Notes From the Legal Hotline: February 2023

February 3, 2023

- By The MAR Legal Team

Q: Is a brokerage required to have an escrow account?

A: A brokerage is only required to maintain an escrow account if they hold transaction funds. 254 CMR 3.10 requires that all money paid over to a real estate broker during the pendency of a transaction be immediately deposited in a bank escrow account, unless otherwise agreed to in writing by the parties. An escrow account is one in which the broker maintains the funds on behalf of the parties to the transaction, but has no claim to the funds. A broker holding such funds is obligated to maintain a proper accounting of all funds held and retain those records for a minimum of three (3) years.

Q: Can a real estate broker operate as the principal broker for more than one brokerage?

A: Yes, an individual holding a Massachusetts Broker’s License is not restricted to working for only one broker. The single affiliation requirement contained within Mass. General Laws Chapter 112, Section 87VV only applies to individuals holding a salesperson’s license. A brokerage may, however, have an internal policy restricting the ability of affiliated brokers to work at other brokerages. Any such policies should be contained within the office policies and/or the independent contractor agreement.

Q. Can a landlord screen potential tenants based on their credit report?

A: Yes, credit can be used as a screening tool with a few very important caveats. As with any other criteria used to screen prospective tenants, the requirement must be uniformly applied to all applicants. Additionally, if a landlord elects to deny an application based on credit, the applicant must be provided a Notice of Adverse Action, which can be done orally, electronically, or via hard copy. If the Notice is provided orally, as a best practice, the applicant should also be sent the Notice via email or USPS. The Notice must include the following information:

  • The credit score, if it was used to make the determination;
  • The name and contact information of the credit reporting agency;
  • The reason(s) for the denial;
  • Notice of the individual’s right to a free copy of their credit report and how to obtain a copy; and
  • Notice of the individual’s right to dispute the accuracy of the information in the report.

Landlords with specific questions regarding appropriate screening policies and processes should be advised to seek independent legal counsel.


Written by: Justin Davidson, General Counsel; Catherine Taylor, Associate Counsel; Jonathan Schreiber, Legislative & Regulatory Counsel; and Kate Berard, Associate Counsel.

Services provided through the Massachusetts Association of REALTORS® is intended for informational purposes and does not constitute legal advice, nor does it establish an attorney-client relationship. The Massachusetts Association of REALTORS®, by providing this service, assumes no actual or implied responsibility for any improper use of responses to questions through this service.  The Massachusetts Association of REALTORS® will not be legally responsible for any potential misrepresentations or errors made by providing this service. For more information regarding these topics authorized callers should contact the MAR legal hotline at 800-370-5342 or e-mail at