Legal Summaries

Oh, how many times have we tried to clone our state legal department? Real Estate law gurus Justin Davidson, General Counsel of the Massachusetts Association of REALTORS®, and his ever supportive Associate Counsel Catherine Taylor help 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

MAR May 17 Reopening Announcement

Oh, how many times have we tried to clone our state legal department? Real Estate law gurus Justin Davidson, General Counsel of the Massachusetts Association of REALTORS®, and his ever supportive Associate Counsel Catherine Taylor help keep us out of trouble on a daily basis! Now, both will share their information with you each month;

May Legal Hotline Notes: From MAR

Oh, how many times have we tried to clone our state legal department? Real Estate law gurus Justin Davidson, General Counsel of the Massachusetts Association of REALTORS®, and his ever supportive Associate Counsel Catherine Taylor help keep us out of trouble on a daily basis! Now, both will share their information with you each month;

Notes from the Legal Hotline

Oh, how many times have we tried to clone our state legal department? Real Estate law gurus Justin Davidson, General Counsel of the Massachusetts Association of REALTORS®, and his ever supportive Associate Counsel Catherine Taylor help keep us out of trouble on a daily basis! Now, both will share their information with you each month;

January Notes from the Legal Hotline

Is requiring a full year’s worth of rent legal?

  1. No, prepaid rent is a violation of the Massachusetts security deposit statute, Massachusetts General Laws Chapter 186, Section 15B. The statute prohibits a lessor from requiring a tenant to pay any amount in excess of:
  2. First month’s rent;
  3. Last month’s rent at the same rate as first month’s rent;
  4. Security deposit equal to first month’s rent; and
  5. The cost to change the lock and key.

While the question often arises in the context of a prospective tenant offering to pay rent in advance, these situations would likely still be a violation of the statute. Generally, a prospective tenant may feel the need to make such an offer to a lessor in order to secure a property they would not otherwise be approved for. Although the landlord may not be making the request for pre-paid rent, the end result is the same.

To stay within the parameters of the law, Massachusetts landlords should never accept rent in advance, regardless of whether the tenant offers, or the landlord demands it.

I am trying to downsize my filing cabinets – what records am I required to maintain?

Many of the “core documents” to a real estate transaction have retention requirements codified in regulations:

Agency Disclosure: 254 CMR 3.00 requires brokers to retain the Massachusetts Mandatory Licensee-Consumer Relationship Disclosure, as well as Consent to Dual Agency Disclosures and Designated Agency Disclosures for a period of three (3) years from the date of the notice.

Escrow records: 254 CMR 3.10(b) requires brokers to maintain records of all funds held in their escrow accounts. Such records should include the date the money was received, the source of the funds, the date the funds were deposited, check number, the date of withdrawal, and “other pertinent information concerning the transaction … and to whom the money belongs.” Copies of checks deposited into and withdrawn from the escrow account should be maintained for three (3) years from the date of issuance.

Lead Paint: 24 CFR § 35.175 requires brokers to retain the Lead Paint Form for three (3) years. HUD recommends maintaining lead paint notification and disclosure forms, as well as inspection, remediation and, maintenance records indefinitely due to the liability associated with lead paint.

Rental Documents: 254 CMR 7.00 (2) requires the following items to be retained for a period of three (3) years:  the Tenant Fee Disclosure, from the date on which the notice was provided; “all rental listings and written documents that demonstrate the availability of an apartment at the time it is advertised for rental” from the date on which the apartment was rented; and “a copy of any check, money order and written cash receipt for any fees, deposits or payments made by a prospective tenant or actual tenant” from the date of issuance.

Regardless of the specific retention requirements noted above, it is a good idea to keep all transaction documents for seven (7) years. This includes, but is not limited to: listing agreements, buyer representation agreements, purchase contracts, and communications with the client(s) and other broker(s). The statute of limitations for most contract actions is six (6) years, so it is important to retain documents for at least this long to protect your interests in any potential lawsuit. Certain documents, such as corporate records, partnership agreements, audit reports, general ledgers, tax returns and deeds should be kept permanently. In most cases, it is acceptable to store these documents electronically, as long as you are safely and securely backing up all of your data. Brokerages should work with an attorney and/or accountant to develop and maintain a record retention policy for their office(s).

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Written by: Justin Davidson, General Counsel; Catherine Taylor, Associate Counsel; and Jonathan Schreiber, Legislative & Regulatory Counsel.

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 legalhotline@marealtor.com.

Window to the Law Update

Oh, how many times have we tried to clone our state legal department? Real Estate law gurus Justin Davidson, General Counsel of the Massachusetts Association of REALTORS®, and his ever supportive Associate Counsel Catherine Taylor help keep us out of trouble on a daily basis! Now, both will share their information with you each month;

Things to Note with Out of Area Closings

Oh, how many times have we tried to clone our state legal department? Real Estate law gurus Justin Davidson, General Counsel of the Massachusetts Association of REALTORS®, and his ever supportive Associate Counsel Catherine Taylor help keep us out of trouble on a daily basis! Now, both will share their information with you each month;

Financing Tips to Get Your Buyer Over the Finish Line

Oh, how many times have we tried to clone our state legal department? Real Estate law gurus Justin Davidson, General Counsel of the Massachusetts Association of REALTORS®, and his ever supportive Associate Counsel Catherine Taylor help keep us out of trouble on a daily basis! Now, both will share their information with you each month;