New Jersey License Types and Broker Supervision

New Jersey recognizes several types of real estate licenses, each with specific requirements and authorities.

License Types

Individual Licenses

Salesperson

A salesperson is licensed to perform real estate activities but must work under a licensed broker. Salespersons cannot:

• Operate independently
• Collect commissions directly from clients
• Supervise other licensees
• Operate a real estate business

Broker-Salesperson

A broker-salesperson holds a broker license but chooses to work under another broker. They:

• Have the same supervision requirements as salespersons
• Cannot operate their own brokerage while in this status
• Can convert to active broker status by proper application

Broker

A broker can operate independently and supervise salespersons. Brokers may:

• Operate their own real estate company
• Supervise affiliated licensees
• Collect and distribute commissions
• Maintain trust accounts
• Operate branch offices

Referral Agent

A referral agent is a limited license category:

• Can only refer potential clients to other licensees
• Cannot negotiate, show property, or engage in other activities
• Receives referral fees only
• Must work under a broker

No License Reciprocity

Critical: New Jersey has NO reciprocity with any other state.

Even if you hold licenses in multiple other states, you must complete all New Jersey requirements from the beginning.

Broker Supervision Requirements

New Jersey law places significant responsibility on brokers to supervise their affiliated licensees.

Broker Sponsorship

Every salesperson and broker-salesperson must have a sponsoring broker:

• Cannot practice without broker sponsorship
• Broker must register the licensee with NJREC
• Broker is responsible for licensee activities
• License is inactive without broker sponsorship

Written Policies

Brokers must establish and maintain written policies covering:

Broker Liability

The sponsoring broker is responsible for:

• Acts of affiliated licensees within scope of license
• Trust account compliance
• Advertising accuracy
• Proper supervision
• Training on license law

Key Point: A broker can be disciplined for the acts of affiliated licensees even if the broker was unaware, if those acts resulted from inadequate supervision.

Business Entity Licensing

New Jersey permits real estate brokerage through various business structures:

Corporations and LLCs

Branch Offices

Brokers operating from multiple locations must:

1. Register each branch with NJREC
2. Display licenses at each location
3. Maintain supervision at each location
4. Keep records accessible

Compensation Rules

In New Jersey:

• Salespersons receive compensation only from their employing broker
• No direct payment from clients to salespersons
• Commission splits are negotiated between broker and salesperson
• Referral fees only to licensed parties