Massachusetts License Law and Regulations

Other Laws to Review (part 1)

If both parties agree in writing, then the brokerage may represent both buyer and seller. AKA Dual Agency A salesperson can receive compensation only from their employing brokers. A salesperson working with a customer cannot advise the buyer customer on how much to offer. Real estate contracts in Massachusetts to be enforceable must be in writing. A seller's property disclosure form is not required in Massachusetts. Massachusetts used a survey system called metes and bounds. Always has a point of beginning (POB). Massachusetts Law requires 20 years for an adverse possession. AKA squatters rights The board does not initiate random investigations of licenses. The designated officer of a corporation must be a licensed broker in Massachusetts before a license will be issued A licensed salesperson cannot sue a seller. Only a licensed broker can sue a seller. The only way to renew a license is to pay the prescribed fee. Commission rates are always negotiable between parties. (Buyer & seller) A broker must have permission before erecting a sign A licensee is not permitted to represent a seller while their ability to do so is impaired by drugs or alcohol. A licensed real estate broker or salesperson can provide an option of value Net listings are illegal because of potential conflict of interest for the broker. (Net listing = when a seller sets a base price they want for the property and the salesperson or broker keeps anything above that amount). Other people's money, such as earnest money and security deposits held during the transaction, must be deposited immediately. A broker does not need to open an account for each deposit, the broker must keep careful records to accurately account for all funds and maintain copies of each check for a period of three years. The listing agreement be canceled by an agreement of both. The broker and salespeople are to be considered special agents A consumer has one year to file a complaint with the Massachusetts Commission Against Discrimination (MCAD). To claim a commission the broker must satisfy three elements: 1) the broker must produce a ready, willing, and able buyer. 2) the buyer and the seller must have signed a contract to purchase. 3) a closing must occur, unless prevented by the wrongful conduct the seller. The age of legal competence, with no exemption, is 18 years in Massachusetts. Though legally emancipated kids can sign. In Massachusetts dower now refers to both the husband's and wife's future interest in the deceased spouse's property. The system to register property is called the Torrens system. Landlords of all rental units must pay interest on security deposits and give tenants an itemized statement to document withholdings from security deposit. (Max 5% interest on a security deposit, security deposits and last months rent can earn interest, landlords can charge- 1st month- last month-security deposit and - lock & key deposit, landlords must inform tenants where deposit is kept and send yearly letter with account info). Massachusetts requires 12 hours of continuing education credits before renewing a license.

Who does not require a license to sell a house

1. A person doing business for themselves or as an employee on a salary 2. A property manager on a salary 3. Licesed auctioneer 4. A public official. ex. Tax Collector 5. A person acting under power of attorney. Known as an attorney in fact. 6. A lawyer 7. Someone acting under a court order 8. Banks, credit unions, insurance companies. 9. The trustee for a trust.

Right of Recession

3 days to change mind on an purchases in your home (3 business days - can include weekends if the business has weekend business hours) Timeshares have 3 day right of recession Interstate land sales have a 7 day right of recession House/land/condo have ZERO right of recession

Client

A person who empowers another to act as their representative.

Customer

A person without representation

Bait and Switch

Advertising that a house is for sale or rent when it has already been sold or rented. This is an illegal act.

MA Consumer Protection Act (93A)

All agents must voluntarily give full disclosure of everything they know or should know about the property (defects included). If charged with a 93 A violation an agent will be sent a 30 day demand letter offering time to resolve the issue before court action can be taken. The court may impose up to triple damages.

Title 5 Environmental Code Law (Sewerage System)

All sewerage systems must be tested prior to transfer by deed, will or before any expansion or for a new use. State certified inspectors must be used and an inspection report must be given to the closing attorney prior to transfer of the property.

Massachusetts Smoke Detector and Carbon Monoxide Law

Carbon monoxide detectors are now required in all homes. A certificate of compliance must be provided to the closing attorney prior to transfer of the property. Local fire stations make inspections and issue the compliance certificates.

Navigable

Deed enough for kayaks/boat. Each owner owns to the waters edge. (Public highways are owned by the public)

Commingling

It is illegal to put deposit money in personal or general business accounts. They must always be held in the broker's escrow account and remain until the day of closing.

Massachusetts Lead Paint Law

Lead paint was declared illegal after 1978 All agents must have the lead paint disclosure form signed at the time of the contract. (Forms will be available in the office you work for) Real Estate Agents must alert all buyers that they will be given 10 days for a lead paint inspection. It will be at the buyers option and cost. If a child, age 6 or under is living in an apartment/house where lead paint is found the property owner must de-lead 5 feet up from the floor.

Other Laws to Review (part 2)

Massachusetts is a lien foreclosure state. A long-term lease for more than seven years must be in writing, acknowledged, and recorded. (Barnstable court house) Transfer stamps in Massachusetts are assessed at $2.28 per $500 (always rounded up if under $500) or $4.56 per $1000 of the sale price. ex. $325,500 / $500 = 651 x $2.28 = $1,484.28 tax stamp. Always paid by the seller of the house (transfer tax). A broker or salesperson must act honestly, ethically, and in the best interest of the client at all times. The deed to transfer property in Massachusetts is called a quitclaim deed. A Great Pond in Massachusetts contains 10 acres or more. Property on a Great Pond in Massachusetts extends to the waters edge. All Great Ponds are owned by the commonwealth of Massachusetts. Owner own land to waters edge. Property owned on less than a Great Pond (any body of water less than 10 acres) is owned to the center of the pond by all abutters. All deeds in Massachusetts must be recorded in the county where the property lies. The name of the legal description used in Massachusetts's called metes and bounds. It always has a POB (point of beginning). All sales and rental agreements must be kept in the broker's office for a period of three years. A person working as a liaison between the buyer and seller without agency duties is called a facilitator. They don't represent anyone, just a middleman. Massachusetts requires an occupancy permit be issued after completion of any new structure. Massachusetts is a lien theory state. A 6D certificate from an condo association shows that all condo fees are either in arrears or up to date. The Massachusetts high court ruled in McCarthy (seller) vs. Tobin (buyer) that a simple one page agreement (sometimes called "an offer to purchase" is in fact a legally binding contract (McCarthy tried to cancel for more money after both signed). In order for a mortgage contract to be valid it must be signed by competent parties. (sound mind, legal age, not under duress). The only acceptable means for the broker of record to withdraw funds from an escrow account would be upon completion of the transaction. "Friable Asbestos" is material that is peeling or flaking. The agent can take the listing with the understanding that it will be disclosed. (often found on old plumbing or public buildings) A sales agent is instructed by a seller to not sell the property to people of a certain ethnic group, the sales agent should refuse the listing. Notice to prospective tenants: if a fee is to be charged for service, a written agreement as to the manner and time which it is to be paid must be signed. Also, what will happen if a tenancy is not created. Must be in writing. Should disclose all fees ahead/upfront including administrative or finders fees.

Tidal Waters

Mean (average) low water line or 100 rods (16.5" per rod) from the mean high water line, whatever is less.

Other Grounds for Punishment

Misrepresentation (knowingly) Acting for more than one party in the same deal without both parties knowing it. Failure to properly account for or return deposit monies. Practicing with an expired license. Practicing as a broker with a salesperson license. Paying an unlicensed person. Persuading someone to break a contract for personal gain. Failing to give contract copies to all concerned parties. Discrimination. First guilty offense 60 day loss of license. Second guilty offense within two years, 90 day loss of license. Conviction of a criminal offense must be reported within 30; days of the court action. (Misdemeanor or felony). Falsifying licensing application. Non disclosure of radon gases, asbestos, underground storage tanks, and lead paint.

Stigmatized Property

Murder, suicide, haunted houses, someone died of a fatal disease, AKA psychological impacted property Does not have to be disclosed unless the buyer asks. For sex offenders, ask buyers to check with police Cannot disclose AIDS information (protected class in MA).

Personal Relationships

Must be disclosed to the consumer. Both next of kin and fellow investors.

Home Inspectors

Must be state licensed and carry a $250,000 liability policy. No sales agent can recommend a home inspector. Agents can only provide a list of certified inspectors. One exception is a buyer agent. Blind advertising is illegal. All ads must identify agent/office. Contracts signed on Sunday or holidays are legal. All commissions and bonus money must go directly to the broker of record. A salesperson cannot work for more than one broker at the same time in Massachusetts. No agent should ever advise against using a lawyer. All agents must display their license in a visible location. All offers must be presented immediately. The Board of Registration comes under the jurisdiction of the Massachusetts Department of Consumer Affairs. Five members sit on the Board of Registration. They enforce these laws and are given a five year term. Three members of the Board of Registration must be brokers for at least seven years. Two are from the general population. Board members are appointed by the governor. They are not paid salaries but expenses are paid. All consumer complaints must be in writing. After an investigation a hearing may be called. A 10 day notice must be given. Board members will vote to 1) suspend, 2) revoke, 3) fine, or 4) refuse to renew the license. If found guilty all licenses must be returned to the board within 7 days. Agents have a right to appeal the decision of the board within 20 days to the superior court in Suffolk County. All charges in your home address or broker affiliation must be reported by all licensees and their broker. A license is required to 1) sell, 2) rent, and 3) exchange real estate To maintain an active license every salesperson and broker licensees must complete 12 hours of continuing education (CEU) every two years when renewing their license.

Agent

One authorized to act for/on behalf of principal (could be buyer, seller, or broker)

Vicarious Liability

Real Estate agent is liable for the acts of his or her salespeople. It holds everyone responsible.

Non-navigable

Shallow river - each abutter would own to the center of the river/stream

Intertidal Zone

Wet sand area between high and low water line. All citizens have the right to fowl, fish and navigate that area.