identity, marital/civil-union status, ancestry, nationality, and lawful source of income.

NJ deed recording office

Deeds are recorded with the county recording officer, where the Realty Transfer Fee is also paid.

Real property

Land, everything permanently attached to it (improvements and fixtures), and the bundle of legal rights of ownership.

Personal property (chattel)

Movable property not permanently attached to land; transfers by a bill of sale, not a deed.

Bundle of rights

Possession, use (enjoyment), exclusion, disposition (transfer), and control.

Fixture

Personal property attached to real property so as to become part of it and transfer with the land.

MARIA test for a fixture

Method of attachment, Adaptability, Relationship of the parties, Intention, and Agreement.

Fee simple absolute

The most complete ownership — absolute, of unlimited duration, and freely transferable by deed or will.

Life estate

An estate measured by someone's lifetime; the holder cannot will it, and it ends at death.

Easement

A nonpossessory right to use another's land for a specific purpose, such as a driveway or utility line.

Easement appurtenant

An easement benefiting an adjacent parcel (the dominant tenement) and burdening another (the servient tenement).

Encumbrance

Any claim, lien, charge, or right that limits an owner's title — liens, easements, encroachments, deed restrictions.

Encroachment

An improvement that unlawfully extends onto a neighbor's land; usually revealed by a survey.

Police power

Government's authority to regulate land for public health, safety, and welfare — zoning and codes, with no payment to the owner.

Eminent domain

Government's power to take private property for public use through condemnation, paying just compensation.

Escheat

Reversion of property to the state when an owner dies with no will and no heirs.

PETE (government powers)

Police power, Eminent domain, Taxation, and Escheat — only eminent domain pays the owner.

Legal description methods

Metes and bounds, the rectangular (government) survey system, and lot-and-block.

Severalty

Sole ownership by one person or entity.

Joint tenancy

Co-ownership with the right of survivorship; requires the four unities of time, title, interest, and possession.

Right of survivorship

On a co-owner's death, that share passes automatically to the surviving co-owners, not to heirs.

Tenancy in common

Co-ownership with no survivorship; each owner holds an undivided, willable share.

Four unities (joint tenancy)

Time, Title, Interest, and Possession — all four are required to create a joint tenancy.

Tenancy by the entirety

NJ co-ownership for spouses/civil-union partners with survivorship and protection from one spouse's individual creditors.

General warranty deed

Gives the most protection; the grantor warrants clear title against all defects, even those before the grantor's ownership.

Bargain and sale deed with covenants

A common NJ deed; the grantor covenants only against defects arising during the grantor's own ownership.

Quitclaim deed

Conveys only whatever interest the grantor has, with no warranties; often used to clear a cloud on title.

Requirements to transfer title by deed

Delivery by the grantor and acceptance by the grantee; only the grantor signs the deed.

Recording

Filing the deed with the county recording officer; it gives constructive notice and sets priority but does not transfer title.

Constructive notice

Notice the law presumes everyone has of recorded documents, whether or not they actually read them.

Title insurance

A policy protecting the insured against loss from title defects that existed before the policy date.

Adverse possession

Acquiring title by open, notorious, continuous, hostile, and exclusive possession for the statutory period.

Will vs. intestate

A will directs how property passes at death; dying intestate (no will) means state law decides, and escheat applies if there are no heirs.

Market value

The most probable price a property should bring in a competitive, open market under fair-sale conditions — an opinion of value.

Market value vs. market price

Market value is an opinion of the likely price; market price is the actual price a property sold for.

Appraisal

An impartial, supported opinion of value by a licensed appraiser as of a specific date, following USPAP.

Comparative market analysis (CMA)

A licensee's value estimate from recent comparable sales to help price a listing — not a formal appraisal.

Highest and best use

The legal, possible, feasible, and most profitable use of a site — the basis of value.

Principle of substitution

A buyer will pay no more than the cost of an equally desirable substitute property; underlies the sales comparison approach.

Sales comparison approach

Compare the subject to recently sold similar properties and adjust for differences; best for homes.

Cost approach

Land value plus the cost to rebuild the improvements new, minus depreciation; best for new or special-use property.

Income (capitalization) approach

Value = net operating income ÷ capitalization rate; best for income-producing property.

Net operating income (NOI)

Effective gross income minus operating expenses, before any mortgage payment.

Capitalization rate

Net operating income ÷ value; a higher cap rate implies more risk and a lower value.

Reconciliation

Weighing the three approaches' indications into one final opinion of value — not averaging them.

Depreciation (appraisal)

Loss in value from physical deterioration, functional obsolescence, or external obsolescence.

Plottage / assemblage

Combining adjacent parcels (assemblage) can create added value (plottage) greater than the sum of the parts.

Valid contract elements

Mutual agreement (offer and acceptance), consideration, legal purpose, and competent parties.

Statute of frauds

Requires real estate sale contracts (and most leases over a year) to be in writing to be enforceable.

Void vs. voidable

Void = missing an essential element and unenforceable; voidable = a party may rescind (e.g., a minor's contract).

Earnest money

A buyer's good-faith deposit showing serious intent; held in trust and usually applied to the price at closing.

Contingency

A condition that must be satisfied for a contract to become binding (financing, inspection, appraisal).

Specific performance

A court order making a defaulting seller complete the sale, available because land is unique.

Liquidated damages

A pre-agreed amount (often the deposit) a party keeps if the other defaults.

Listing agreement

A contract employing a broker to find a buyer for the owner's property in exchange for compensation.

Exclusive right-to-sell listing

The listing broker earns the commission no matter who finds the buyer.

Exclusive agency listing

The broker earns the commission unless the owner sells the property themselves.

Open listing

Only the broker who actually finds the buyer earns the commission.

Net listing

The broker keeps any amount above the seller's set price — a conflict of interest, disfavored or banned.

Agency

A fiduciary relationship in which an agent represents a principal in dealings with third parties.

Fiduciary duties (OLD CAR)

Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable care.

Confidentiality duty

An agent must keep a client's confidential information private, and this duty survives the end of the relationship.

Principal vs. customer

The principal is the client the agent represents; a customer is a party the agent deals with but does not represent.

Disclosed dual agency

Representing both buyer and seller; lawful only with the informed written consent of both parties (in NJ, via the CIS).

Express vs. implied agency

Express agency is created by a written or oral agreement; implied agency arises from the parties' conduct.

Procuring cause

The broker whose efforts actually bring about the sale — the one entitled to the commission in a dispute.

Bilateral vs. unilateral contract

Bilateral = a promise for a promise (sales contract); unilateral = a promise for performance (an open listing).

Fair Housing Act (1968)

Bans housing discrimination based on race, color, religion, national origin, sex, familial status, and disability.

Federal protected classes

Race, color, religion, national origin, sex, familial status, and disability — seven classes.

Steering

Guiding buyers toward or away from neighborhoods based on a protected class — a fair-housing violation.

Blockbusting

Inducing panic selling by suggesting a protected class is moving into an area — illegal.

Redlining

A lender refusing to lend or insure in an area based on its makeup — illegal.

Reasonable accommodation

A change in rules or services so a person with a disability can use housing, such as allowing a service animal.

NJ LAD vs. federal classes

The NJ Law Against Discrimination protects more classes, including sexual orientation, gender identity, and source of lawful income.

Commission negotiability

Commission rates are always negotiable; fixing them with competitors is illegal price-fixing (antitrust).

Antitrust violations

Price-fixing, group boycotts, market allocation, and tie-in arrangements among competing brokers.

Trust (escrow) account purpose

To hold client funds, like earnest money, separate from the broker's own money.

Lease (lessor vs. lessee)

A lease conveys the right to use property for a term in exchange for rent; the landlord is the lessor and the tenant the lessee.

Property management agreement

A contract employing a broker to manage an owner's property for compensation, creating an agency relationship.

Puffing vs. misrepresentation

Puffing is opinion or sales talk; misrepresentation is a false statement of material fact — only the latter is actionable.

Do-not-call / advertising rules

Licensees must follow telemarketing and truthful-advertising rules; NJ also bans blind ads.

Material fact

A fact that would affect a reasonable buyer's decision or the price they would pay; it must be disclosed.

Latent defect

A hidden physical defect not discoverable by ordinary inspection; a known latent defect must be disclosed.

Weintraub v. Krobatsch

A NJ case establishing a seller's duty to disclose known latent material defects not readily observable.

Caveat emptor (limited)

'Let the buyer beware' — now limited by disclosure law and the duty to reveal known latent defects.

Lead-based paint disclosure

For pre-1978 housing: disclose known lead paint, give the EPA pamphlet, and allow a 10-day inspection window for sales.

NJ Private Well Testing Act

Test the untreated private well water and review the results with the buyer before closing (a right-to-know law).

NJ off-site conditions notice

For new construction, notice that lists of off-site conditions are at the municipal clerk's office.

Radon

An odorless, radioactive gas from soil that can accumulate indoors; commonly tested and disclosed.

Asbestos

A hazardous material in old insulation/flooring; managed by removal or encapsulation.

Mold

Grows in damp areas; may require disclosure and remediation.

Underground storage tank (UST)

Can leak and contaminate soil and groundwater, creating cleanup liability — a NJ concern with older heating-oil tanks.

Stigmatized property

A property psychologically impacted by an event (e.g., a death); state law governs whether disclosure is required.

Promissory note

The borrower's written promise to repay the loan; the personal obligation in a financing.

Mortgage

The security instrument that creates a lien on the property; New Jersey uses a mortgage and note.

Judicial foreclosure

New Jersey's process — a lender forecloses a mortgage through the courts.

Loan-to-value ratio (LTV)

Loan amount ÷ value (or price); a higher LTV means a smaller down payment and more lender risk.

Private mortgage insurance (PMI)

Usually required on a conventional loan when the LTV is above 80%; protects the lender.

Conventional loan

A loan not insured or guaranteed by the government; may require PMI above 80% LTV.

FHA loan

A government-insured loan with lower down payments and flexible qualifying.

VA loan

A loan guaranteed by the Department of Veterans Affairs for eligible veterans, often with 0% down.

RESPA

The Real Estate Settlement Procedures Act — requires loan-cost disclosures and prohibits kickbacks at closing.

TILA

The Truth in Lending Act — requires disclosing the cost of credit, including the annual percentage rate (APR).

Loan Estimate & Closing Disclosure

Loan Estimate within 3 business days of application; Closing Disclosure at least 3 business days before closing.

Lien priority

Generally first to record is first in priority; property-tax liens take priority over most others.

Commission formula

Commission = sale price × commission rate. A $300,000 sale at 6% = $18,000.

Price for a target seller net

Price = net ÷ (1 − commission rate). A $282,000 net at 6% = $282,000 ÷ 0.94 = $300,000.

Loan-to-value (LTV) example

LTV = loan ÷ value. An 80% LTV on a $300,000 home is a $240,000 loan.

Area of a rectangle

Area = length × width (in square feet for a lot or building footprint).

Square feet per acre

43,560 square feet = 1 acre. Convert square feet to acres by dividing by 43,560.

Feet per mile

5,280 feet = 1 mile. Memorize it; it is not provided at the test center.

Section and township

1 section = 1 square mile = 640 acres; 1 township = 36 sections (6 mi × 6 mi).

Annual property tax

Assessed value × tax rate. Read the rate carefully (per $100, per $1,000, or a percent).

Proration

Splitting taxes, rent, or interest by the days each party owns the property; the problem specifies the day count and who owns closing day.

Income approach value

Value = net operating income ÷ capitalization rate. NOI of $90,000 at a 9% cap rate = $1,000,000.

Profit / percentage of gain

Percent gain = (sale price − cost) ÷ cost. A $200,000 cost sold for $230,000 is a 15% gain.

New Jersey Realtors (NJ Realtors)

A private trade association of real estate professionals — not the regulator. The NJREC, within DOBI, is the licensing authority.

NJREC discipline powers

The Commission may suspend or revoke a license, levy fines, and order other penalties for license-law violations (N.J.S.A. 45:15-17).

NJ buyer's choice in attorney review

During attorney review, either party may have an attorney review the contract; if neither does within three business days, it becomes binding.

Designated agency vs. dual agency (NJ)

Designated agency uses separate licensees in one firm for each party (full loyalty); disclosed dual agency has one firm represent both with written consent.

NJ broker trust account location

Funds of others must be held at an authorized New Jersey financial institution, segregated from the broker's business and personal accounts.

Reciprocity (NJ broker)

Limited reciprocity may waive part of the three-year experience requirement for certain out-of-state broker applicants.

Riparian rights

The rights of a landowner whose property borders a flowing waterway, such as a river or stream.

Littoral rights

The rights of a landowner whose property borders a static body of water, such as a lake, ocean, or bay.

Cloud on title

A claim or encumbrance that may impair title; often cleared with a quitclaim deed or a quiet-title action.

Chain of title

The recorded history of ownership of a parcel, traced through successive conveyances.

Gross rent multiplier (GRM)

A quick value estimate: GRM = price ÷ gross rent; value = gross rent × GRM. Used for small income properties.

Option contract

A contract giving a buyer the right, but not the obligation, to buy within a set time at a set price for consideration.

Novation

Substituting a new contract or party for an old one, releasing the original party from the obligation.

Americans with Disabilities Act (ADA)

Requires accessibility in public accommodations and commercial facilities — relevant to commercial real estate.

Acceleration clause

A loan clause letting the lender demand the full balance immediately upon default.

Mill / millage (taxes)

One mill equals one-thousandth of a dollar ($0.001) of assessed value; a tax of 20 mills = 0.020 × assessed value.