Q: What qualifies a resident for the purposes of the Tax Withholding Regulations for Non-residents?
A: Massachusetts real estate sale or transfer is subject to withholding when the sales price is $1,000,000 or more and the transfer or is not a full-year resident. Full-year Massachusetts residents are exempt from the withholding requirement.
A person is a full-year Massachusetts resident if they:
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have been a resident, as defined in M.G.L. c. 62, § 1(f) (a person who is domiciled in MA or spends more than183 days in a taxable year with a permanent residence in the state); and
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represent that they will continue to be a resident, as defined in M.G.L. c. 62, § 1(f), after closing.
It is good practice to discuss this new requirement with your sellers when the anticipated sale price is $1,000,000 or more.
* Local Note: The Department of Revenue requires Sellers to complete a Transferor’s Certification during the closing process. This will enable the “withholding agent”, typically the closing attorney, to determine if withholding is or is not required. It is NOT up to a real estate agent to make any determination, but rather to prepare your clients for what to expect in a transaction. For sales over $1 million, they should expect to complete a Transferor’s Certification and may discuss possible tax withholdings prior to annual filing with their accountant and/or attorney.
Q: According to the home inspection law, can a seller accept an offer that waives a home inspection?
A: No, a seller cannot accept an offer that waives a home inspection. The law ensures that buyers have the unwaivable right to decide whether to conduct a home inspection after entering into a contract to purchase.
To effectuate this right, sellers are prohibited from accepting offers that require buyers to waive, limit, restrict or forego a home inspection. Additionally, prospective buyers and their agents are not allowed to convey, directly or indirectly, any intention to not perform an inspection before the offer is signed. This includes indicating unreasonable timeframes or repair thresholds that would render the home inspection contingency meaningless.
Once the parties are under contract, the buyer is not obligated to conduct a home inspection, provided they have received the necessary written disclosure and have not been pressured by the seller or the listing agent.
However, there are a few narrow exemptions to this rule. These generally include transactions that are not arm’s length, such as transfers due to divorce, foreclosure, or estate planning purposes. One relevant exemption for REALTORS® is for new construction where there is not substantial completion of the home.
Q: Under the rental broker fee law, who is responsible for paying for tenant screening and background checks?
A: The law, (c.186 s. 15B) has now been updated to include a prohibition on the landlord’s agent collecting more than first, last, security deposit and lock and key fee. Read in conjunction with the residential rental broker fee law, the licensee working with the landlord to place a tenant cannot charge this fee on behalf of the landlord, or as a service provided to the tenant.
If the landlord does not want to bear the cost of the background checks, but requires them with every application, the licensee should send the prospective tenant to the third-party site that is performing the check to complete and pay themselves. It is important for the licensee to avoid any fee collection or the collection of personal data needed for the background check.
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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 legal@marealtor.com.