PracticeBlogFlashcardsEspañol

4.2 New Jersey License Law Violations and Discipline

Key Takeaways

  • Violations of New Jersey license law can result in fines, suspension, or revocation
  • Common violations include trust account mishandling, failure to supervise, and misrepresentation
  • NJREC investigates complaints and conducts hearings through administrative law process
  • Licensees have the right to a hearing before an Administrative Law Judge
  • The Real Estate Guaranty Fund provides limited compensation to victims of licensee misconduct
Last updated: January 2026

NJREC has authority to discipline licensees for violations of the Real Estate License Act and Commission rules.

Types of Violations

Common Violations

CategoryExamples
Trust AccountCommingling, conversion, late deposits
SupervisionFailure to oversee salespersons
DisclosureFailing to disclose material facts
MisrepresentationFalse statements about property
AdvertisingMisleading ads, missing broker ID
Unlicensed ActivityPracticing without valid license
Agency ViolationsFailing to provide CIS

Specific Prohibited Acts

Under N.J.S.A. 45:15-17, violations include:

  1. Fraud or misrepresentation in obtaining a license
  2. Making false promises to influence transactions
  3. Demonstrating unworthiness to act as licensee
  4. Acting for more than one party without disclosure
  5. Commingling of trust and personal funds
  6. Failing to remit funds owed
  7. Paying commissions to unlicensed persons
  8. Failing to provide required disclosures
  9. Discrimination in violation of fair housing
  10. Conviction of crime involving moral turpitude

Disciplinary Process

Investigation

NJREC initiates investigations based on:

  • Consumer complaints
  • Audits
  • Referrals from other agencies
  • Self-reporting

Process Steps

StepDescription
Complaint filedConsumer or agency reports violation
InvestigationNJREC staff reviews
NoticeLicensee notified of charges
HearingBefore Administrative Law Judge
DecisionJudge issues initial decision
Commission actionNJREC adopts, modifies, or rejects
AppealLicensee can appeal to court

Penalties and Sanctions

Available Sanctions

SanctionDescription
ReprimandOfficial warning on record
FineMonetary penalty
SuspensionTemporary loss of license
RevocationPermanent loss of license
ProbationLicense with conditions
EducationRequired additional coursework
RestitutionRepay wronged party

Fine Amounts

Fines vary based on:

  • Severity of violation
  • Prior violations
  • Harm to consumers
  • Willfulness of conduct

Real Estate Guaranty Fund

New Jersey has a Real Estate Guaranty Fund to compensate victims:

Fund Details

FeatureDetail
PurposeCompensate victims of licensee misconduct
SourceLicensee fees
Maximum per claimLimited amount
ConditionsCivil judgment required
Effect on licenseeLicense suspended until fund repaid

How to Claim

  1. Obtain civil judgment against licensee
  2. Show licensee cannot pay judgment
  3. File claim with NJREC
  4. Fund pays up to limit
  5. Licensee's license suspended

Hearing Rights

Licensees facing discipline have rights:

RightDescription
Written noticeDetailed charges
HearingBefore Administrative Law Judge
RepresentationRight to attorney
EvidencePresent witnesses and documents
Cross-examineQuestion opposing witnesses
AppealChallenge decision in court

Criminal Violations

Some violations may also be criminal:

Criminal ActPotential Charge
Conversion of fundsTheft/embezzlement
FraudCriminal fraud
Operating without licenseCriminal penalty
False statementsPerjury or fraud
Loading diagram...
NJREC Disciplinary Process
Test Your Knowledge

What happens to a licensee's license if the Real Estate Guaranty Fund pays a claim against them?

A
B
C
D
Test Your Knowledge

Where do licensees facing disciplinary action have their initial hearing?

A
B
C
D
Up Next

4.3 New Jersey Property Rights and Ownership

Continue learning