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Rebate Legislation & Legislative Update

One of the biggest complaints political insiders have about the political process in New Jersey is that issues move too fast for the public and decision makers to weigh in and fully vet an issue. So, when on October 23, 2006 Assemblyman Patrick Diegnan (D-18) introduced legislation, A3567, that would allow real estate brokers, broker-salespersons, and salespersons to provide rebates to sellers or purchasers, NJAR® was obviously concerned. The concept of rebates, while currently allowed in approximately 40 states, has always been prohibited during real estate transactions in New Jersey.

The NJAR® Legislative Committee, which is comprised of real estate brokers, broker-salespersons, and salespersons from both large and small firms from all areas of New Jersey, reviewed the legislation and recommended that NJAR® support the legislation with amendments to be crafted by a task force formed by the NJAR® president. In early 2007, the NJAR® Executive Committee approved a motion to change NJAR®’s position to oppose. The NJAR® Board of Directors approved the opposition to A3567 and to create the task force to work on amendments to the legislation, should the measure move forward in the legislative process.

On February 6, 2007, the issue of rebates came before the New Jersey Real Estate Commission (NJREC). The NJREC is comprised of brokers, agents and public members and is the regulatory body for all real estate licensees in New Jersey. At the hearing, a company in support of the legislation and Assemblyman Diegnan were invited to speak to the Commission on the issue of rebates. This hearing was the first of more than 20 times the Commission heard arguments regarding rebates from various interested parties, including NJAR®, Assemblyman Diegnan, large and small brokers, the United States Department of Justice, and other interested parties. At the time of this writing, the NJREC does not support or oppose rebates in New Jersey.

It was during those hearings and through research that NJAR® learned of the various groups who support the concept of rebates in New Jersey. As stated, the Unites States Department of Justice became very interested in this issue on a national level, which is part of a larger goal of creating competition in real estate. The Department of Justice has even created a website for consumers to learn more about competition in real estate. The New Jersey Black Ministers’ Council and Governor Jon Corzine’s then Commissioner of the Department of Banking and Insurance, Stephen Goldman, both submitted letters of support for rebates.

During this time, there was a re-organization of the legislature and the bills had to be reintroduced. The legislation was now A373 sponsored by Assemblyman Deignan and S139 sponsored by Senator Nicholas Scutari (D-22).

While the NJREC held hearings throughout 2007 and 2008, NJAR® was contacted by Assemblyman Diegnan, who indicated that this legislation was a priority for him and that the legislation would move in the winter of 2008/09. Recognizing the broad support other groups have for this consumer-friendly measure, NJAR®, at the direction of the Board of Directors began to work on amendments to the bill.

Working with Assemblyman Deignan, NJAR® offered amendments to clarify the bill to protect REALTORS® and allow the legislation to work in New Jersey.

Those amendments include:
1. Limiting rebates to buyers.
2. Stating that only brokers may offer rebates to buyers as opposed to all real estate licensees offering rebates to buyers at the onset of the realtionship
3. Rebates must be clearly defined in a buyer agency agreement or in a written or electronic document.
4. Rebates can no longer be in the form of cash or goods (like a refrigerator), but only in the form of a credit reducing the amount of commission payable to the broker or a check.
5. Requiring advertisements for rebates to include a statement informing the buyer to contact a tax professional about their rebate.
6. Limiting the rebates to only buyers of residential property.

On January 15, 2009 the legislation was heard before the Assembly Regulated Professions and Independent Authorities Committee where committee members discussed the legislation and adopted the amendments above. The bill was then brought before the full General Assembly on March 16, 2009 where it passed with 45 in favor, 26 opposed and 7 abstentions.
More recently, the bill had a hearing before the Senate Commerce Committee on December 14, 2009 and was passed out of committee with the same amendments as the Assembly version.

Many of you may be wondering whats’s next for the legislation to become law. First, the Senate President must decide to schedule the bill for a full vote in the Senate. As long as no amendments are made, the bill would be sent to Governor Corzine for his approval. If Governor Corzine does not sign the bill by January 19, 2010, the whole process starts over with the possibility of the bills being reintroduced.

As of January 1, 2010, NJAR® has received all of the above listed amendments. While NJAR® does not support this legislation; the amendments ensure that if the Legislature does move forward and Governor Corzine enacts the measure into law, the amendments provide a working bill for all involved parties. NJAR® will continue to provide updates to our membership on this and other important legislative matters through our website, our magazine, our Week In Review and our Legislative Update that is sent to your offices Designated REALTOR® twice a year.

As always, NJAR® will continue to work with the Legislature to improve this and other legislation that affects the real estate industry. As always, I encourage you to visit www.njar.com/government_affairs/index.php to read about this and other pieces of legislation. If you have any questions, please feel free to contact me at 732-494-4720 or at dtomson@njar.com.