A New Jersey developer is selling units in a planned real estate development. The developer's sales agent, acting on instructions from the developer, begins taking non-refundable reservation deposits from prospective buyers before the NJREC has approved the PREDFDA registration. Which of the following best describes the legal consequence of this action?
Correct Answer
B) The developer has violated PREDFDA by conducting sales activity before NJREC approval, and the deposits must be refunded
PREDFDA (N.J.S.A. 45:22A-21 et seq.) expressly prohibits any sales or marketing activity — including taking deposits — before the NJREC approves the developer's registration. Collecting non-refundable deposits before registration approval constitutes a violation of PREDFDA. The developer is liable, and the deposits collected in violation of the statute must be refunded to the prospective buyers. The NJREC may also take disciplinary action against the developer.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Commingling is the illegal act of mixing client funds with a broker's personal or business operating funds, while conversion is the unauthorized use of client funds for the broker's own benefit. Both are serious violations that can result in license revocation.
Commingling is the illegal act of mixing client trust funds with a broker's personal or business operating funds; conversion is the misappropriation of those funds.
Continuing education (CE) refers to the ongoing coursework that licensed real estate professionals must complete during each renewal cycle to maintain an active license. CE ensures agents stay current with changes in laws, regulations, and industry practices.
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