N.J.A.C. 11:5-5.2 — Funds of others; safeguards

(a) A licensee shall not accept funds or deposits from a prospective purchaser without ascertaining that there have been established by escrow, or otherwise, adequate precautions to safeguard such funds or deposits where the licensee knows, or conditions are such as to give them reason to know, any facts that would tend to create a reasonable doubt as to the ability of the seller to: 1. Perform their contractual obligations; or 2. Return funds in the event of the failure of a contingency contained in a contract. (b) The provisions at (a) above shall not apply to a licensee who, before accepting such funds or deposits, has informed the prospective purchaser of any known risks and has secured from them a separate signed writing in which the purchaser has acknowledged: 1. The purchaser's awareness of any risk or contingency; 2. The disposition of the purchaser's funds or deposits; and 3. The absence of any representations by the licensee as to the solvency of the seller and their ability to return such funds. (c) Funds or deposits placed in escrow pursuant to this subchapter may be held by any person or entity legally authorized to hold funds in that capacity, such as, but not limited to, the broker themself, lawyers, or banks.