NJ brokerage services agreements: when you need one and what goes in it

What a brokerage services agreement is

A brokerage services agreement, often shortened to BSA, is the written contract between a brokerage firm and the person it works for. P.L. 2024, c.32, the New Jersey law that took effect August 1, 2024, defines it as a written agreement between a brokerage firm and a principal that appoints the firm to represent the principal as an agent, or to work with a buyer or seller as a transaction broker.

The name is new, but most of the documents are familiar. The law says brokerage services agreements include sale and rental listing agreements, buyer-lessee agency agreements, and transaction broker, dual agency and designated agency agreements. So a listing agreement is a BSA, and so is a buyer agency agreement.

Two definitions widen the reach. In the law, a buyer includes an actual or prospective tenant, and a seller includes an actual or prospective landlord. The agreement rules are not only about sales.

When New Jersey requires one

The law has two triggers, one for each side, and the timing language is the same for both: the firm must enter into the agreement "before, or as soon as reasonably practical after" it starts providing brokerage services to or on behalf of that party. Section 3 covers buyers and section 5 covers sellers.

Commercial has a specific meaning in the law. Commercial real estate is New Jersey real property other than, among other things, a property with one single-family home or a building with four or fewer residential units, land zoned for no more than one to four residential units, farmland assessed as such, and units like condominiums or townhouses that can be sold one at a time. A two-family house is residential. A strip mall is commercial.

There is also a money trigger. Section 11 says a firm must have a written brokerage services agreement in order to be paid: with the buyer or seller in a residential deal, and with the seller in a commercial deal. No agreement, no compensation. Section 11 also says compensation agreements must be in writing and signed by the buyer or seller.

When you do not need one

Section 11(h) lists three services that can be paid without a brokerage services agreement:

• A broker's price opinion.
• A comparative market analysis.
• A referral from one firm to another, as long as the referring firm provided no brokerage services in the transaction.

Add the commercial buyer exception from the table above. Also keep in mind that the agreement requirement is about the firm's own client. Bulletin 24-11 notes that an unrepresented buyer does not have to sign a CIS acknowledgment just to look at a property, such as at an open house. An unrepresented party gets the CIS on its own deadline, covered below.

What every agreement must contain

Sections 3 and 5 list the contents for buyer and seller agreements, section 11 adds compensation terms, and section 2 adds the agency disclosure. Bulletin 24-11 pulls them into one list. Here they are side by side.

The Commission's older rule adds its own requirements on top. N.J.A.C. 11:5-6.9(i) says every brokerage agreement must include an acknowledgment that the CIS was received and a declaration of business relationship, printed larger than the document's main print. A firm can also comply by having the party acknowledge receipt on the CIS itself, writing the intended relationship on the CIS, attaching a copy to the agreement and referring to it in the agreement.

The agreement also shapes the duties you owe. Unless the two sides agree otherwise in writing, a buyer's agent must make a good faith and continuous effort to find a property, and a seller's agent must do the same to find a buyer (sections 4 and 6). Section 10 says the relationship ends at the earliest of full performance, the end of the term, mutual agreement, or written notice under the agreement. Ending it by mutual agreement or by notice takes effect only with written confirmation; ending by performance or expiration needs none.

How compensation works inside the agreement

Section 11 rewrote the money rules. The points most likely to show up in practice and on a test:

• Who can pay: the seller, the buyer, a third party, or a split between firms. A firm may be paid by more than one party, whatever its relationship with them.
• Paying does not create agency. A seller who pays the buyer's broker does not become that broker's client.
• Sharing needs consent: a seller or buyer must agree in a signed writing before their firm shares the compensation they pay with another firm.
• Form of pay: a flat fee, a percentage of the price or another lawful method all count as a commission.
• The buyer gap: if no one else offers compensation, or offers less than the buyer agreed to pay, the buyer agreement must say whether the buyer pays the difference or how the firm and buyer will proceed. The law gives an example: the buyer can direct the agent not to show homes where the seller offers less than the agreed amount, or nothing.
• Dual and designated agency: when one firm is paid by either or both sides, the sources and amounts must be disclosed in writing to the buyer and the seller.

The law also bars a seller's agent from sending a notice about compensation sharing to a service, such as an MLS, that prohibits those offers from being displayed. Bulletin 24-11 says the Commission is eliminating the older rule, N.J.A.C. 11:5-6.9(k)(1)(iii), that required that information. The "fully negotiable and not set by law" statement is the same idea behind the line now required in ads; our post on NJ advertising rules covers that separately.

Where the CIS and agency disclosure fit

Two sets of deadlines apply to the Consumer Information Statement, and you have to meet both. This is the part people mix up most.

In practice the rule's triggers usually come first. A buyer often talks about budget before anyone signs anything, and that conversation needs the verbal explanation and, at a meeting, the written CIS. The statute's deadline is the outer limit tied to the agreement. Bulletin 24-11 also told licensees to use the revised CIS in its Appendix A, which lists five relationships, in place of the older text in N.J.A.C. 11:5-6.9(h).

Signing the CIS acknowledgment is not the agreement and is not consent to dual agency. N.J.A.C. 11:5-6.9(b) says handing over the CIS does not by itself satisfy the consent requirement. Consent belongs in the brokerage services agreement or a separate document the party initials or signs. Our post on designated agency vs dual agency in NJ explains what that consent covers. The rule also says signed CIS acknowledgments on deals that produce a fully executed contract or completed rental are kept as business records for six years.

NAR's written buyer agreement rule is separate

Since August 17, 2024, a different requirement has applied to many agents. It comes from the NAR settlement and the MLS rules that followed, not from New Jersey law. NAR's Written Buyer Agreements 101 says MLS participants "working with" a buyer must have a written agreement in place before touring a home, in person or by live virtual tour. NAR's consumer guide says you do not need one to visit an open house on your own.

NAR lists what the agreement must do: disclose the amount or rate of compensation, or how it will be determined; state it in objectively ascertainable terms, not open-ended; say the agent may not receive more than that from any source; conspicuously state that broker commissions are not set by law and are fully negotiable; and include anything state law requires. NAR's consumer guide on offers of compensation says those offers cannot be listed on an MLS, and NAR's commercial guidance says written buyer agreements are not required for commercial transactions because the settlement is focused on residential deals.

For a New Jersey agent who is an MLS participant, the practical answer is to meet both. Our suggestion: have the buyer agreement signed before the first tour, since that satisfies NAR and also beats the statute's deadline, and make sure the form contains every New Jersey item in the table above. A form written only for the NAR rule can miss state items such as the Agency Disclosure paragraph, the CIS and the buyer gap clause.

Four scenarios

The people are made up. The rules come from the sources below.

One more for the exam: Maya signed a buyer agreement promising 2.5 percent. The seller of the home she loves offers the buyer's broker 2 percent. Her agreement must already say whether she pays the half-point difference or how they will proceed, for example by skipping homes that offer less. It is not something to work out at the closing table.

How this shows up on the exam

On the national portion, expect the general rules on listing agreements and buyer agency agreements: that they create agency, that an exclusive agreement differs from an open one, and that who pays the agent does not by itself decide whom the agent represents. Agency is 13 percent of the national portion in the PSI outline. On the New Jersey portion, use the state specifics: a BSA is required with residential buyers and sellers and with commercial sellers, the CIS goes in the agreement, compensation is fully negotiable and not set by law, and consent to dual or designated agency is written. In the exam outline, "Agency/Conflicts of Interest/Disclosure Requirements" and "Listings and Content of Listing Agreements" both sit under the 22 items on statutes and rules governing licensee activities.

Our suggestion: memorize the three exceptions (BPO, CMA, referral with no services) and the two CIS deadlines, then review the agency and CIS study guide and test yourself on the national agency topic. The NJ-only rules sheet is a good last look before test day.