Legal Summaries

MAR Legal Hotline

Oh, how many times have we tried to clone our state legal department? Real Estate law gurus Michael McDonagh, General Counsel of the Massachusetts Association of REALTORS®, and his ever supportive Associate Counsel Ashley Stolba keep us out of trouble on a daily basis!

Now, both will share their information with you each month; provide you with a highlight of the calls they field on the legal hotline; and keep us posted with changing Massachusetts law. Also included here are national notes from NAR’s legal department concerning federal cases that are of interest to Massachusetts brokers and salespersons.

Members may access the Legal Hotline by calling 800-370-LEGAL (5342), sending an e-mail, or faxing questions to the Legal Department at 781-890-4919

The MAR Legal Hotline offers authorized callers access to staff attorneys who can assist members with questions about current state and federal laws and regulations, permissible business practices, and important court rulings affecting real estate practitioners.  To take advantage of the Legal Hotline service, a member’s designated broker must first complete and sign an Authorization Form and return to the MAR Legal Department.  Once approved as an authorized caller, MAR members may access the Hotline. The hours of operation are Monday-Friday, from 9 a.m. to 1 p.m.

Legal Summaries by Topic

Advertising Anti-Trust Chapter 93A Contract Contingencies
Email Contracts  Escrow Issues  Estate Properties Fair Housing
 Gifts and Referrals Home Inspector Law  Independent Contractors Multiple Offers
 Offers  Procuring Cause  Property Liability  Referral Fees
 Rentals/Seasonal  Rentals/Tenants  RESPA Issues  Right to Farm
 Security Deposits  Separate Water Metering  Sex Offender Registry  Sexual Harassment
 Short Sale & Foreclosure  Stigmatized Property


Take care when advertising online

Fair housing principles apply on-line exactly as in real life!  Earlier this week, we published on our Facebook page (if you’re not following us, you should!) that HUD filed a complaint about discriminatory practices with the way Facebook allowed advertisers to target (or withhold ads) from users based on protected classes.  Facebook allowed advertisers to, among

Nanny Cam – Secret Recordings in Homes

The legal hotline was recently asked if a listing agent knows that a seller has a surveillance system installed in their home – do they have to tell potential buyers that they are being recorded? YES!  It is a crime in Massachusetts to secretly hear or record another individual without their knowledge and consent pursuant

SJC Declines To Uproot Law On Tree Responsibility

A few weeks ago, in Shiel v. Rowell, the Court was asked to overrule centuries-old common law that a landowner may not be held liable for damage caused to a neighbor’s property from a healthy tree. In an opinion interspersed with amusing tree puns, the justices declined to uproot precedent, and reaffirmed the “Massachusetts Rule”
MAR Legal Hotline

Crack down on Escrow Account Handling

We would like to start this Legal Hotline question with an announcement that MAR General Counsel Mike McDonagh has accepted a position as CEO of the Massachusetts Association of Subcontractors, effective September 1.  MAR will be on the hunt for a new led counsel and we will rely on Catherine and Justin until a replacement

Coming Soon Listings: Do the Right Thing

We’ve received several calls about facebook ads and lawn signs featuring ‘coming soon’ properties – homes advertised by an MLS member but NOT listed in the MLS.  Members must follow MLS rules for coming soon/pocket listings, but also should also be aware of NAR’s caution about following fiduciary law as well, and understand the impact on the industry as a whole.

Understand The Rules

These listings are not prohibited however, all members must always follow the MLS’s Rules and Regulations with regard to them.

    • You should submit paperwork immediately – a copy of the Exclusive Right to Sell AND Refusal/Delayed to List form to  When asked, the MLS will tell brokers that the property is exclusively listed and all dealings must go through the agent. If there is no paperwork on file, we cannot confirm it’s exclusively listed.
    • If you promote a Coming Soon listing without an Exclusive Right to Sell and delayed submission form submitted to the MLS, there is nothing that stops a member from knocking on the door or contacting the seller of the “open listing” if they have interested buyers.
    • REALTORS® are bound by the Code of Ethics to protect and promote the best interest of the client. Coming soon listings have limited exposure, potentially resulting in fewer offers and thereby reducing the possibility that your client will get the best and most reasonable price and terms.
    • SELLERS must be the one to decide to pre-market their property, especially in this low inventory market when exposure could bring more / higher offers. Most sellers just want the highest price possible for their home. The best way to accomplish that goal is to make sure their home is exposed to the maximum amount of potential buyers. If a seller has privacy or other legitimate concerns and want to keep the listing off the MLS, agents must explain the pros and cons of how this could affect their sale.
    • SELLERS must also decide if they will allow showings and/or accept an offer before it’s been listed in the MLS.  If the strategy is to deprive some buyers of the ability to view and offer for the property, you better make sure that the seller – not an agent – is making that decision.  It’s no coincidence that Fannie Mae and Freddie Mac properties require a listing to be advertised in the MLS for 72 hours before they will accept and offer – it’s to ensure fair market exposure and value.  If an agent puts their own interest ahead of their client, to secure both sides of the commission, not only is that highly unethical, it is a breach of your fiduciary duties. Depending on the scope, it could result in a violation of Chapter 93A and treble (triple) damages to be paid by the agent / broker, plus legal fees.
    • The primary purpose of the MLS is to foster cooperation and establish offers of compensation among participating brokers. If the spirit of sharing listing information, compensation and cooperation falters, so will our ability to work collectively on transactions for the good of the consumer and industry.
    • If you tell cooperating REALTORS that a property can’t be shown until a specific date and then get caught making an appointment with an unrepresented buyer that calls directly, you will wind up in hot water for unethical and potentially illegal behavior.  That self-serving behavior is a tarnish on our whole industry because it lines the agent’s pockets while harming both the buyer and seller.
    • Remember – Selling it “behind the scenes”, changes the entire dynamic of our real estate market – that sale can no longer be used by appraisers as a comparable since it hasn’t  had exposure on the open market.

Best practice:  How to handle coming soon marketing due to a home not being ready to show? 

List it exclusively, have the seller sign the Refusal / Delayed Submission, send it to the MLS office IMMEDIATELY.  Work with the seller to develop a consistent way to arrange showings, preferably waiting to show to all buyers only when it is publicly listed in the MLS, so they get the most exposure and activity.

Make sure if you allow a buyer to preview the listing before it is actively marketing it in the MLS, you are not discriminating and are showing it to ALL buyers.

Advise sellers on legitimate pros and cons if an offer is received before it is actively marketed.

List it in the MLS (and syndicate as your seller wishes) for at least some time (72 hours is a good rule of thumb based on Fannie and Freddie’s rule) so that proper exposure to the marketplace and pool of interested buyers is made aware of the property’s availability.

Most importantly, honor all dealing with co-brokes. Our business structure exists based on cooperation – if our industry loses cooperative sales (can you imagine the impact on your income if you don’t have access to sell MLS listings?), consumers AND Realtors are harmed.  And I’m sure Zillow will be happy to take over matching buyers to sellers in your place.

Are Your Clients Best Interests Being Served?

The National Association of REALTORS® (NAR) has responded to the recent industry discussion surrounding “coming soon” listings by reminding members that, “‘The first important step in advising a seller-client on whether to advertise a property as ‘coming soon’ is to identify the client’s best interests, as defined by that client…Failing to act in the client’s best interest and failing to disclose the pros and cons of a limited marketing plan, such as ‘coming soon’ advertising, can violate state real estate license laws and regulations, MLS policies, and the REALTOR® Code of Ethics.'”  You can also read NAR’s guidance for members on the use of coming soon listings. (or watch the following 4 minute legal video from NAR General Counsel).

Read more from NAR’s response to coming soon listings.

Impact to the MLS Community

The primary purpose of the MLS is to foster cooperation and establish offers of compensation among participating brokers. Instead of promoting cooperation, the use of pocket or coming soon listings may discourage and may dampen that spirit of sharing listing information, as well provide no assurance of cooperative compensation should you find yourself involved in a transaction that includes a non-MLS listing.

Outside of the effect these listings could have on your seller, pocket listings also adversely affect information everyone relies on the MLS to provide.  Please don’t forget that appraisers rely on the MLS data to create accurate appraisals.  Many lenders will not allow non-MLS sales to be used as comparables because those properties were not adequately exposed to the market and, therefore are not an accurate representation of market-driven prices.  Brokers and salespersons also heavily use the MLS database to help sellers determine list price and to help buyers determine what they should offer. Sales that aren’t included in the MLS lead to incomplete and inaccurate results.

Stay Compliant, Serve Your Clients

Despite the ongoing industry discussion about on this topic, remember these two things: you are still required to comply with the MLS’s listing entry rules and you have an obligation to act in the best interest of your clients. Keep these two things in the forefront of your mind and you can avoid running into trouble when confronting off-MLS or coming soon listings.

REALTOR® Magazine. Accessed: 6/18/2014.

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