Essentials of NJ Real Estate (18th ed.) · Unit 1

Real Estate Licensing

Who regulates real estate in New Jersey, who needs a license, how to get and keep one, and what happens when things go wrong. On the state exam, this is the section that's almost all numbers and "who can do what." Memorize it and it's easy points.

1 · Look Skim the visuals top to bottom (~15 min).
2 · Drill Tap the blanks in Must-know numbers until they're automatic.
3 · Test Take the 40-question quiz. Aim for 85%+, then hit "Retry missed only."

0 The real exam, at a glance

The NJ salesperson exam is given by PSI. Facts below are from PSI's NJ Candidate Information Bulletin (updated Feb 1, 2026).

110
scored questions
+ 5–10 unscored "pretest" items mixed in
4 hrs
time limit
70%
to pass = 77 correct of 110
$38
exam fee · test center or remote

How the 110 questions split

National · 80
contracts, agency, finance, math…
NJ State · 30

Inside the 30 NJ-state questions (red outline = Unit 1 territory)

Statutes & rules governing licensee activity · 22
broker/salesperson relationships & commissions are partly Unit 1
Licensing requirements · 3
Commission duties & powers · 2
Additional requirements · 3
Guaranty Fund, Full Disclosure Act…
Format: every question is 4-choice multiple choice with one best answer. Expect plain recall ("How many members…?"), short scenarios ("Broker Pat's license is revoked. Her salespeople…"), and NOT/EXCEPT questions. The quiz below uses all three.
Scoring: PSI's 2026 bulletin lists one passing score (77/110) for the whole exam. Some prep sites say the national and state parts are scored separately. That's not what the bulletin says, but aim for 70%+ on both parts anyway. If she fails, she can't rebook the same day, and she must pass within 1 year of finishing her course.

📘 What the book's Unit 1 covers

The book is organized in "Units," and Unit 1 is the licensing unit. Based on the book's table of contents (earlier edition) and a NJ school's lesson plan for the 18th edition, it covers:

  1. Who must be licensed (and who's exempt)
  2. The Real Estate Commission
  3. Types of licenses & qualifications
  4. Licenses and criminal convictions
  5. Broker of record suspended or dies
  6. Unlicensed assistants
  7. The Real Estate Guaranty Fund
  8. Interstate (out-of-state) property
  9. Rental referral agencies
  10. Key Terms Review + Review Questions

Each unit ends with a key-term matching exercise and multiple-choice review questions, with answers in the back of the book. Do those too. Heads-up: the 18th edition came out in mid-2024, and NJ has changed some rules since: a new CE law, and Commission rule amendments effective Jan 20, 2026 (digital license copies, online license terminations). This page reflects the current rules. The book may also say "referral agent" where current law says "salesperson licensed with a real estate referral company." They mean the same license.

1 Must-know numbers

Most Unit 1 questions are one of these numbers. Tap each dashed box to reveal it. Cover-and-recall beats rereading.

🏛️ The Commission

  • Members on the NJ Real Estate Commission: 8
  • Broker members / public members / gov't dept rep: 5 / 2 / 1
  • Broker members must have been brokers for: 10+ years
  • All members must be NJ residents for: 10+ years
  • Who appoints them: the Governor · Term: 3 years

🎓 Getting licensed

  • Minimum age (every license type): 18
  • Salesperson course: 75 hours (incl. 3 hrs ethics + 1 hr fair housing)
  • Pass exam AND apply for license within: 1 year of finishing the course
  • Broker education: 150 hours = 90 + 30 + 30
  • Broker experience: 3 years full-time as a NJ salesperson
  • Initial salesperson fee: $160 = $100 license + $50 application + $10 Guaranty Fund

🔁 Keeping your license

  • License term: 2 years, expiring June 30 of odd-numbered years
  • CE per term (current rule): 12 hours, with at least 6 core (2 ethics · 1 fair housing · 1 agency)
  • Broker processes a departing salesperson's termination within: 5 business days
  • Report criminal charges/convictions within: 30 days
  • Lapsed 2+ years → retake course & exam

💸 Money & penalties

  • Guaranty Fund max: $20,000 per transaction
  • Fine, 1st violation: up to $5,000 · each later one: up to $10,000
  • License barred after forgery/robbery/theft conviction for: 5 years (shoplifting excepted)
  • Transactions needed to be "in the business": ONE

🏘️ Special rules

  • Full Disclosure Act: buyer may cancel until midnight of the 7th calendar day after signing
  • Full Disclosure Act exempts subdivisions under 100 lots
  • Rental referral: verify referred units every 3 working days; advertised units every day the ad runs
  • Rental referral advance fee above $25 → broker's escrow account
  • Temporary broker license after a broker dies: salesperson with 3+ yrs, apply within 30 days, lasts 1 year

2 Who's in charge: the NJ Real Estate Commission

The law itself is the Real Estate License Act (N.J.S.A. 45:15). The Commission's rules are in N.J.A.C. 11:5, and they carry the force of law.

🧑‍⚖️ Governorappoints all 8 members, can remove for cause
🏢 Dept. of Banking & Insurance (DOBI)NOT Consumer Affairs, NOT Community Affairs
🏛️ NJ Real Estate Commissiona division inside DOBI · elects its own president
Licensing
Bureau of RE Educationlicenses schools & instructors
Bureau of Subdivided Land Sales ControlFull Disclosure Act
Investigations & Guaranty Fund

The 8 seats

BBBBB PP G
5 brokers, each a broker 10+ yrs 2 public members 1 state-department rep (unpaid, serves at Governor's pleasure)

All 8: NJ residents 10+ years · 3-year terms · majority = quorum

What the Commission can do

✔ Issue, renew & deny licenses
✔ Investigate (on its own or on complaint)
✔ Subpoena witnesses & records
⚖ Probation · suspend · revoke
⚖ Fine up to $5k / $10k
⚖ Require restitution before relicensing

Hearing notice: at least 10 days' written notice before a suspension or revocation hearing. Appeals go to the Appellate Division of Superior Court.

3 Who needs a license?

The exam loves "which person needs a license?" questions. Run every scenario through this test:

💵 Compensationa fee, commission, OR any "valuable consideration" (a car, a boat, a favor), or even the expectation of one
+
🏠 Brokerage actlist · sell · buy · rent · exchange · negotiate · collect rent · auction · find prospects · negotiate a mortgage
+
🤝 For someone elsenot your own property
=
LICENSE REQUIREDeven for ONE act, transaction or sale
Also illegal without a license: advertising or holding yourself out as a licensee, even if you never close a deal.

…unless they're exempt. Three buckets:

1. Their OWN property

  • A bona fide owner selling or leasing their own property
  • A lessor renting out their own property
  • Applies no matter how many properties they own

2. Legal / court authority

  • Attorneys at law (acting for their clients, not running a brokerage)
  • Executors & administrators of estates
  • Receivers & trustees in bankruptcy
  • Anyone selling under a court order or a deed of trust

3. Financial institutions

  • State & federal banks, savings banks, trust companies located in NJ
  • Insurance companies incorporated in NJ
Classic trap: a builder's salaried employee selling lots in the builder's subdivision does need a license. The Act names people employed by an owner "at a stated salary" to sell lots. Being on salary doesn't make you exempt.

🎯 Practice: license needed or not?

4 The four licenses

Read it bottom-up, like a ladder. Everyone below the broker works under a broker.

Referral salesperson"salesperson licensed with a real estate referral company" (older name: referral agent)
  • ONLY refers prospects, and only to the broker who supervises their referral company
  • Paid only by that broker · only 1 broker/referral company at a time
  • Can't show, hold open houses, negotiate, list, do CMAs, collect rent, or hold deposits
  • No CE required under current law
Salespersonthis is your wife's license
  • Does brokerage work (list, sell, rent, negotiate) under the supervision of ONE broker
  • Paid only by that broker (or through the licensee's own LLC registered with the Commission)
  • Needs a signed written agreement with the broker before starting (employee or independent contractor)
Broker-salespersonNJ's term. Other states say "associate broker"
  • Qualified to be a broker but chooses to work under another broker
  • Can supervise a branch office
  • Can't keep their own office or escrow account
Broker"broker of record" = the individual broker responsible for a firm
  • Can do all brokerage acts for others for a fee
  • Must keep a main office open to the public, with all licenses displayed
  • Holds the escrow/trust account · supervises all licensees · the only one who can sue clients for commission

Side-by-side

ReferralSalespersonBroker-sales.Broker
Minimum age18181818
Pre-license education75 hrs75 hrs150 hrs150 hrs
Experience required——3 yrs FT3 yrs FT
Show / list / negotiate✗✓✓✓
Supervise a branch office✗✗✓✓
Own office & escrow account✗✗✗✓
Sue a client for commission✗✗✗✓
CE to renewnone*✓✓✓

*A 2026 law will require referral licensees to take 2 hours of CE in terms starting July 1, 2027. Brokers with 40+ years in broker status are exempt from CE.

5 Path to a salesperson license

The 1-year clock starts when she finishes the course, not when she passes the exam. This is a favorite question.

Step 1
75-hr course
At a Commission-licensed school. ≥3 hrs ethics, ≥1 hr fair housing. School issues PSI eligibility.
⏱ 1-yr clock starts➜
Step 2
Pass PSI exam
110 Qs, 77 correct. $38. Can retake (not the same day).
➜
Step 3
Sponsoring broker
Broker signs the score report and the written agreement. Applies for her.
➜
Step 4
Fingerprints
Criminal background check (IDEMIA Live Scan, ~$66) after passing.
all within 1 yr➜
Done
Licensed ✔
$160 fee. Can't work until the Commission issues the license.

Other requirements

  • High school diploma or equivalent
  • Good moral character (the Commission can investigate)
  • Nonresidents can be licensed. Getting the license = irrevocable consent to be served legal papers through the Commission.
  • No reciprocity. NJ doesn't swap licenses with any state. (Out-of-state licensees may qualify for education waivers.)
  • Disabled war veterans (honorably discharged, wounded or disabled in the line of duty) still take the course and exam, but get the license and renewals free. They can even get a broker license without the experience requirement.

🚫 Criminal history

5-year bar after a conviction for: forgery · burglary · robbery · theft (except shoplifting) · conspiracy to defraud · similar offenses
Permanent bar: sex offenses that require Megan's Law registration
Already licensed? Report any conviction, indictment/formal charge, or out-of-state license discipline to the Commission within 30 days. A conviction for the offenses above means revocation. On an indictment, the Commission may suspend.

6 How commission money flows

One picture answers a dozen exam questions:

Clientseller · buyer · landlord
➜pays
Employing BROKERonly one who can collect from & sue the client
➜pays
Salesperson / broker-sales. / referralcan sue only their own broker
🚫Client ➜ Salesperson directly(no cash, no gift cards, no "thank-you" checks, not even with everyone's written consent)
✔ Allowed: a NJ broker pays a referral fee to a broker licensed in another state who has a real office there. That out-of-state broker can even sue the NJ broker for it.
✔ Allowed: a broker gives a buyer a rebate of commission, if it's in writing at the start and disclosed to everyone, including the lender.
✘ Not allowed: paying a referral fee to an unlicensed person (a past client, a neighbor, a mail carrier). And an unlicensed person can't sue to collect a commission at all.

7 Keeping (and losing) a license

The 2-year license term (example: the current term)

Jul 1, 2025 ▸ term startsterm ends ◂ Jun 30, 2027
Licensed in year 1 → must complete CE before the first renewal
Licensed in year 2 → no CE for the first renewal. (Licensed in late 2026 = this box.)
April 30 of the renewal year: CE deadline ($200 late CE fee after)
June 30, odd year: license expires. Renew (late fee $20 salesperson / $40 broker).

A new license costs the full 2-year fee no matter how late in the term it's issued.

📚 Continuing education (CE)

Current rule (in effect now, and what the book teaches): 12 hours per term, at least 6 core, including 2 ethics, 1 fair housing / NJ Law Against Discrimination, and 1 agency.

Changing after she's licensed: P.L. 2026, c.52 raises CE to 18 hours for terms starting July 1, 2027, with set topics (fair housing, ethics, legal updates, agency, licensee safety) and at least 2 hours live. It's too new to be in the book. On the exam, answer 12 unless her school says otherwise.

📇 Where the license lives

  • The broker keeps all licenses and displays them in the main office
  • The licensee must carry a copy of the license whenever working: the paper pocket card or a digital copy on a phone or tablet (2026 rule)
  • Each branch office needs its own branch license and must be directly supervised by a broker-salesperson
  • Outside of every office: the firm name + "Licensed Real Estate Broker"

"What happens when…?"

SituationResult
A salesperson leaves (resigns or is fired)Written notice either way. Within 5 business days the broker processes the separation through the Commission's online system. The salesperson can't work until the Commission authorizes the new broker. Transfer fee $25.
The broker's license is revoked or suspendedEvery salesperson's license under that broker is automatically suspended until they move to a new broker. The new license is free within the same term.
The broker dies or is incapacitated and no broker-salesperson is in the firmCommission may issue a temporary broker's license to someone who has held a salesperson license 3+ years. Apply within 30 days (the statute's wording; the 2026 rule says 30 business days). Good for up to 1 year, not renewable. Meanwhile they take the broker course and exam.
A broker closes the businessTerminate every agent's license (online) within 5 business days. Within 30 days, file an office-closing affidavit (escrow closed, agents paid, signs and ads removed…).
A salesperson breaks the lawThe broker's license isn't revoked unless the broker had "guilty knowledge".
The license lapsesWithin 2 years: reinstate (catch up on CE + fees). 2+ years: back to the 75-hr course and exam.
A license is revokedThat person can't be employed in any capacity, paid by a licensee, or even share office space at a licensed office while revoked.

⚖️ Penalties

1st violation≤ $5,000per violation
Each later violation≤ $10,000each transaction = a separate offense
Repeat offenderBarred3 violations can mean a permanent bar from licensing
Same fines apply to unlicensed people doing brokerage, and they can't sue to collect a fee. Fines can come on top of, or instead of, probation, suspension or revocation.

8 The Real Estate Guaranty Fund

A state fund that pays consumers who were cheated (embezzlement, conversion, theft) by a licensee or a broker's unlicensed employee, when the wrongdoer can't pay.

1
Consumer loses money
Licensee embezzles or converts funds in a deal.
➜
2
Wins in court
Sues within 6 years (Commission notified/joined). Gets a final judgment. Files a criminal complaint.
➜
3
Can't collect
Exhausts efforts to collect from the licensee.
➜
4
Fund pays
Court orders payment, max $20,000 per transaction total, however many victims.
➜
5
License REVOKED
No reinstatement until the licensee repays the fund in full, with interest.
$10
one-time charge when a salesperson (or referral licensee) is first licensed
$20
one-time charge for brokers & broker-salespersons
✘
A wrongdoer's spouse can't collect from the fund

9 Special rules: rentals, out-of-state land, assistants

🏢 Rental referral agencies

These businesses charge tenants a fee to find rentals, and they must be licensed. Charging a fee for rental listings without a license before a lease is signed (or possession taken) makes you a disorderly person: a fine of at least $200 and/or up to 30 days in jail.

  • Written contract with the tenant (services, fee, dates, tenant's duties, refund policy, "licensed by NJREC")
  • Needs the landlord's consent to refer. Oral consent must be confirmed in writing within 24 hrs.
  • Verify availability: every day an ad runs, and every 3 working days for referred units. Never refer a unit not verified in the past 7 calendar days.
  • Advance fee over $25 → into the broker's escrow account until the services are done
  • Keep records 1 year · post a copy of the rule in the office

🌴 Out-of-state ("interstate") land

Real Estate Sales Full Disclosure Act, run by the Commission's Bureau of Subdivided Land Sales Control. It covers subdivided land (lots, condos, co-ops, etc.) offered in NJ or marketed into NJ from elsewhere, like a Florida lot sold through NJ ads.

  • The developer must register with the Commission first
  • The buyer must get a Public Offering Statement before buying
  • The buyer can cancel until midnight of the 7th calendar day after signing
  • Exempt: fewer than 100 lots · an owner's single isolated sale · purely commercial or industrial · court order · government · cemetery lots · all-rental developments

Timeshares have their own law: the NJ Real Estate Timeshare Act.

🎯 Practice: can an unlicensed assistant do this?

From the Commission's own "Permissible and Prohibited Actions" guidance. Rule of thumb: clerical = OK. Talking to the public about property, showing, or negotiating = licensee only.

10 Exam traps & how to beat them

"Consent"On licensing law, written consent from the buyer or seller never fixes an illegal payment. A salesperson paid directly by a client is still wrong, even if "everyone agreed in writing." "Value""Valuable consideration" doesn't have to be money. A car, a boat, free rent, or a promise of payment all count, so a license is required. "Once""Just one sale" or "only occasionally" doesn't matter. One act = in the business. "Salary"A salaried employee of a developer selling lots still needs a license.
"Clock"The 1-year deadline runs from course completion, not from passing the exam. "Suspend vs revoke"Broker revoked → agents suspended (until they transfer). Guaranty Fund pays → licensee revoked. "21?"Other states require brokers to be 21. NJ: 18 for all license types. "Which agency?"DOBI, the Department of Banking & Insurance. Not Consumer Affairs, not Community Affairs. "Associate broker"Not a NJ license. The NJ term is broker-salesperson.
PSI strategy: read the last line of the question first and circle NOT or EXCEPT. Eliminate the 2 obviously wrong answers, then choose between the last two. Flag and move on if you're stuck. You have about 2 minutes per question, which is plenty.

11 Practice quiz: 40 PSI-style questions

These are original questions written to match the exam format and Unit 1 topics. Tap an answer to see why it's right. Your score bar shows the 70% passing line.

12 Key-term flashcards

Tap to flip. Mark "Got it" to hide the ones she knows. Progress is saved on this device.

Sources & how this was checked

The textbook isn't available online, so this page is built from what the book's Unit 1 is about (its contents and school/flashcard materials based on it) and the actual laws and exam that the book teaches. Facts were checked on Oct 16, 2026. If the book and this page disagree, tell me and I'll check. The law sometimes changes after a book prints.