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In re Pipes

329 N.J. Super. 391, 748 A.2d 118 (App. Div. 2000)

BROKERS; LICENSES—The Real Estate Commission’s regulations requiring full time employment as a salesperson as a prerequisite to licensing as a broker are valid.

N.J.S. 35:15-9 requires that “every applicant for a license as broker or broker-salesperson shall at first have been the holder of a New Jersey Real Estate Salesperson’s license and have been actively engaged on a full-time basis in the real estate brokerage business in this State for 3 years immediately preceding the date of the application… .” A Real Estate Commission regulation to implement this provision of the statute states that full-time employment shall be demonstrated by a showing that: “(i) the applicant has worked as a salesperson under the authority of the broker(s) with whom they were licensed for at least 40 hours per week and during the hours of approximately 10:00 a.m. to 8:00 p.m.; (ii) Such work ... was performed during any five days in each week of the three year period; and (iii) If the applicant was employed in any other occupation during the three year period, such other employment was on a part time basis and did not exceed 25 hours per calendar week.” Here, the applicant clearly did not meet those requirements even though he was a licensed salesperson. Instead, he testified that he used his salesperson’s license in connection with his full time employment elsewhere to assist moderate or low income individuals and families in acquiring affordable housing. He testified that “[h]e was involved in the acquisition and rehabilitation of forty emergency shelters, fifteen rental units and over seventy home ownership units by assisting people with multiple needs to begin the process of obtaining self-sufficiency.” The lower court determined, however, that his role as the executive director of his full time employer was not as a salesperson but as a principal, selling to buyers. An independent agent licensed with another brokerage represented the company in various transactions and received a commission. There was no dispute that the applicant did not meet the experience requirement set forth in the regulation. Nonetheless, the applicant contended that the decision of the Commission to follow its regulation and not to accept his work experience in lieu of the requirements of the regulation was arbitrary, capricious, and unreasonable. The Court was unimpressed. It pointed out that the legislature may set forth its public policy concerns in broad language, leaving detailed implementation to an administrative agency. A Court is obligated to give great respect to an agency’s expertise. Here, the business of the real estate broker is infected with a public interest. Industries infected with a public interest are subject to comprehensive regulation to protect the public. Therefore, a heavy burden is imposed on those who challenge the validity of a regulation in such an area. According to the Court, the obvious purpose of the Commission’s regulation was to ensure that real estate brokers possess experience not only in the sale and leasing of real estate but also in the day-to-day operations of a brokerage business such as the management of fiduciary accounts, drafting of contracts, and interaction with financial institutions and other professionals including supervision of real estate salespersons. “Viewed in this light the regulation is a reasonable, valid and authorized implementation of the statutory purpose of the Real Estate License Act.”


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