The REC can impose monetary penalties and order restitution to consumers.
Before you read
Test yourself first: 5 questions
Question 1 of 5
Which agency has authority over a New Jersey broker who has mishandled trust account funds?
Answer: A. The New Jersey Real Estate Commission (REC), which operates under the Department of Banking and Insurance (DOBI), regulates licensees and can discipline brokers for trust-account violations.
Question 2 of 5
A New Jersey salesperson accepts a commission directly from a buyer without the knowledge or consent of her employing broker. This is:
Answer: A. In New Jersey a salesperson works under and is paid only by her employing broker. Accepting compensation directly from a member of the public, or from anyone other than the employing broker, is a license-law violation subject to discipline.
Question 3 of 5
A licensee induces a homeowner to list by falsely telling her that minority families are moving into the neighborhood and prices will collapse. Under New Jersey law this is:
Answer: A. Inducing sales or listings by representations about the entry of persons of a particular race, religion, or other protected class into a neighborhood is blockbusting (panic selling). It is illegal under fair housing law and is prohibited conduct for which a New Jersey licensee can be disciplined.
Question 4 of 5
A New Jersey seller's agent discovers a known latent defect, a chronically wet basement, that the seller wants hidden. The agent's correct course of action is to:
Answer: A. Even while representing the seller, a licensee may not misrepresent or conceal known material defects. The duty of honesty and disclosure of material facts to the buyer overrides a client's instruction to conceal. Following the seller's instruction to hide the defect would be prohibited conduct subject to discipline.
Question 5 of 5
If, after a hearing, the New Jersey Real Estate Commission finds that a licensee violated the license law, which of the following sanctions may the Commission impose?
Answer: B. Following a hearing, the Commission may suspend or revoke a license and may impose monetary penalties for violations. Imprisonment is a judicial matter, not a Commission sanction.
Keep the streak going with more questions like these, each with a full rationale.
Must-know rules
- The REC may suspend, revoke, or refuse to renew a license for violations.
- The REC can impose monetary penalties and order restitution to consumers.
- Grounds include fraud, misrepresentation, commingling, and dishonest dealing.
- Unlicensed practice of real estate brokerage is prohibited and penalized.
- Licensees are entitled to notice and a hearing before disciplinary action.
- New Jersey maintains a Real Estate Guaranty Fund to reimburse wronged consumers.
- Guaranty Fund payouts follow an unsatisfied judgment against a licensee, subject to statutory limits.
New Jersey License Discipline, Penalties & Fund Quick Sheet: FAQs
Is New Jersey License Discipline, Penalties & Fund Quick Sheet on the real estate exam?
Yes. State License Law is a scored domain on the New Jersey real estate licensing exam, and this topic appears in the state license-law portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
Does New Jersey test this differently?
New Jersey applies its own license law on top of the national portion. This page covers the New Jersey rules specifically, which is what the state section of your exam tests.
