PSI New Jersey Real Estate State Practice Exam

What action is considered a violation of New Jersey License Law when a salesperson is informed of a buyer's intent to subdivide the property?

1. Failing to disclose commission to the buyer

2. Failing to include financing options

3. Disclosing a potential conflict of interest

4. Not informing the seller of the buyer's plans

The correct answer is: Not informing the seller of the buyer's plans

Not informing the seller of the buyer's plans to subdivide the property represents a violation of New Jersey License Law because it goes against the duty of loyalty and full disclosure that a real estate salesperson owes to their client, in this case, the seller. When a buyer expresses their intention to alter a property significantly, such as subdividing it, this information could materially affect the seller's decision-making and strategy in the transaction. The salesperson has an ethical and legal obligation to relay pertinent information that could influence the seller’s position or interests. Failure to communicate such significant intentions undermines the trust and transparency that are foundational to the real estate profession, potentially harming the seller’s interests. The other choices present situations that either do not directly impact the seller's interests or are commonly accepted practices that do not violate license laws in the same way. For instance, not disclosing the commission to the buyer or failing to include financing options does not fulfill the necessary obligation of informing the seller about information that directly affects their property. Disclosing a potential conflict of interest, while important, does not pertain as directly to the matter of the buyer's plans regarding the property's subdivision as the lack of informing the seller does.