Real Estate Agents and brokers and Consumer Fraud in New Jersey

The Consumer Fraud Act applies to real estate agents in their capacity as an agent for the seller of the property. In essence, they are professional sellers and are required to assure that they make accurate disclosures pertaining to any property they sell. The courts recently demonstrated that when a realtor makes a mistake as to the location of the property they can be sued under the New Jersey Consumer Fraud Act. In Vagias v. Woodmont Properties, 384 N.J.Super. 129, 136 (App.Div 2006) the Appellate division held that a realtor's misrepresentation is a serious matter and violates the Act. N.J.S.A. 56:8-2.

It is not really disputed that the application of the Consumer Fraud Act applies to the sale and/or lease of real estate. In this regard, it has been determined that the New Jersey Consumer Fraud Act applies to realtors in their role as agents, brokers or transactional participants under the New Jersey Consumer Fraud Act. Quite simply, the New Jersey Consumer Fraud Act would apply to realtors as those selling vehicles, selling products, selling furniture, selling service or those engaged in the sale of goods and services in the stream of commerce. The New Jersey Consumer Fraud Act was amended specifically to include the sale of real estate within its powers. Obviously, the purchase of a home is the most significant transaction that individuals might undertake in their entire lives. It is clear why the New Jersey Consumer Fraud Act is needed to apply to realtors because in such a significant transaction, it is absolutely necessary that the entirety of the communications, representations and conduct is free from the restricted contents of the New Jersey Consumer Fraud Act. Realtors have duties to their clients, the other realtors and other persons. Obviously, one would expect that realtors would be honest in their representations as to the nature and extent of the property one is purchasing. However, as in all businesses, there are a few realtors who quite simply should not be relied upon. It is these circumstances where the “bad apple” is discovered that there’s a need for the remedies under the New Jersey Consumer Fraud Act. The remedies under the New Jersey Consumer Fraud Act are very powerful and apply to realtors as well as the sellers of real estate. There are triple damages, attorney’s fees, costs and the availability of injunctive relief if needed under the circumstances of the case, whether it be realtors or others selling real estate. The existence of the application of the New Jersey Consumer Fraud Act to realtors and real estate transactions does not mean that one should abandon common sense. Although real estate agents and brokers are professionals, trained in the regulatory requirements under New Jersey law, there should be some type of minimal questioning by those relying upon these statements. The realtors also have a code of ethics that they must fulfill when they represent a buyer or seller and the failure to do so can result in both dissatisfied customers and lawsuit. The FTC also has regulations.

Claims against realtors under the New Jersey Consumer Fraud Act are nothing new. Some of the very old and very trendsetting cases under the New Jersey Consumer Fraud Act involve lawsuits against realtors. It is not disputed that the New Jersey Consumer Fraud Act applies to realtors. However, realtors have numerous defenses under the New Jersey Consumer Fraud Act with regard to the tripling of damages which many businesses were entities do not have. If a seller’s disclosure is completed this is a defense to a selling realtor. This is only defense in the context of triple damages. However, the same rules and procedures as well as same deceptive business practices are prohibited under the state law rules and under the administrative code as it applies to realtors. Realtors cannot lie about the nature and extent and quality of the property. Realtors cannot make material omissions of fact with regard to the nature and extent and quality of the property. Realtors must have a duty of loyalty to their clients and must make full disclosure with regard to their duties to their client and the adversaries. Similar to attorneys realtors have a code of ethics upon which they must rely with regard to each and every transaction and each and every client.  So while a lawsuit against a realtor has numerous source of ethical obligations usually the paperwork they complete is relatively solid with regard to a seller’s disclosure in my experience usually do make complete disclosures. However, individuals have consulted me and I have determined that the realtors make sure as omissions of material fact with regard to various important issues on the sale of the home. The specific facts can vary by transaction however, again, ascertainable loss is associated with deceptive practices are recoverable against realtors as with any other deceptive business.