Notes From the Legal Hotline: March 2024

February 29, 2024

- By The MAR Legal Team

Q: What disclosures are required in Massachusetts? A: Massachusetts real estate transactions are generally ruled by the principle of caveat emptor, or buyer beware. Massachusetts home sellers are only required to inform prospective purchases of whether the property is serviced by a septic system (Title 5) and, for properties built prior to 1978, sellers must provide a Property Transfer Lead Paint Notification & Certification. Further, any information provided by a seller, such as on the Seller Statement of Property Condition or in response to direct questions from a buyer, must be accurate. Real Estate licensees, however, have a heightened disclosure obligation under Massachusetts General Laws Ch. 93A and must inform prospective buyers of any known material facts related to the property that may influence a buyer’s decision to purchase the property. While this does not obligate the licensee to discover…

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Notes from the Legal Hotline: February 2024

February 1, 2024

- By The MAR Legal Team

 Q: Can commissions be paid to an LLC? A: Whether commissions can be paid to an LLC depends on how the LLC is established and by whom. First and foremost, Massachusetts real estate licensing laws prohibit the sharing of fees, commissions, or other valuable consideration with an unlicensed individual. This restriction extends to corporate entities, such as LLCs, which must be validly licensed. For a corporation to become licensed, Massachusetts General Laws Chapter 112, Section 87UU mandates that a partner or officer of the corporation hold an individual broker’s license. This means that the corporate entity must have its own corporate broker’s license in addition to the officer’s individual broker’s license. If the principal no longer holds an active broker’s license, the corporation also loses its valid license. As a result of this requirement, salespersons may never receive real estate…

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Notes From the Legal Hotline: January 2024

December 21, 2023

- By The MAR Legal Team

Q: An unrepresented buyer attended my open house and scheduled a follow up showing with me. I answered all their questions about the property and now they want to submit an offer using a buyer’s agent. Can I tell the buyer they can’t use their own agent at this point? A: No. A buyer may choose who they want to represent their interests in a real estate transaction, and a listing agent has no authority to deprive a buyer of that right. In situations such as this, however, there may be a question of procuring cause. While the listing agent may not be obligated to compensate that buyer broker, they are still obligated to cooperate, unless it is not in the best interests of the client (See Code of Ethics, Article 3). REALTORS® must take care to not allow issues…

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2023 Year in Advocacy Review

December 13, 2023

- By The MAR Legal Team

2023 was a banner year by any metric for MAR advocacy success. Here’s the rundown:  Fighting Rent Control and Transfer Taxes  2023 saw the rise in two significant threats to housing in Massachusetts – rent control and transfer taxes. The former was proposed as part of a sweeping ballot question to be included on the 2024 election ballot. Fortunately, supporters fell significantly short of the required signatures to reach the ballot. However, we anticipate this issue will return, likely with greater organization and funding for the 2026 election cycle. In the meantime, we continue to oppose several bills before the Legislature. Read more about the ballot question campaign and watch our testimony opposing rent control bills here.  Transfer taxes have now risen to the fore as progressive housing advocates’ top target. Proposals would place a significant burden on the housing…

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Notes From the Legal Hotline: December 2023

December 4, 2023

- By The MAR Legal Team

Q: Who may receive a referral fee? A: Referral fees may only be paid to individuals who hold a real estate license; unlicensed individuals may never be given anything of value in exchange for a referral. Within the broad category of “licensee,” however, there are several nuances that are important to take note of when paying a referral fee. An individual holding an active salesperson’s license may only receive real estate related compensation through the broker with whom they are affiliated. Any referral fee owed to an active salesperson would be paid to the salesperson’s broker and then distributed to the salesperson according to the terms of their agreement. An individual with an inactive salesperson’s license may receive a referral fee directly, as there is no affiliation requirement for inactive licensees (see M.G.L. Ch. 112, Sec.87XX1/2). An individual holding a…

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Forms Updates – November 2023

November 28, 2023

- By The MAR Legal Team

Below are some important updates to the MassForms™ Library. Be sure to confirm that you are using the latest versions of these forms. You can access these forms here. UPDATED: Listing Agreements (Forms 692, 693, 707, 708, 709, 715, 721) All versions of the Listing Agreement in the Library have been updated to allow for the fee due to the broker to be entered as either a dollar amount or a percentage of the sale price. Additionally, language in the dispute resolution paragraph has been updated to allow for a panel of at least three (3) arbitrators for consistency with the NAR’s Code of Ethics and Arbitration Manual and MAR’s policies for conducting arbitration proceedings. UPDATED: Buyer Representation Agreements (Forms 701, 702, 703, 720, 714) Language in the dispute resolution paragraph has been updated to allow for a panel of…

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Rent Control Ballot Question Ended, Opposition Continues

November 13, 2023

- By The MAR Legal Team

Proponents of the 2024 ballot question that proposed to lift the statewide prohibition on rent control and give municipalities control over everything from evictions to real estate broker’s fees to removal of properties from the rental market have suspended their efforts. Supporters fell significantly short of the roughly 75,000 voter signatures required to move the ballot question onto the next step in the approval process. Read more about the process here.   While that means MAR’s direct opposition to the ballot question has largely stopped before it could begin, our conversations with a broad swath of like-minded groups will continue as we work to educate stakeholders and the general public about unintended consequences this policy will have for Massachusetts. Keep an eye on the 2026 election for another potential ballot question on this issue.  While the ballot process is ending, the…

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Notes From the Legal Hotline: November 2023

November 7, 2023

- By The MAR Legal Team

Q: May a buyer’s agent advertise a listed property of another brokerage? A: Permission should always be obtained prior to advertising the listing of another brokerage, even if you are a cooperating buyer’s agent. Advertising a listing that is not yours, regardless of your participation in the transaction, could result in a Code of Ethics, MLS, copyright, and/or licensing complaint being filed against you. Once a transaction closes, however, Article 12 of the Code of Ethics, does permit a cooperating broker who participated in the transaction to claim to have “sold” the property, including placing a sold sign on the property with the consent of the buyer. Cooperating brokers, however, must still refrain from using listing photographs without the consent of the listing broker. Q: Can a landlord ask a prospective tenant if they need a de-leaded apartment? A: No,…

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What does the Burnett v. NAR et al. Verdict mean for Massachusetts REALTORS®?

November 2, 2023

- By The MAR Legal Team

On October 31 the jury in the Burnett v. NAR et al, class action lawsuit reached its verdict, finding that NAR and the co-defendants participated in a conspiracy to enforce the cooperative compensation rule ultimately leading sellers to pay more than they would have otherwise. The jury awarded $1.785 billion in damages to the Plaintiff class, which by law will be automatically trebled to roughly $5.4 billion. NAR President Kasper recently released the following statement on the verdict. It is important to understand that NAR plans to appeal and this case still has a long way to go before it is resolved. What does the verdict mean for REALTORS® in Massachusetts? The verdict doesn’t require that REALTORS® do anything differently. However, it does provide an opportunity to stress the value and importance of using an exclusive buyer agency agreement. These…

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Notes From the Legal Hotline: October 2023

October 5, 2023

- By The MAR Legal Team

Q: Must a REALTOR® affirmatively disclose whether a listed property is haunted? A: No, psychological impacts on a property, such as hauntings, are not required to be affirmatively disclosed to a prospective buyer and are, in fact, specifically exempted from affirmative disclosure under Massachusetts General Law Chapter 93, Section 114, commonly referred to as the Stigmatized Property Law. In 1998, the Stigmatized Property Law was enacted, which specifically states that brokers do not have a duty to investigate or affirmatively disclose murders, suicides, paranormal phenomena, or other possible stigmas. However, as with any direct inquiry from a prospective buyer, a REALTOR® is obligated to provide a truthful answer. If the answer is unknown, or additional information is requested, REALTORS® should direct the buyer to an appropriate resource. Q: Can a tenant be responsible for paying the water bill? A: Yes,…

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