Massachusetts Real Estate Licensing Law

Bait and Switch

Form of fraud where an agent advertises a certain property that may or may not be available, with the intention of switching it out for something more expensive or lower quality when the client comes into the office to view; prohibited under licensing law

Rental fee disclosure

Given at first personal meeting with a tenant; written notice that informs the prospective tenant if they will pay a fee, how much, manner of payment, time of payment and whether or not a fee is due if tenancy is created

Employing broker

A broker who hires real estate agents to work under their license/brokerage

Dual agent

A broker or subagent who works for both the buyer and the seller in the same transaction; must be disclosed and both parties must consent to it in writing per licensing law

Associate broker

A broker who chooses to work for another broker

Reciprocity

A state recognizing the license of another

Licensing Rules Etc

All money paid to the agent must come from their employee broker. Brokers must keep records of rental fees paid to the broker for 3 years. RE commissions are negotiable (unlicensed agents = no commission, fine for practicing without a license = $500). Agents and brokers = need written permission to list props on MLS. All offers must be presented to the client. Brokers must keep records for 3 years after (no Bait and Switch tactics).

Broker

Allowed to work for him/herself and can handle client money (eg. escrow funds).

Facilitator

Also known as a non-agent, transaction broker, transaction coordinator or contract brokers; a licensed agent that helps buyer and seller reach an agreement, but does not represent either party

Escrow account

Also known as trust account; special bank accounts to hold client money; broker holding money is called the escrow agent.

Net listing

An illegal commission arrangement with an unspecified commission, most commonly arranged so that the agent receives all money over a certain fixed price in a sale.

License is required when...

Anytime someone is doing an RE transaction for someone else in exchange for a fee. (assists, advertises, or engages in the business of selling, renting, leasing, negotiation, exchanging, purchasing, or deal in RE or assisting with the procuring of prospects for the sale, exchange, purchase, leasing or renting of RE)

The Board

Board of Registration of Real Estate Brokers and Salespersons; enforces MA licensing law; office located at 1000 Washington St. Boston; made up of 5 members, 3 Brokers with 7+ years of experience and 2 unlicensed members of the public

Broker vs Salesperson

Brokers must be bonded, Salespersons do not need to be bonded.

Limited reciprocity

CO, DE, KY, ME, NH, NC, SC, SD, WA, WV

Full reciprocity

CT, GA, IA, NE, NM, PA, RI, NY

Revocation

Cancellation or taking back

License Suspension and Revocation

Commingling. Lying when you get/renew your license. Act as an undisclosed dual agent. Do RE while intoxicated. Steal client money. Paying for referral fees/commissions to unlicensed persons. Undisclosed kickbacks for money your client spent. Induce your client to break a RE contract for your own gains. Fail to provide copies of RE contracts (email is not adequate w/o read receipt). Fail to disclose a conflict of interest in writing. Net listing (listing where the commission is unspecified; commissions must be a flat fee or pre-stated % of the sales price). Violating FHA (automatic), bc enforced by MCAD (MA Commission Against Discrimination).

Broker bonds

Effectively insurance policies for escrow accounts. Every licensed broker, including corps and inactive licensees must provide the Board with a surety bond for $5000. Bond is for the benefit of any person harmed if the broker loses escrow funds; it is not insurance for the broker.

Broker of record

Entities involved in RE (eg. LLC) must have a broker's license and must designate on their officers the Broker of Record. If they pass away, the entity may operate independently for up to a year. If a sole proprietor passes away, the board may issue a temp license good for one year to anyone designated by the estate of the deceased (do not need RE experience here).

Biennially

Every 2 years; real estate licenses are renewed on this time frame

Licensing Renewals

Every two years on your birthday (biennially), Agents must complete 12 hours of continuing education classes before renewing their license.

Licensing Law Exceptions

Lawyers (lawyers are entitled to their broker's license. licensed lawyers can pay a fee to get a license). People buying, selling, or renting prop for themselves. Regular hourly or salaried employees of a company that engage in daily activities related to prop management (prop managers). public officers/employees performing official duties. Auctioneers, appraisers and the employees of lenders/insurance companies. Persons acting under a court order (eg. executors, administrators or guardians). Trustees.

Inactive licensees

Licensed real estate professionals who are no longer actively practicing real estate, typically for a year or longer; may make referrals to active licensees and receive a fee from the agent to whom they made the referral; must continue continuing education and pay their licensing fee to maintain this status, otherwise they become expired

Who creates the laws

MA state legislation.

Conflicts of interest

Must be disclosed in writing: Represent yourself (including indirectly), family (blood, marriage), a business partner. Cannot purchase/rent a prop when you represent the seller.

Mandatory agency disclosure

Must be presented upon first personal meeting with a prospective buyer or seller; discloses the relationship of the agent with the client

Brokers hiring an RE agent

Must inform the Board. Only work for one MA broker at a time. Brokers have vicarious liability for their agents' activities. Agents and brokers must display their license in the office. Broker cannot hire an unlicensed salespersons.

Salesperson

Must work under a broker as either an employee or an independent contractor, and may not handle client money.

Advertising regulations

No discriminatory advertising, No blind advertising, out of state prop developments offered for sale in the commonwealth must be registered with the Board. Agents that accept out of state listings must inform the Board within 7 days.

Turf states

Only permits out of state licensees to receive a referral fee.

Physical location state

Out of state licensees are not permitted to perform RE services in MA, commission for a transaction in MA as long as any services performed on behalf of clients occurred outside MA

Cooperative States

Permits out of state licensees to perform RE services in the state if they enter into a written co-broker agreement with an in-state licensee for the transaction.

Buyer's / Seller's agency

Represent the buyer or seller

Broker licenses

Salespersons may receive their broker's license after 3 years of work experience (at least 25 hours per week). You may not hold both a salesperson and a broker license.

Escrow accounts notes

Separate from the broker's business accounts (no comingling). Detailed records kept for 3 years. Don't need separate accounts for each deposit. Doesn't need to bear interest.

Taxes are payable on which dates in MA

Taxes are paid on a fiscal year running July 1 to June 30, and are due 11/1 and 5/1 (or 8/1, 11/1, 2/1, and 5/1 if collected quarterly).

Commingling

The mixing of client money with the broker's personal or business funds; prohibited under licensing law

DBA

Under Massachusetts law, brokers operating under a trade name must file a Doing Business As certificate with the Board of Registration. That way the Board knows who is responsible for the trade name's real estate activities if they receive a complaint.

Designated agent

When a broker or their subagent chooses another agent to represent a buyer or seller; can be used if an agent does not want to be a dual agent or if their client will not consent to dual agency

Blind advertising

When real estate agents advertise property under their own name, without disclosing the name of their broker/brokerage and that they are a licensed agent; prohibited under licensing law

Escrow Deposits

they are not commission. No unauthorized conversions. Conversions require written permission from both parties.