Selling a Home in Massachusetts? Key Legal Requirements

Tax, disclosure, and other requirements when selling a house in Massachusetts.

If you are selling a home in Massachusetts, you will want to be aware of the relevant legal requirements. Knowing what to expect and following proper procedures will help your transaction proceed smoothly and also help avoid any potential liability to the buyer following the sale.

Some Massachusetts Home Sellers Must Disclose the Possibility of Lead-Based Paint

Given this state’s long history, it’s safe to say that many homes in Massachusetts were built prior to 1978. And if you are selling a home that was constructed before that date, you (and your real estate agent if you have one) are required to disclose to your buyer the possibility that the house may contain lead-based paint.

In addition, sellers are required to give buyers a ten-day period within which to inspect the property for lead-based paint. Massachusetts law requires that sellers provide the eleven-page Property Transfer Notification to the home buyer prior to signing the Purchase and Sale Agreement. Sellers and buyers, and their agents, if any, must all fill out page eleven of the Property Transfer Notification.

The sellers must completely fill out and sign the form first, indicating first whether they have any knowledge of lead-based paint and/or lead-based paint hazards in the house. (No need to actually inspect the house for lead – you are just asked to state what you know.)

Secondly, the sellers must indicate whether they have provided the buyer with all records and/or reports relating to lead-based paint, indicating which records or reports they are providing or whether the seller has no reports or records to provide. The seller must then sign and date the bottom of the form.

The seller’s agent, the buyer’s agent, and the buyer must complete the form after the seller. Failure to properly disclose and complete the Property Transfer Notification can result in fines of up to $10,000, plus damages under Massachusetts law, in addition to criminal and civil penalties under federal law.

Massachusetts Home Sellers Must Disclose Any Private Sewer System Servicing Their Home

Sellers of homes that are serviced by a private sewer, such as a cesspool or septic system, are required to disclose that fact to potential buyers. The so-called “Title V” law also requires that an approved inspector inspect the system within two years of the sale. Title V does not actually require that the sellers obtain the inspection; nevertheless, the custom in Massachusetts is for sellers to hire the inspector and provide the inspection report.

If the inspection reveals that the system is not in compliance with local (city or town) Board of Health regulations, then the local (city or town) Board of Health will require repair or replacement of the system before the system receives a passing grade under Title V. While sellers are not required to make the repairs, most mortgage lenders will not close on a property that does not have a passing Title V inspection report. Therefore, it is customary in Massachusetts for sellers to provide the report and bring the system into compliance.

Massachusetts Home Sellers Must Honestly Answer Questions Posed by Buyers or Real Estate Agents

While there is no required seller’s disclosure form in Massachusetts, sellers must, by law, honestly disclose and answer any questions posed by buyers or by real estate agents.

Buyers will often ask questions about the age of a roof or history of water in the basement. If asked, sellers are required to answer those questions truthfully.

Many real estate agents also ask Massachusetts home sellers to complete and sign a Seller’s Disclosure Form that the real estate agent provides to them. Massachusetts law requires that sellers complete the form truthfully. Failure to do so could subject you to liability even after the home sale closes, for example if the buyer discovers a roof leak or other defect that you must have known about but failed to mention, and then sues for damages.

Massachusetts Home Sellers Typically Pay the State Tax Stamps

The transfer of real estate in Massachusetts requires payment of the State Tax Stamps – which is another way of saying transfer tax or excise tax. The Tax Stamps are collected on the county level when the deed is recorded with the county Registry of Deeds. In most counties, as of 2015, Tax Stamps are collected at the rate of $2.28 per $500 of consideration (purchase price). For example, the Tax Stamps on a $350,500 sale would be $1598.28. Massachusetts custom is for the sellers to pay the tax stamps.

Certain counties, such as Barnstable, impose an additional tax stamp fee. Nantucket County and Dukes County also impose a Land Bank Fee, through an agency called the Land Bank Commission.

Check with your attorney or real estate agent to determine the total amount of transfer fees you will have to pay.

Massachusetts Home Sellers Should Hire an Attorney

Massachusetts is considered an “attorney state,” meaning that attorneys are involved in the drafting, negotiating, and revising of purchase and sale agreements. (In other states, real estate agents may perform these roles.)

A Massachusetts home sale is a two-step process. First, the buyer submits an offer. If the seller is interested in it, the two parties negotiate, and sign it, turning it into an actual contract to proceed with the sale, subject to any contingencies in the offer.

Then, after the home inspection period, assuming the buyer still wants the house and buyer and seller can agree on any repairs to be paid for by the seller, the two parties will complete a more detailed contract called a Purchase and Sale Agreement.

It is customary for the seller’s real estate agent to prepare the initial draft of the Purchase and Sale Agreement. However, Massachusetts attorneys will revise and add riders to these Purchase and Sale Agreements, and will often draft their own agreements and ignore the agreement drafted by the agent.

Sellers should know however, that the offer is a binding contract and can be enforced even if you never get as far as signing a Purchase and Sale Agreement. Therefore, it is important to get an attorney involved in the process as early as possible.

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