N.J.A.C. 11:5-4.1 — Business relationship agreements; commissions; accounting to salespersons; actions for collection of compensation

(a) Prior to engaging in any brokerage activity, the broker and salesperson must enter into a written agreement that contains the terms of their business relationship. Such agreement shall contain terms including, but not limited to, the following: 1. The rate of compensation to be paid to the salesperson during their affiliation with the broker; 2. A provision that the broker will pay the salesperson their portion of commissions earned within 10 business days of their receipt, as soon as such funds have cleared the broker's bank account, or in accordance with a payment schedule explicitly set forth in the written agreement; 3. The rate of compensation payable to the salesperson on transactions that close or renewals that occur subsequent to the termination of the salesperson's affiliation with the broker; and 4. A provision that any future changes to the agreement will not be binding unless memorialized and signed by both parties. (b) A copy of the fully executed agreement shall be provided to the salesperson upon the commencement of their affiliation with the broker, and the original thereof shall be maintained by the broker in accordance with N.J.A.C. 11:5-5.5. (c) All compensation paid to brokers shall, unless debited from funds held in escrow in accordance with N.J.A.C. 11:5-5.1(d), be deposited into the general business account of the broker within five business days of their receipt. (d) If any monies due a salesperson are not paid in accordance with (a)2 above, the broker shall provide to the salesperson a written explanation of the failure to pay such monies. (e) Within 30 days of the termination of the affiliation of a salesperson, the broker shall provide a written accounting of all monies due the salesperson as of the date of termination and/or monies that may become due in the future. If the accounting is not consistent with the post-termination compensation clause in the written agreement, the broker shall provide to the salesperson a written explanation of the difference and an accounting. (f) A broker must maintain copies of the following documents and proof of delivery of the document to the salesperson for six years: 1. Agreements as described at (a) above; 2. Explanations of the failure to pay compensation due a salesperson described at (d) above; and 3. Accountings and explanations regarding compensation due a salesperson subsequent to the termination of their affiliation with a broker as described at (e) above. (g) The Commission will not further investigate a complaint alleging non-payment by a broker to a salesperson if the Commission confirms that the broker has complied with the requirements of this section, unless such complaint is accompanied by an arbitration decision, or equivalent, or a judgment of a court of competent jurisdiction secured by the salesperson against the broker. Unless appealed, the failure of a broker to pay monies awarded to a salesperson pursuant to the terms of any such decision or judgment within 30 days of its effective date shall subject the broker to sanctions pursuant to N.J.S.A. 45:15-17. (h) Broker and salesperson licensees may only bring actions in the courts of New Jersey for the payment of compensation due them for brokerage services performed as provided at N.J.S.A. 45:15-3. 1. The phrase "at the time the alleged cause of action arose" as used at N.J.S.A. 45:15-3 means at the time that the brokerage services which form the basis for the alleged claim to compensation were rendered. For example, at the time when a property was listed for sale or rental by a licensee. 2. The phrase "at the time the alleged cause or action arose" as used at N.J.S.A. 45:15-3 does not require that the licensee be actively licensed at the time that the compensation allegedly due was to have been paid. For example, licensure is not required at the time of the renewal of a lease to enable a claimant to sue for compensation based upon a promise, made or in effect when the lease was originally executed, to pay additional consideration to the claimant in the event that the lease was renewed. (i) References to "salesperson" in this section include individuals licensed as broker-salespersons. References to "non-payment of a commission" in this section shall be construed to include the non-payment of other forms of compensation. (j) The terms "employment agreement," "employ," and "employing broker" refer to an employment relationship or an independent contractor relationship between a broker and a broker-salesperson or salesperson.