Massachusetts law requires only that home sellers disclose the existence of lead paint (see the Massachusetts Lead Paint Statute) and the presence of a septic system (see Title 5 of the Massachusetts Environmental Code).
While these are the only two legally required disclosures, you can expect prospective home buyers to ask you questions about the property, particularly after they’ve conducted a home inspection. And you cannot legally lie or actively hide the truth.
A buyer might also request during negotiations that you make additional written disclosures.
If your home was built before 1978, you (most likely through your real estate agent) must notify buyers whose offer you have accepted about the dangers of lead paint. Do so by completing the Massachusetts “Property Transfer Notification Certification.” Per Massachusetts practice regarding entering into a home-sale contract, you will need to supply this notification before you and the buyer enter into the formal, lengthy purchase and sale agreement that eventually replaces the offer contract with which you start the deal.
In this certification form, you are telling your home’s buyers about the dangers of lead paint in general, disclosing any information you have about its presence on your property (or that you have no information), and informing buyers of their opportunity to conduct their own lead paint risk assessment within ten days of having received the form.
The Property Transfer Notification Certification must be signed first by you, then by the buyer, and also by any real estate agents involved in the transaction. It must be completed and signed prior to signing a purchase and sale agreement. If you fail to initiate this, you could be assessed a penalty of up to $1,000, and ordered to pay other damages to the buyer.
According to Title 5 of the Massachusetts Code (15 CMR § 15.301), sellers of homes that have a septic system must not only disclose this in writing to buyers, but have it inspected within the two years leading up to the sale and give the report to the buyers and to the local board of health. This is commonly called a Title V Certificate.
The inspection can be delayed until up to six months after the sale if weather conditions such as frozen ground prevent an earlier inspection, however.
Also, exceptions exist, such as in cases where you've receivea certificate of compliance for a new system from the approving authority within the three years before the property transfer and you can show through system pumping records that you had the system pumped at least once during the third year.
If your home is in a condominium or townhouse community, the association that governs it will be responsible for commissioning the inspection and report.
The condition and cost of repairs to bring failed systems up to code can become a major negotiation issue in situations where sellers are not willing to make neededy repairs and buyers insist on having the repairs done. Not all home buyers will insist on this, however, and Massachusetts law doesn’t require home sellers to bring their septic systems into compliance with the law before selling the property.
If the prospective buyer (or buyer’s agent) asks you (or your agent) specific questions about the condition of the property, or if you volunteer certain information about the property, you are required to disclose the truth—or at least any facts that that a reasonable person would rely on in making a decision to purchase a home. This standard comes from various Massachusetts court decisions in individual cases. In other words, you can’t lie, obfuscate, or conceal important truths once a buyer takes an interest in a certain aspect of your property.
Unfortunately, exactly how much you need to disclose is a subjective determination and depends on the facts of each situation. Home buyers in Massachusetts routinely ask sellers to warrant, or state to the best of their knowledge, that the property contains no underground storage tanks, nor any hazardous materials such as radon, chlordane, or formaldehyde insulation.
Including such additional disclosures is a matter for negotiation between you and the buyer. A qualified real estate attorney can assist with the negotiations.
Most Massachusetts buyers who have entered into serious negotiations to buy a home will also reserve the right to have the property inspected by a licensed home inspector. After this inspection, buyers often come up with additional questions about the property’s condition. These questions might range from whether or not the basement has ever flooded to the condition of the electrical system. If you fail to do answer truthfully or you mislead the buyer, you could later be sued and held liable for misrepresentation.
]]>The Massachusetts real estate market offers buyers a few different choices: single-family homes, multi-family homes, and condominiums. While there are a handful of cooperatives in the major cities, you will not commonly find them throughout the state. Buyers can also find land for sale; however most vacant land is purchased by builders.
A single-family home has one unit of living space, while a multi-family home has two or more. In both a single family home and multi-family home, the homeowner owns the building and the land under it. Some single-family homes are located in developments managed by a homeowners' association (an "HOA"). With an HOA in place, the homeowners must abide by certain rules and regulations and pay monthly or yearly dues. However, many single-family homes and most multi-family homes in Massachusetts are not in an HOA-governed community.
In a condominium, the homeowner owns the living space and any accessory space (such as a garage or deck) but the condominium owners as a group are part of the condominium association, which owns, maintains, and manages the land and any other shared space.
In most other states, when you decide to buy a house, you or your real estate agent will write up an offer on a standard form that’s used statewide. There might be some negotiating back and forth with the seller over the many details contained in the offer form. But as soon as that offer form is drafted and signed, it becomes your purchase contract.
In Massachusetts, get ready for a two-step process. First, when you decide to put in an offer on a house, you will write up an offer on a standard form; but one that’s shorter than the offer form used in most other states. The two most commonly used forms are put out by the Massachusetts Association of REALTORS® (the “MAR” Contract) and the Greater Boston Real Estate Board (the (“GBREB” Offer to Purchase Real Estate). Some real estate agencies might have their own form. There is no one statewide standard form.
The offer typically sets forth contingencies that must be met before the deal can go forward, such as a home inspection. The home inspection contingency can be scheduled to extend for anywhere from seven to ten days, or longer if the parties agree.
Another commonly requested contingency is the mortgage contingency. This gives buyers an out if they are unable to secure a loan commitment from a lender by a certain time.
Once the home inspection is complete, assuming the inspection report was satisfactory and/or the buyer and seller manage to negotiate over any needed repairs, the parties sign a longer, more detailed contract, known as a Purchase and Sale Agreement (or P&S for short). (The offer form typically sets a deadline for this, too.)
The Massachusetts P&S may also be drafted on any variety of forms available to real estate agents. The signed P&S becomes the final contract between the parties.
Nevertheless, the initial offer is considered a binding contract between buyer and seller. If for some reason the buyer and seller do not end up signing a P&S, unless the original offer/contract is terminated, it remains a binding contract. In one important case, the seller accepted the buyer’s offer but, during the P&S negotiations, received a second, higher offer. The seller declined to sign the P&S and accepted the other, higher offer. The first buyer sued to force the seller to perform under the initial contract. The buyer won, and the seller was ordered by the court to sell to the first buyer. (See McCarthy v. Tobin, 429 Mass. 84 (1999).)
Therefore, you’ll want to include all contingencies, such as financing, the sale of another home, inspections, and so on, in your offer, in case it becomes the only contract between you and the seller.
Unlike in the majority of states, attorneys must, by law as well as custom, be involved in Massachusetts real estate transactions. First, attorneys take part in the drafting and negotiation of the P&S described above (although you can submit an offer without an attorney’s help, as is commonly done).
The P&S forms ordinarily used by real estate agents are not comprehensive and quite often favor the seller. Typically, both buyers and sellers have attorneys represent them during the drafting and negotiation of the P&S. Attorneys often supply their own forms for a P&S and will often add riders to a P&S drafted on a standard real estate association form or to one drafted by another attorney.
Secondly, attorneys, not title companies, handle real estate closings in Massachusetts. Courts in Massachusetts have held that performing a closing is a legal function that must be undertaken by someone licensed to practice law in Massachusetts. Closings performed by non-attorneys are considered to constitute the unauthorized practice of law.
The closing attorney is, in Massachusetts, responsible for performing a title search, preparing the settlement statement and closing documents, handling the financial aspects of the transaction, and ensuring that all transfer documents (such as the deed and mortgage) are properly recorded in the registry of deeds for the county in which the property is located.
The buyer pays the closing attorney’s fee, as part of the buyer’s closing costs associated with the mortgage.
On a side note, while the closing attorney represents the lender at the closing, he or she may be the same attorney who represented the buyer in the P&S negotiation, if the buyer consents to this. It is a commonly accepted practice in Massachusetts, even though the buyer and the lender have different interests in the transaction.
“Caveat emptor,” or buyer beware, is the rule in Massachusetts real estate transactions. Sellers are not required to complete a disclosure form setting forth any material defects with the property, as they are required to do in many other states. The only disclosure sellers are required to make is a lead paint disclosure on homes built prior to 1978.
(See Selling a Massachusetts Home: What Are My Disclosure Obligations?”.)
In Massachusetts, as in other states, the listing agent represents the seller in a real estate transaction. You should not assume that a real estate agent represents you, the buyer, unless you are specifically told otherwise.
An arrangement known as “dual agency” is allowed in Massachusetts, if the nature of this relationship has been disclosed to both home buyer and seller, and if both have consented. Dual agency means that the real estate agent in a transaction represents both the buyer and the seller simultaneously.
Many experts consider this to be a risky situation for the buyer, because no one is solely on your side, listening to your confidential thoughts about issues like your finances and how far you’re willing to stretch to buy the house, and negotiating hard for you on that basis.
There’s another, related form of representation known as ”designated agency,” which occurs when both the seller’s agent and the buyer’s agent work for the same real estate office. Designated agency is also allowed in Massachusetts, again upon full disclosure.
Many consider designated agency to be risky as well. The fiduciary duty owed to a client runs to the broker in charge of the real estate office, not just to the client’s agent. Therefore, in a designated agency situation, the broker in charge owes a fiduciary duty to both buyer and seller, much like with dual agency. In addition, when both agents are in the same office, there is a risk that private information will be shared between the two agents, whether inadvertently or intentionally.
The third option of representation for Massachusetts buyers is buyer agency. This is when the agent, as well as the brokerage for which that agent works, represents only the buyer. These agents are also known as exclusive buyer agents. The seller would have his or her own agent from a separate brokerage house.
Buyers should know that agents who are hosting an open house represent the seller. Be wary of disclosing any personal information to an agent at an open house without first determining whom that agent represents. If unsure, ask the agent to provide a copy of the Massachusetts Mandatory Licensee Disclosure form. This form clearly explains the different representation options in Massachusetts and also discloses what type of representation a particular agent is offering. Agents must present it before discussing any particular property with a potential client.
The best way to find an agent who will represent your best interests is to hire an agent before starting a home search.
]]>If you’ve bought a home in another state, you’ve probably dealt with real estate agents before, but perhaps not with a real estate attorney. Massachusetts is one of few so-called “attorney states” in the U.S. when it comes to real estate transactions. That means that Massachusetts home buyers and sellers typically have an attorney represent them, in keeping with Massachusetts General Laws Chapter 221, Section 46a, which prohibits the unauthorized practice of law by nonlawyers. (In most other states, real estate matters can be handled by a real estate agent and a title company without an attorney’s help.)
Let’s take a closer look at the different roles that the real estate agent and attorney have in helping you buy a home in Massachusetts.
The role your real estate agent will play, if you are buying a home in Massachusetts, depends partly on whether you have lined up your own, “buyer’s agent,” or whether you will be using a particular home’s seller’s agent to wrap up the deal.
You have the right to be represented by your own real estate agent, known as a buyer’s agent. It’s a good idea to take advantage of this right, so as to have an agent whose sole duty is representing you. A buyer’s agent owes a fiduciary duty to the buyer to act in the buyer’s best interests and to keep the buyer’s personal information confidential.
If you want a buyer’s agent, you’ll need to line that person up before you start house-hunting, rather than looking at a house, meeting the agent who represents the seller, and authorizing that person (the “listing agent”) to represent you in the same transaction. The latter, “dual agency” approach can result in divided, or at least balanced loyalties on the part of the agent, who might end up negotiating less firmly for your interests as a result.
If you’re at all unclear about whether an agent represents you or the seller, however, the matter should be cleared up on paper soon: All real estate agents in Massachusetts are required to present the Massachusetts Mandatory Licensee Disclosure Form to all potential clients prior to meeting or discussing a particular property. This form discloses whether the agent is representing the seller, the buyer, or both.
Here’s what a buyer’s agent will do for you: show you properties for sale, provide a market analysis to help you determine a home’s value, discuss negotiating strategy, and present your offer to the seller’s agent.
A buyer’s agent will also assist in managing the home inspection, your application for a mortgage, and execution of the purchase and sale agreement, and will attend the final walk-through and closing. A buyer’s agent can also provide referrals for home inspectors, contractors, or other professionals you might need in connection with your home purchase.
Real estate agents in Massachusetts are prohibited from providing legal advice. They may not draft contracts. beyond filling in the blanks on standard REALTOR forms.
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