A developer in Ocean County, New Jersey begins marketing units in a new planned real estate development before registering with the New Jersey Real Estate Commission as required by PREDFDA. A buyer signs a purchase contract and pays a $10,000 deposit. Upon learning of the registration violation, the buyer wants to cancel the contract and recover the deposit. Which of the following best describes the buyer's legal position under New Jersey law?
Correct Answer
A) The buyer may cancel the contract and recover the deposit because the developer violated PREDFDA by marketing before registration, rendering the contract voidable at the buyer's option
Under PREDFDA (N.J.S.A. 45:22A-21 et seq.), a developer must register with the NJREC before marketing or selling units in a planned real estate development. Marketing or selling without registration is a violation of PREDFDA. A purchase contract entered into in violation of PREDFDA's registration requirement is voidable at the buyer's option. The buyer is entitled to cancel the contract and recover all deposits paid, because the developer's failure to register deprives the buyer of the statutory protections — including the right to receive a Public Offering Statement — that PREDFDA is designed to provide.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Contingencies are conditions written into a real estate contract that must be met before the transaction can close. If a contingency is not satisfied, the buyer can typically cancel the contract without penalty.
Contract termination occurs when a contract is ended or discharged, releasing both parties from their obligations. A contract can be terminated through performance, mutual agreement, operation of law, or breach.
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
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