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The Greater Boston Real Estate Boards continues to work on the issue of producing housing at all price points as a solution to an issue that confront so many people in the Greater Boston area, and especially inside of Route 495. The Commercial Divisions of the Board see this as an issue as they look at market conditions because without adequate housing, the ability of companies to grow and prosper in Massachusetts will be affected which will ultimately impact commercial rental rates. Residential members see a problem of inventory at sale prices that many working families can afford.

As a solution the Greater Boston Real Estate Board has been working for several years with the Legislature and the Mayor of Boston to advance policies that can produce the much-needed housing stock, both in the "for sale" inventory and for rental units as well. The Board is supporting the housing proposal filed by Governor Baker in December of 2017, which will not solve the problem entirely but will help move the Commonwealth closer to a solution. Massachusetts is in a great economic position with a highly skilled workforce, so let's hope that our greatest export is not our hard-working citizens who will be forced to exit because they have no place to live.

GBREB strives to ease the Massachusetts Housing Crisis
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This year, the National Association of REALTORS® (NAR) Conference and Expo is coming to Boston from November 2-5. The conference features a vast number of nationally-recognized real estate trainers and industry experts and allows you to build your referral network with more than 20,000 REALTORS® from throughout the US and several foreign countries in attendance.

You can choose from 100 education sessions to learn about strategies and solutions that meet your clients’ needs. And browse the industry’s largest trade show, with over 400 exhibitors, to find products and services that will help you conduct business more efficiently. Attendees gain the knowledge, tools and contacts to be successful in this competitive business.

Tickets are on sale now and there are a single-day, multi-day and full convention packages available. Check out the website here to find out more about the conference and to register.
 
NAR Convention Comes to Boston, Registration Open Now
GBAR
GBAR is saddened to report the loss of one of our longest-serving volunteer members, Judy Moses, who died tragically on Sunday after being struck by a car in Medford. The broker-owner of Pathway Home Realty Group in Newton Centre, Judy joined the REALTOR® association in 1987. A former GBAR Director and GBREB Director, she also was a past member of the MAR Board of Directors and currently served as an alternate state director. She also served on numerous committees at the local and state levels. Judy was very active with the Women’s Council of REALTORS®, having served as a local chapter president, state governor and regional vice president, before being elected to the office of president of the WCR National Chapter in 2007. She was a RPAC Major Investor and held the professional designations ABR, CRS, GRI and SRES.

She was the consummate professional; a loyal friend to so many of her colleagues, and a warm, generous, kind-hearted woman who cared deeply for her clients, fellow REALTORS®, and the dogs she provided a home to or cared for at local animal shelters.

A Funeral Mass will take place on Friday, May 4 at 11:30 a.m. at the Holy Rosary Church, 1015 Shirley St. in Winthrop. You may also express your condolences by sending a sympathy card or note to Judy’s husband, Charles Capace, to 123 Wolcott Road, Chestnut Hill, MA. 02467.

For a complete obituary, access this link https://bit.ly/2HIg7Rw
 
Remembering Judy Moses
GBAR
In the new world of globalized business, and as REALTORS®, it is becoming increasingly important to better understand how to navigate the growing global real estate market. For this reason, GBAR has developed a Global Council, and is offering variety of seminars and educational courses to help you navigate the global real estate climate in Greater Boston.

On May 30, we are hosting our first International Connection seminar of 2018, on the topic of Cryptocurrency. Cryptocurrency, such as bitcoin, is becoming an alternative way to pay for regular things and thousands of merchants worldwide accept bitcoin including Microsoft & Expedia.  Cryptocurrency has found its way to the real estate profession as consumers can even buy a house with bitcoin - as long as the buyer and seller agree on exchanging bitcoin for the property.

Our speakers will cover the basic frameworks of what distributed ledger technology is – and how it works. They will present examples of how cryptocurrency can be used in a real estate transaction and they will also highlight some of the concerns and risks associated with the volatility of cryptocurrencies!  

We also have an upcoming education course for the Certified International Property Specialist (CIPS), focusing on Asia/Pacific International Real Estate.  This course covers the social, economic, political and geographic characteristics s of major countries in the Asia/Pacific region, as well as the important characteristics of the real estate markets of the region including influential laws and real estate brokerage practices.  Click here to find out more about our CIPS course on June 12. 
Take Your Business Global with GBAR
GBAR
Questions continue to swirl around the subject of what kinds of fees can legitimately be charged to residential tenants and rental applicants.  The law remains murky, meaning that landlords and brokers must proceed with caution.

Fees Charged By Landlords At or Prior to Term Commencement
Chapter 186, Section 15B of the Massachusetts General Laws (“Section 15B”) forbids landlords, at or prior to the commencement of any tenancy, from requiring a tenant or prospective tenant to pay any amount in excess of the rent for the first full month of occupancy, the rent for the last full month of occupancy, a security deposit equal to the first month’s rent and the cost of purchasing and installing a new lock and key.  In an important 2014 decision, Perry v. Equity Residential Management, L.L.C., United States District Court Judge Rya Zobel declared that these provisions must be applied strictly and are “simply not susceptible of more than one reasonable construction.”  She proceeded to invalidate the following fees charged by a landlord prior to commencement of the tenancy:
a $50.00 application fee per person;
an amenity or community fee ranging as high as $500.00; and
a $250.00 fee for the privilege of being allowed to keep a pet.
Massachusetts courts have likewise disallowed any amounts charged by landlords at or prior to the commencement of the lease term unless expressly authorized by Section 15B.

Fees Charged by Landlords After Term Commencement
Section 15B contains a separate provision prohibiting landlords, at any time subsequent to the commencement of a tenancy, from demanding rent in advance of the current month’s rent or a security deposit in excess of the amount otherwise allowable.  In Perry, Judge Zobel took the position that the statute did not bar the landlord from charging a monthly pet fee of $30.00; because the tenants “became obligated to pay this fee after they were already tenants, they may not turn to Section 15B for relief.”  She acknowledged, but respectfully disagreed with, a contrary 2012 ruling by Judge David Kerman of the Northeast Housing Court in Broad Street Associates v. Levine.  In his view, Section 15B “makes no distinction between up-front deposits and recurring fees.”  He also noted, however, that the landlord had not offered “any economic or other explanation or justification for the fees,” without clarifying whether that would have made a difference.  He also pointed out that the landlord did not “characterize, or attempt to justify” the recurring pet fees as “additional rent”, implying that the landlord could have simply increased the rent in consideration of allowing the pet.
Whether the correct interpretation of the statute is Judge Zobel’s or Judge Kerman’s won’t be known until the issue is definitively resolved by an appellate Massachusetts court.  In the meantime, landlords who impose fees after the term of a lease has commenced can seek to defend these charges on the basis of (1) Judge Zobel’s decision and (2) the fact that the charges have a sound economic basis (such as the additional wear and tear likely to be caused by having a dog in an apartment).

New Occupant Screening Fees
One particular fee which some landlords charge relates to the screening of a proposed new subtenant or roommate.  In this scenario, the landlord is typically seeking to be reimbursed for costs like a credit report, processing a rental application, qualifying the new occupant and amending the lease agreement.  If the landlord requires a new lease and the new occupant will not move into the apartment until the term of that lease begins, the analysis becomes a bit more complicated.  Any fee charged by the landlord for screening the new occupant could be viewed as being imposed prior to the commencement of the new tenancy in violation of Section 15B.  The landlord would take the position that, notwithstanding the new lease, this is really a continuation of the original “tenancy”, legitimizing any fee for screening the new occupant just as the monthly pet fee was permitted by Judge Zobel in Perry.  In any event, the landlord could presumably recoup the cost of screening the new roommate by increasing the rent payable under the new lease.

Service Fees
Another type of fee, which is believed to be exempt from the statutory restrictions whenever charged, relates to additional services provided by the landlord to a particular tenant.  The best example is a parking space, for which a separate charge is routinely made.  Another illustration is offered by Gardner v. Simpson Financing Limited Partnership, decided in 2012 by a federal District Court judge and cited with approval by Judge Zobel in Perry.  The landlord in that case utilized a lease form requiring tenants to maintain personal liability insurance in a minimum amount of $25,000, covering personal injury or property damage caused by the tenant or any guest.  The landlord had arranged to obtain a master insurance policy to which tenants could be added.  Those tenants who chose to participate were essentially required to reimburse the landlord for their proportionate share of the premium.  Tenants also had the option of adding contents coverage for an extra charge, protecting themselves from loss if their personal property was damaged by fire or other casualty.

Some of the residents alleged that the premium charges violated Section 15B.  The judge disagreed, characterizing the master insurance policy as an “additional service” made available to the tenants, who decided on their own whether to participate in the program.  Admittedly, tenants were required to obtain liability insurance, but they were not compelled to use the landlord’s insurer.  In the case of contents coverage, the decision of whether to obtain insurance at all was the tenant’s alone.  It would, in the words of the judge, “elevate form over function” to penalize the landlord in these circumstances.

Contrast these fees with those charged for additional services which a tenant doesn’t want, like the amenity fee struck down in Perry. The same result was reached in Hermida v. Archstone, a 2011 case involving tenants who were charged a one-time $475 amenity fee for the right to use the property’s swimming pool, gym and outdoor grill.  Although this fee was meant to be optional, the tenants were not so informed.  Ultimately, they demanded a refund. The tenor of the Hermida decision clearly suggests that the result would have been different if the tenants were told that they needed to pay the amenity fee only if they in fact wished to take advantage of having a swimming pool, gym and outdoor grill on site.  None of these facilities (unlike, say, a toilet or functioning heating system) is legally required to be made available to a residential tenant and there is no good reason why they can’t be withheld from tenants who choose not to pay for them.  It seems clear that Judge Zobel would concur, given her characterization of the prohibited amenity fee in Perry as mandatory and non-refundable.

Commissions Charged By Brokers
Any amount which a landlord is allowed to charge can alternatively be collected through a real estate broker; the economic impact on the tenant is exactly the same.  A more difficult question is whether a broker can impose charges in addition to those lawfully collectible by a landlord.  That issue was raised in Samia v. McElaney, a 1983 decision handed down by the Boston Housing Court.  The judge readily acknowledged that Section 15B prohibits a landlord from collecting a broker’s commission from a rental applicant.  In Samia, however, the broker was not acting as the landlord’s alter ego.  Rather, the broker’s firm was characterized as a “separate bona fide business operation engaged in locating apartments for tenants” even though the landlord was its major source of listings.  Under these circumstances, the judge found “no prohibition” against the broker’s charging a commission to a rental applicant.

Other Fees Charged By Brokers
The same logic which permits a broker to charge a commission should apply as well to other fees.  For example, a broker may wish to collect and process information (similar to what is contained in a rental application) with respect to a prospective tenant and/or order a credit report.  The broker would essentially be taking the position that that part of its job is to investigate the desirability of the applicant; this is somewhat analogous to getting a prequalification letter from a mortgage lender in order to confirm that a would-be homebuyer will be able to pay for a house.  Interestingly, an article in the April issue of Units, the publication of the National Apartment Association, suggests that the “fastest growing form of fraud today” consists of persons falsifying a rental application, for example by supplying a false social security number or landlord reference.  The author recommends more careful scrutiny by “leasing teams”.  Rather than charging separate application and/or credit report fees, some brokers may simply prefer to include those costs as part of their basic commission.

It must be emphasized once again that the law remains in a serious state of flux, preventing an authoritative pronouncement regarding the legitimacy of particular fees, especially those charged after the term of a lease has commenced.  Members are urged to consult with their own attorneys.

Philip S. Lapatin, Esq.
Holland & Knight LLP
May 3, 2018

For any questions you may have, please contact GBAR Director of Risk Management & Legal Counsel William G. Mullen III, Esq., at wmullen@grbeb.com or 617-399-7842.
 
Charging Fees to Residential Tenants
GBAR
Last month, the as part of the National Association of REALTORS® (NAR) Sustainability program, NAR released its 20189 REALTORS® and Sustainability Report .This report surveyed members from across the country about sustainability issues facing the industry as well as the preferences that their consumers and communities have.

Among its findings, the report shows that:
Forty percent of respondents reported their MLS has green data fields, and respondents typically used the green data fields to promote green features and energy information.
Seventy-one percent said energy efficiency promotion in listings was very or somewhat valuable.
Sixty-one percent of respondents found clients were at least somewhat interested in sustainability.
Twelve percent of respondents reported that their Commercial Information Exchange (CIE) had green data fields, and the CIE green data fields were used to promote energy information, green features, and green certifications.
A majority of agents and brokers (70 percent) said that energy efficiency promotion in listings was very or somewhat valuable

“Consumers continue to make it clear that environmentally friendly features and neighborhoods are an important factor in deciding where and what home to buy,” said NAR President Elizabeth Mendenhall. “REALTORS® are leaders in the conversation about real estate sustainability, energy conservation and resource efficiency, and will continue to promote environmentally conscious strategies and best practices that benefit not just our clients, but also our communities.”

For more information, view the full Sustainability Report here. Want to learn more about green features and sustainability?  Sign up for our GREEN Designation course!
Consumers Prefer Green Features, Real Estate Sustainability
GBAR
A limited supply of homes for sale, appreciating home values, and rising mortgage rates tempered sales of single-family homes and condominiums in March from year ago levels in Greater Boston, according to data issued today from the Greater Boston Association of REALTORS® (GBAR).

Sales of detached single-family homes saw a year-over-year decline of 13.1 percent in March as 728 homes were sold compared to the 838 homes sold in March 2017. This year’s sales total is the tenth highest figure on record for the month of March and is a 51.7 percent increase on the February 2018 sales total of 480 homes sold. The condo market also experienced a decline in sales of 10.3 percent from 823 in March 2017 to 738 last month. Last month’s condo sales total is the eighth highest on record for the month and is also a 58.4 percent increase on the 466 condos units sold in February 2018.

“Again this month, we’ve witnessed the impact that the lagging supply can have on the market, however it is promising to see the month-over-month sales totals increase significantly this month as we start to enter the busy spring market,” said GBAR President Marie Presti, broker-owner of The Presti Group in Newton. “We’re continuing to see the strongest demand for homes priced at $500,000 or above, and this concentration of activity is fueling the upward pressure on home prices.”

Indeed, the median sales price of single-family homes continued to increase last month to a new record-high for the month of March at $579,950. This reflects a 4.9 percent increase in median sales price from March 2017 of $552,912. Likewise, the condo market experienced an increase in median sales price, from $515,000 in March 2017 to $547,608 last month. This is a 6.3 percent increase and is a record-high median sales price for the month of March.

“The record-high prices have yet to quell buyer enthusiasm, as we have eager buyer population looking to close on a home as soon as they can,” added Presti. “Our issue continues to be that our inventory of homes for sale is lagging behind the demand for housing, which has affected our overall sales totals.”

Active listings dropped significantly in both markets last month as the single-family home market had 1,970 active listings at the end of March 2018, which was a 22.9 percent drop from the 2,556 last March. Similarly, the condo market active listings also fell 22.9 percent from 1,706 in March 2017 to 1,316 last month.

“As prices continue to appreciate and inventory levels remain low, prospective sellers continue to have the upper hand as we enter the heart of the spring market,” Presti noted.

For additional information regarding March 2018 Greater Boston Housing statistics, including our new interactive housing market data dashboard, visit the Monthly Housing Market Reports page.
Greater Boston Home Sales Soften in March
GBAR
BOMA UPDATE BANNER

Did you miss our May Newsletter? Read about upcoming BOMA Boston events, news, and educational opportunities!

Read the May BOMA E-News

May E-News
GBREB
BOMA UPDATE BANNER

Did you miss our April Newsletter? Read about upcoming BOMA Boston events, news, and educational opportunities!

Read the April BOMA E-News

April E-News
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Real Estate Professional Ethics -Live Classroom
GBAR Member Service And Training Center
10:30am
 
REFA May After Hours
Whiskey Priest
 
Seller Representative Specialist (SRS Designation)
GBAR Member Training & Service Center
8:30am
 
BOMI: Budgeting & Accounting
BOMA Office
 
GBAR- International Connection
Crowne Plaza
2:45pm