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Chapter 93A Procedures and Risk Reduction

by ROBERT S. KUTNER, ESQ. Partner, Casner & Edwards | Feb 28, 2018
In my last column I discussed the duties imposed on real estate agents by the Massachusetts Consumer Protection Act, Chapter 93A. Chapter 93A requires brokers, salespersons, and other business persons to disclose all facts known by a real estate licensee about defects in a property, even if a buyer or tenant does not ask. This article will focus on procedures for Chapter 93A claims, procedural defenses, and methods to reduce risk.

Demand Letter Procedure and Multiple Damages

If a consumer asserts a claim for unfair or deceptive practices in violation of Chapter 93A, the consumer must first send a demand letter at least 30 days prior to filing suit, describing the basis for the claim and the damage suffered. The business receiving the letter then has an opportunity to respond and decide whether to include an offer of settlement within that 30 day period.       

If no response is made, or if an offer is made, but rejected, a lawsuit may be filed.       

If the broker is found liable for violating 93A, the trial judge has authority to award double or treble damages for a willful or knowing 93A violation. However, the judge will limit the consumer’s recovery to single damages, if the judge finds that the offer of settlement was “reasonable” in relation to the injury suffered. Additionally, the consumer will not be awarded attorneys’ fees incurred after a reasonable offer of settlement is rejected, even if the 93A violation is found to have been intentional.     

A licensee who receives a demand letter may be tempted to ignore it, hoping that the claimant will go away, or because the licensee does not want to dignify the claim with a response. 


If a recipient fails to respond, and the judge finds that the respondent’s failure to respond was in bad faith and with reason to know that the person’s conduct violated Chapter 93A, the judge can award double or treble the actual damages for that reason. 

While double or treble damage awards in Chapter 93A cases are not common, where they are awarded, they may be recovered against each defendant.             

In a l983 decision, International Fidelity Insurance Company v. Wilson, the Massachusetts Supreme Judicial Court ruled that if punitive damages are awarded against more than one defendant, each defendant must pay the full punitive award against them, ignoring whether another defendant has already paid punitive damages. The result can multiply the consumer’s potential recovery and increases the consumer’s incentive to sue.  While double or treble damages can be recovered against each defendant separately, there can only be single recovery of actual damages against all defendants collectively.

Risk Reduction Suggestions

To reduce the risk of a claim to have violated Chapter 93A, it is recommended that Realtors® establish specific procedures when listing and showing. The following best practices will reduce the potential to be on the wrong end of a claim, but are not mandatory.

1. Gather Information About a Property: While Chapter 93A does not require that a real estate agent inspect a property to discover potential problems, it is recommended that the listing agent tour the premises and ask the seller to describe any needed repairs or problems of which the seller is aware, so disclosure can be made.

2.  Use a Seller Disclosure Form: As listing agent, ask the seller to complete a detailed disclosure form about the property and its condition. Although there is no law that requires a non-business seller to complete the form, experience has shown that written disclosures reduce the risk of a claim against real estate licensees.       

The form memorializes what the agent was told by the seller. Use a form that asks the seller about such matters as the condition of the structure, water penetration, zoning violations, etc. A number of such forms are available, including one from the Massachusetts Association of Realtors® called the “Sellers Statement of Property Condition.”     

Include language on the form stating that: “Owner represents that to the best of the owner’s knowledge the heating system, plumbing, and electrical systems and appliances, except ________, are in good working order; that the building is structurally sound; that the roof does not leak; and, that there is no water seepage in the garage/basement. Owner agrees to indemnify, defend, and hold the brokers harmless for any claim regarding the information set forth.” Have the seller sign the form.     

Language of this type is included in the Sellers Statement of Property Condition. If the Owner is reluctant to sign, explain that buyers are often willing to accept problems when disclosures are made. It is the post-purchase surprises that lead to lawsuits. A typical lawsuit from a buyer will name the seller as a defendant as well as the real estate agent. 

3. Add Disclaimer to MLS: Include a conspicuous disclaimer that: “The source of all representations are from the seller or a public source; broker has not verified same. It is recommended that buyer independently verify all information.”

4. Avoid Adjectives That May Be Misconstrued When Describing Property: When listing or showing a property, real estate brokers and salespersons should avoid adjectives that could be interpreted as a personal guarantee or statement of quality. For example, you risk being brought into a lawsuit if you state that the property is “pristine” or the neighborhood is “quiet,” only to have the buyer discover a problem after the purchase.       

Do not make any statement about which you do not know the facts, e.g., lack of termites, type of insulation in walls. If you are passing on information from the seller or the town in which the property is located, it adds protection to advise the buyer that you have not personally verified the information.       

When the buyer asks a question about information that may be contained in municipal records, refer the buyer to that public source to obtain the answer, rather than checking yourself. For example, if a question relates to zoning or a building or septic permit, direct the buyer to the appropriate town or city department for an answer. This will reduce the likelihood that the buyer will claim to have relied on the real estate licensee.

5.  Encourage Home Inspections: Include a “right to inspect” clause in your forms for Offers to Purchase and Purchase and Sale Agreements. If a professional inspector does not discover a problem, there is an argument that a real estate agent did not know. Current law requires that every home inspector carry $250,000 of liability insurance.

6. Encourage The Buyer To Consult With a Lawyer or Other Professional: Advise buyers to hire an attorney with regard to zoning or permitted use of a property. This will reduce the risk that they will claim to have relied on the licensee. If there is a question about an environmental problem, such as mold or soil conditions, refer the buyer to the appropriate professional.

7. Review Escrow Clauses: When a broker acts as escrow agent, include a provision that authorizes the broker to continue to hold funds in the event of a dispute between the buyer and seller concerning who should be paid the funds if the transaction does not close. A statute that MAR was successful in having enacted, Chapter 184, Section 17A, prevents escrow agents from being named in lawsuits where the underlying agreement contains this language.

8. Keep Communicating: If any problem arises after the sale, keep lines of communication open. Try to resolve the situation amicably. Do not ignore claim letters. If you do, you risk increasing potential liability from compensatory damages to treble the consumer’s actual damages plus the attorney’s fees.

9. Obtain Insurance: Errors and omissions insurance policies (E&O)are a wise investment. These policies protect against professional negligence. Add riders to cover claims for discrimination, license law complaints, and pollution-related claims. Premiums and deductibles vary, depending on the amount and scope of the policy. 

E&O policies provide coverage for claims of negligence, fraud, and violation of Chapter 93A, but will generally not pay a claim if intentional misconduct is proven. E&O policies also exclude coverage for bodily injury claims, such as physical harm from ingesting lead paint or from mold. Obtain general liability insurance for bodily injury claims and make sure you have adequate automobile insurance.     

This is my last column. It has been my honor to represent MAR. Now, it is time to ride off into the sunset.