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Q: Are there any limitations on the types of transactions a real estate licensee may engage in? A: Once an individual is properly licensed as either a broker or a salesperson in Massachusetts, they are legally permitted to engage in any type of real estate transaction throughout the Commonwealth. Licensees, however, may be subject to discipline under 254 CMR 3.14(e) if they assume any duties or responsibilities that they are not adequately prepared to undertake or for which they have not achieved competency. Additionally, Article 11 of the REALTOR® Code of Ethics contains a similar requirement: REALTORS® shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence unless they engage the assistance of one who is competent on such types of property or service, or unless the facts…

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…

Q: Who has the legal obligation to remove snow and ice from a property? A: The State Sanitary Code requires owners to keep all means of egress free from obstruction, including snow and ice. Property owners owe a duty of reasonable care to visitors of the property and may be liable for injuries caused to a visitor due to the failure to remove snow and ice. This duty extends to landlords, who are responsible for maintaining all entrances and exits to the property in a safe, operable condition at all times. No lease provision may negate this responsibility. Only in situations where a tenant has an independent means of egress not shared with other tenants and the responsibility for snow removal is included in a written lease agreement may the landlord shift this obligation to the tenant. Placing this responsibility…

Q: Does a buyer whose offer was not accepted have the right to a written objection? A: No. Most offers are valid for a finite period of time, as specified in the offer itself. Once that time period has lapsed without an acceptance, the offer is no longer valid, acting as a de facto rejection by the seller. A buyer has the ability to request a formal written rejection, but the seller is under no legal obligation to provide this, and under the principles of contract law, a written rejection is unnecessary. In situations where there may be a concern that an offer was not presented to the seller, a buyer’s agent may submit a written request to the REALTOR® representing the seller seeking confirmation that the offer was presented to the seller. Under Article 1, Standard of Practice 1-7,…

Q: If a transaction falls apart and there is a dispute over the release of escrow funds, can the seller place the property back on the market and go under contract with a new buyer? A: Maybe. It is a best practice to fully resolve any outstanding issues with the failed transaction prior to placing the property back on market and proceeding with a subsequent purchaser. Unfortunately, not all situations are able to be resolved in a timely manner. If this is the case, the seller should always be advised to consult with their legal counsel to determine whether they are at risk of any legal liability if they move forward with a new buyer. The question becomes whether the dispute is solely over the disbursement of the escrow funds, or whether there is a dispute relating to the underlying…

Q: Can a brokerage operate as a designated agency on a per-transaction basis? A: No, because of the way agency relationships in real estate transactions work, the type of agency a brokerage practices must be consistent for all transactions. A brokerage may elect to transition from traditional agency to designated agency, or vice versa, as an office policy, but the type of agency practiced at any given time must be consistent amongst all transactions. A brokerage may not switch the agency it practices from one transaction to the next. In a “traditional agency” brokerage, each licensee in the office has the same relationship with each client. This means that when one agent within an office represents a seller and another agent within the same office represents a buyer, dual agency is created. In order to proceed in this scenario, both…

Q: The financing contingency date in the contract has passed and the buyer has not informed us of whether they received a commitment – is the deal dead? A: Not necessarily. The passing of any contingency date without an extension or notification of withdrawal by the buyer simply means that the contingency is no longer available to the buyer, but the deal may proceed. If the buyer has not obtained an extension and then is unable to obtain financing to purchase the property, the buyer may terminate the transaction, however, any deposit funds may be subject to forfeiture as liquidated damages to the seller. As a best practice, buyers and buyer agents should always be certain to maintain open lines of communication with the seller and seller’s agent and request an extension if there is any question about their…

Q: Should a buyer’s agent be checking permits for their clients? A: No. A buyer’s agent’s job is to ensure that their client’s interests are best served throughout the transaction. While this may include advising the client regarding potential issues with outstanding permits or unpermitted work on the property, the agent should not be the one researching this issue. Our recommendation is that REALTORS® always be the source of the source. A buyer’s agent should be advising their clients to inquire about any work that was done on the property that may have required permits and assisting the client with obtaining additional information regarding those permits. This may even include accompanying the client to the building department to obtain this information, which allows the buyer to receive the desired information directly. If an agent were to obtain the information…

Q: I have a tenant who is offering to pay 6 months of rent upfront – is that allowed? A: No. For tenancies greater than 100 days in duration, the provisions of the Security Deposit statute apply. The statute prohibits a lessor from requiring a tenant to pay any amount in excess of: First month’s rent Last month’s rent calculated at the same rate as the first month’s rent Security deposit equal to the first month’s rent The purchase and installation cost for a new lock and key. On occasion, a prospective tenant may offer to pay rent in advance. Even if the subject of prepaid rent originates from the prospective tenant, rather than the landlord making a demand, this is likely still a violation of the statute. Generally, this type of offer is made by prospective tenants who…

Q: What do REALTORS® need to know to avoid antitrust liability? A: The best way to avoid antitrust liability is to ensure that all business decisions are made independently within the brokerage. The potential for antitrust liability arises any time two or more competitors discuss their business practices. REALTORS® must always be alert to discussions that focus on commission rates, pricing structures, listing policies, or marketing practices of other brokerages. If a discussion becomes troubling, immediately suggest a change of topic, or remove oneself from the conversation. Within the real estate arena, we most often hear of antitrust issues arising from price fixing and group boycotts. Price fixing may be as obvious as two or more competitors blatantly agreeing to charge consumers the same commission on real estate transactions or agreeing to the same cooperating commission splits. Price fixing…