According to the New Jersey Real Estate Licensing Law and the rules of the Real Estate Commission, a broker is permitted to provide a rebate from their commission to a buyer of residential property. For the rebate to be legally provided, several conditions must be met. One of the most critical is that the payment of the rebate must be formally documented at the time of closing. This can be done by including the rebate on the closing disclosure statement or through a separate written document that acknowledges the payment. This requirement ensures transparency and provides a clear record of the transaction for all parties involved.

A. if the licensee is the broker.

While only the broker can ultimately pay the commission rebate, a salesperson (who is also a licensee) can arrange it with the broker's consent. Therefore, this option is too restrictive.

B. if notated on the contract of sale.

The law requires a written disclosure of the rebate's terms at the beginning of the client relationship, not specifically on the contract of sale itself.

C. provided it does not exceed 50% of the total commission.

New Jersey law does not specify any percentage or dollar amount limit on the commission rebate that can be offered to a buyer.

1. New Jersey Administrative Code (N.J.A.C.) § 11:5-7.4(e): "The payment of the rebate shall be made on the closing statement or in a separate document at closing which acknowledges payment of the rebate." This rule explicitly mandates the written confirmation at closing.

2. New Jersey Statutes Annotated (N.J.S.A.) § 45:15-17(l): This statute was amended to permit a real estate broker to provide a purchaser of real estate a portion of the broker's commission in the form of a rebate. It forms the legal basis for the practice.

3. New Jersey Real Estate Commission, Real Estate License Law and Rules (N.J.A.C. 11:5): This official publication outlines all rules governing licensees. Section 11:5-7.4, "Advertising rules; general," contains the specific provisions on rebates, confirming that disclosure at the outset and documentation at closing are required. The document is available through the NJ Department of Banking and Insurance.