Each year in New Jersey, bills and amendments are proposed that affect the real estate industry. The government affairs department keeps a sharp eye on Trenton to monitor and advocate in the best interest of Realtors®.
NJ Realtors® has been extremely effective in making the voice of Realtors® heard in the state capitol.
Learn more about some of the issues we've worked on:
For over a decade, NJ Realtors® has been a strong advocate for in support of increasing affordable housing available throughout the state. Everyone, regardless of income, deserves the right to a home and working with state legislators has eased the financial burden for many throughout the years.
The Council on Affordable Housing operated under the Department of Community Affairs and regulates affordable housing within municipalities, abiding by the Fair Housing Act.
How does this impact you?
After a prolonged battle, Gov. Christie released a set of new affordable housing standards for each municipality to meet throughout New Jersey. The new regulations replaced expired ones and calls for an additional 110,000 units across the state. The New Jersey Supreme Court ruled in 1983 that municipalities must provide a “fair share” of affordable homes for their poorest residents. Studies show that 36,000 to 60,000 such homes have been built in the interim, according to nj.com.
Municipalities must determine how to abide by the new fair share rules and provide new or rehabilitated residences for their poorest constituents.
Realtors® should be aware of the requirements in each municipality where they work. While the battle over affordable housing is far from over in New Jersey, the eventual effects of it will certainly impact property values.
Do you know if the sale of your client’s property falls under the bulk sales requirements?
In 2011, NJ Realtors® initiated and strongly supported legislation that exempted individuals, estates and trusts involved in purchasing one- and two-family residential properties, condo units, cooperatives and seasonal rental properties from the bulk sales notification requirements. LLC’s and other corporate ownership structures involved in real estate transactions are still subject to bulk sales requirements. In addition, the law is retroactive to August 1, 2007, meaning that any transactions taking place between that date and September 14, 2011 were in essence, never subject to bulk sales requirements.
Broker Price Opinions, also known as Comparative Market Analyses are a key tool for REALTORS® when determining a price to list a home at. So, when the right to perform BPOs and CMAs came under fire in recent years, NJ Realtors® stepped up to protect members’ right to do their jobs.
While BPOs and CMAs have always been recognized as tools for Realtors®, legislation was introduced declaring that BPOs and CMAs are identical documents to each other and permits real estate licensees to prepare them with certain provisions. Two bills unanimously passed the Senate and Assembly, but were pocket vetoed by Gov. Christie, twice.
As a Realtor®, can I still prepare a BPO?
Despite the pocket veto, Realtors® are still able to prepare BPOs and CMAs, as detailed in a 2013 advisory released by the New Jersey Real Estate Commission.
The memo states:
“A BPO is defined in federal law as “an estimate prepared by a real estate broker, agent or sales person that details the probable selling price of a particular piece of real estate property and provides a varying level of detail about the property’s condition, market and neighborhood, and information on comparable sales, but does not included an automated valuation model….”
“The Commission rules, however, do refer to a “comparative market study or analysis” (“CMA”), which is an estimate of the value of real property similar to a BPO. The Commission considers the term CMA as used in its rules to also encompass BPOs.”
Eminent domain can be a valuable tool in redevelopment. However, policies must be in place to ensure the fundamental rights of private property owners are not diminished in favor of economic development.
The government should not be able to take private property from owners who have maintained it to give to another private owner to demolish the structure under the guise of redevelopment. New Jersey home and business owners deserve proper notification of any redevelopment plans that will affect them which should be clearly defined with a timeframe for implementation. They deserve a voice in the eminent domain process, a process where the burden of proof should rest on the entity taking the property. The association supports an assessment of comparable, available and affordable housing to meet the relocation needs of residents displaced by redevelopment.
Once the eminent domain process is concluded property owners deserve compensation that will allow them to remain members of the communities they know and love. NJ REALTORS® supports the mandate that displaced home and business owners and tenants are given the right of first refusal on new property within the redevelopment project.
Read more about eminent domain cases at the federal level from the national association.
Often forced at the time of sale during a real estate transaction, a 2005 law required all one- and two-family homes (with the exception of seasonal rental properties) to be equipped with a fire extinguisher. Regulations were never adopted by the Department of Community Affairs, so there could be a potential 566 different sets of standards for each municipality to enforce this requirement.
NJ Realtors® backed legislation in 2012 which would have repealed the requirement for one- and two-family homes. Gov. Christie conditionally vetoed the bill in 2012, but then signed it in 2013, requiring a review of the current state laws and regulations and requiring the DCA report back with recommendations on the repeal of the requirement.
A home inspection is a crucial part of any sale, so having a verified,licensed home inspector is non-negotiable. In New Jersey, applicants must satisfy the following two requirements to be licensed:
- Complete an approved course of study of not less than 180 hours, which shall include not less than 40 hours of unpaid field-based inspections in the presence of and under the direct supervision of a licensed home inspector who oversees and takes full responsibility for the inspection and any report produced; or
- Perform not less than 250 fee-paid home inspections in the presence of and under the direct supervision of a licensed home inspector who oversees and takes full responsibility for the inspection and any report produced.
In support of interests of NJ Realtors®, the government affairs department has made amendments to bills that allow property owners to requests a different inspector to perform a reinspection when a construction code violation was found and has opposed legislation that required licensed home inspectors to report an energy rating code, which could stigmatize many older homes and be cost prohibitive for an owner to upgrade.
Private transfer fees differ from property taxes because they are assessed on real property when ownership of the property is transferred between parties. These taxes are used in many areas to fund programs designed to preserve rapidly depleting open spaces in commercial or residential areas and to fund housing programs for low-income residents.
Since 2010, private transfer fees have been banned on newly constructed properties new disclosure requirements were put into place for existing properties where the fees were already in place. This was legislation initiated by NJ Realtors®.
In 2011, the FHFA submitted a proposed rule to the Federal Register addressing comments on a previous proposal that limits Fannie Mae, Freddie Mac, and federal home loan banks from authorizing mortgages on properties with a private transfer fee (PTF) attached to the property. The new proposal bans the use of PTFs, with an exception for fees paid to homeowners associations, condominiums, and cooperatives.
Guidance from the national association
The National Association of Realtors® has generally been against private transfer fees, which increase the cost of homeownership and do little more than generate revenue for developers or investors and typically provide no benefit to homebuyers. However, NAR acknowledges that such fees may be appropriate for some organizations, such as homeowners associations, where there is a direct benefit to the homeowner, the fees are reasonable, and there is full disclosure. NAR also supports an exception for existing properties with private transfer fees. If existing properties are not excepted many homeowners will be unable to sell their homes, which could result in a further disruption in real estate markets. These comments have all been previously submitted to the Federal Housing Finance Agency.
Legislation in 2012 extended the expiration date of permits already approved and extended under the Permit Extension Act of 2008 from the end of 2012 until the end of 2014. June 30, 2016, the Act was amended once again to extend certain permits and approvals in areas that were impacted by Superstorm Sandy. Specifically the following counties: Atlantic, Bergen, Cape May, Essex, Hudson, Middlesex, Monmouth, Ocean, and Union.
Private well testing has been a legal part of NJ real estate sales since 2002. The Private Well Testing Act decrees a minimum testing requirement for potable water samples taken from private wells prior to the closing of a title. The Act also states that, when property with certain types of drinking water wells is leased, the well water must be tested for contaminants. The results of the water testing must be reviewed by both the buyer and seller, or in the case of a leased property, by the lessee.
The NJ Realtor® Standard Form of Real Estate contract has been updated to deal with this provision.
A state income tax deduction of up to $500 for homeowners testing their private well water supply once every five years was enacted in 2010. NJ Realtors® supported this legislation, as it makes it easier for homeowners who must test their wells prior to the sale of the home.
No subject has been more hotly discussed over the past decade than New Jersey’s soaring property taxes, where the state boasts some of the highest property taxes in the nation.
Our more than 50,000 members provide professional services to sellers and buyers of residential and commercial properties and are keenly aware of how property taxes impact the transaction.
NJ Realtors® has continually worked with legislators to not only support proposals that slowed the rate of property tax growth, such as Gov. Christie’s 2 percent annual cap but will eventually lower them.
Realty Transfer Fees have been an unfortunate reality in New Jersey since 1968. The original purpose was meant to defray the cost of tracking the transfer of real properties. Funds from the RTF are shared between the state and counties. The state portion of the revenue is allocated to neighborhood revitalization, shore protection, extraordinary aid and the state’s general fund. The counties are responsible for disbursement of their portion of the revenue.
Want to know what the RTF will be on your next transaction? Check out the RTF Calculator.
The Realty Transfer Fee applies to all residential and commercial property transfers.
The transfer fee is made up of five parts: the basic fee, which was established in 1968 and increased in 1975; the additional fee, established in 1985; the supplemental fee, which was established in 2003; the general purpose fee, established in 2004; and the 1 percent fee, established in 2004 and extended to commercial property in 2006.
On June 27, 2018, the New Jersey State Legislature attempted to double the realty transfer fee. The RTF is already a burdensome tax on homeowners selling their property and proposing to double this fee is just one more tax property owners should not be responsible for. There are approximately 60,000 homes worth over $1 million in the Garden State. If passed, there would have been a bare minimum of $10,000 added to the expenses of purchasing a home of that price range. It would have been one more reason for high income residents to leave the state and take with them their potential contributions to the economy.
An Affidavit of Consideration is required to be affixed to and recorded with all deeds transferring “new construction” in addition to the existing claims for a partial exemption.
NEW CONSTRUCTION must be printed clearly in upper case lettering on the top of the first page of deeds transferring new construction.
Download the Realty Transfer Fee Affidavit of Consideration for Sellers.
Download the Realty Transfer Fee Affidavit of Consideration for Buyers.
In addition to the regular realty transfer fee, a 1 percent fee is assessed on residential and commercial property sold for more than $1 million.
The fee on commercial property was enacted in July 2006. NJ Realtors® secured an amendment that exempts those commercial transactions where a contract was fully executed by July 1, 2006 and the deed is recorded on or before November 15, 2006. Buyers who fall under this exemption are required to pay the 1 percent fee and request a refund from the New Jersey Division of Taxation within one year following the date of the deed recording. An explanation letter to deed recorders from the Division of Taxation further explains the provisions and exemptions of the 1 percent fee.
The law also exempts any transfer of property to a charitable organization that is exempt from federal income tax under section 501(c)(3) of the federal Internal Revenue Code.
Despite strong opposition to many versions of a real estate rebate law since 2006, a bill permitting rebates to be provided to consumers in real estate transactions moved forward in 2010. NJ Realtors® was able to secure amendments to the bill that increase consumer protection.
When the bill was signed into law, the real estate commission released this advisory bulletin, detailing how to legally offer a rebate.
On June 27, 2018, as part of the budget process, the New Jersey State Legislature attempted to add a seasonal sales tax on rental properties. Realtors understood that adding a seasonal sales tax to rental properties could have decimated the tourism industry after we battled for five years after Superstorm Sandy to recover. In fact, according to a 2015 Oxford Economics study, the Garden State could lose approximately $100 million in economic activity and an immediate loss of $20 million in tax revenue if a sales tax were enacted. Through strong advocacy and engaging our members, the Realtors were able to defeat this measure and will continue to fight against any future attempts at such a tax.
Please be advised that as of January 1, 2019, the state of New Jersey requires that battery powered single station smoke alarms be replaced with a ten year sealed battery powered smoke alarm.