Check out the June edition of the RHA Insider- featuring highlights from past events, information on upcoming events, plus local and national multifamily news.

Click Here for the June RHA Insider
The RHA Insider- June
GBREB

After several years of discussion, the Boston City Council passed legislation regulating short term rentals in the City of Boston. The primary effect of the proposed Ordinance would be to establish a registration system for all short-term rentals and to impose limitations on such rentals in the City of Boston.

A “Short-Term Rental” is defined as the use of a residential unit by a person for less than 28 consecutive dates. Also, licensed rooming houses, licensed bed and breakfasts, units offered under certain circumstances for person receiving medical treatment and their families, and short-term business/institutional stays of at least ten days, are all excluded from this Ordinance.

The Committee on Government Operations made several changes to the bill including allowing owner adjacent units to be rented for 365 days a year.  Under a prior version of the bill owner adjacent bills were capped at 120 days a year. The bill also added a requirement that the Commissioner of ISD report on the effectiveness of the new law beginning on June 30, 2019. Three amendments to the bill were also added including a sunset provision allowing residential units with executed leases for short term rentals to operate through September of 2019.   Mayor Walsh has indicated he plans to sign the bill into law. 

Please stay tuned for a member update from GBREB regarding the specific provisions of the law once it is signed by Mayor Walsh. 

Short Term Rental Bill Passes In Boston
GBAR
The GBAR Brokerage Counseling Line has received an increasing number of calls from members requesting information about setting up a Team and what are the Massachusetts regulations that cover Real Estate Teams within a brokerage.  Other questions received, which are equally pertinent include advertising and worker classification issues by Teams and what rules or laws must be followed.  

REALTORS® are subject not only to the licensure rules of the Commonwealth of Massachusetts, but also by The REALTOR® Code of Ethics and any local statutory or regulatory rules.  Although a handful of states have implemented specific laws and regulations governing real estate teams, the Commonwealth of Massachusetts has not yet legislated any team-specific laws or regulations.
Even though no current laws or regulations surrounding Real Estate Teams in Massachusetts have been codified, there several rules (laws, regulations and Articles of the Code of Ethics) governing REALTORS® licensed in the Commonwealth that are of particular importance to teams.

When working in or managing a team, it may be easy to run afoul of these rules * :

1) Real estate salespersons must be associated with a broker (254 CMR 3.00);
2) Real estate commission fees may only be paid to a broker (254 CMR 3.00);
3) Salespersons are prohibited from advertising in their own name and all advertisements must include the name of the broker (254 CMR 3.00);
4) REALTORS® shall be honest and truthful in their real estate communications and shall present a true picture in their advertising, marketing, and other representations. REALTORS® shall ensure that their status as real estate professionals is readily apparent in their advertising, marketing, and other representations, and that the recipients of all real estate communications are, or have been, notified that those communications are from a real estate professional. (REALTOR® Code of Ethics, Art. 12);
5) The name of the REALTOR® firm must be disclosed in a reasonable and readily apparent manner in all advertisements (REALTOR® Code of Ethics, Art. 12, Standard of Practice 12-5);
6) Salespersons and brokers other than the Brokerage firm are prohibited from holding client funds, (254 CMR 3.00);
7) Agency disclosure issues including undisclosed dual agency (254 CMR 3.00);  and
8) Non-licensed team members performing real estate activities reserved for licensees only (MGL c. 112, § 87RR).

*The following is meant to be representative, but is not an exhaustive list of all rules (as defined) pertaining to real estate Teams.  Consultation with your legal advisor is recommended prior to setting up any real estate Team


“Broker” when defined above means the brokerage firm with which the Team is affiliated.  Any commissionable transactions will always belong to the Brokerage firm, not the team as the Brokerage is the entity with which the public is engaging and because the team is not a separately licensed brokerage firm.  It is also important that all advertising and communications with the public include, in a prominent manner, the name and contact information of the Brokerage firm, in addition to that of the Team.

Although the broker of record for a brokerage firm may have different policies and procedures for Teams separate from agents under their direct supervision and training, a broker of record may share, but cannot delegate its responsibility for supervision solely to a Real Estate Team or Team Leader.  Ultimate responsibility for the action of all sales agents and broker-associates affiliated with the brokerage firm lies with the broker of record. Ultimately, “the buck stops here” with the broker of record, as he or she is both liable and responsible for the actions of all agents and team members affiliated with the brokerage.

In summary, if running a Team, remember one key thing: You are not a brokerage, so do not hold yourself out as one. Failure to adhere to these rules and regulations could result in an investigation by the Board of Registration, an ethics complaint, or even a 93A lawsuit from a disgruntled or potentially deceived client.
For more information, please see a selected list of articles and resources below, or contact William G. Mullen III, Esq, GBAR Legal Counsel & Director of Risk Management at 617-399-7842.

Resources:
State Statutes and Regulations for Unlicensed Assistants (NAR)
Legal Issues for Teams (NAR) 
How to create a winning real estate team, (REALTOR® Magazine/Daily Real Estate News, July 29, 2016)
7 reasons your real estate team will fail, (REALTOR® Magazine, Mar. 2016)
Teams: Important Considerations Regarding Real Estate Teams in Massachusetts
GBAR
MassHousing recently announced a $2,500 closing cost credit for Massachusetts veterans who use their ‘Operation Welcome Home’ loan program to buy a home. This savings in in addition to the program’s offer to finance up to 97 percent of the purchase price of a single-family home or condominium.

“Closing costs can run into the thousands of dollars, and by helping our veterans reduce those costs, we will make homeownership more affordable for them,” said MassHousing Executive Director Chrystal Kornegay in a press release. “When combined with MassHousing’s existing financing options, which offer military members and Gold Star families down payment assistance and up to 100-percent financing, this new closing cost credit will give the men and women who serve our country substantially more buying power.”

Relatedly, the National Associations of REATLORS® (NAR) recently released its 2018 Veterans & Active Military Home Buyers and Sellers Profile, which evaluates the differences of active-service and veteran home buyers and sellers compared to those who have never served in the military. Among the many statistics in the report, it indicates that among recent home buyers, 17 percent were veterans and 2 percent were active-military. Half of the active-service military buyers were first-time buyers and 68 percent are first-time sellers. 

According to a release from NAR, “Despite lower median incomes ($84,000), more stable job security and no down-payment financing options give aspiring military homeowners an advantage over their civilian peers. Fifty-six percent of active duty and 41 percent of veterans put no money down when buying a home, compared to 7 percent of non-military.

For more information view this release and infographic, or download the full report here.
 
Veterans Eligible for Closing Cost Credit from MassHousing
GBAR
On Monday, June 18, the National Association of REALTORS® (NAR) will launch a Call for Action (CFA) to push Congress to reauthorize the National Flood Insurance Program (NFIP) before it lapses on July 31.  Flood insurance is required for a mortgage in more than 20,000 communities nationwide and millions of small business and home owners depend on this program for their flood insurance, and a lapse in the program can impact nearly 40,000 home sales per month.

Among NAR’s policy standing on the issue, it supports:
Reauthorizing a long term and gradually strengthening NFIP;
Encouraging the development of private market options to offer comparable flood insurance coverage at lower cost than NFIP;
Providing federal assistance to high-risk property owners, including guaranteed loans, grants and buyouts in order to build to higher standards and keep insurance rates affordable;
More granularly pricing NFIP policies to better reflect the property's specific risk; and
Improving flood map accuracy so fewer property owners have to file expensive appeals.

Watch your email for this important CFA from NAR on Monday, June 18. It only takes a minute to let your member of Congress and Senators know how important flood insurance is for the market. 

NAR to Issue Call for Action to Extend Flood Insurance
GBAR
GBAR is looking for volunteers for two new task forces; a Technology Task Force and a REALTORS® Political Action (RPAC) Fundraising Task Force. The formation of both groups was approved by the GBAR Board of Directors at their most recent meeting.

The Technology Task Force will be responsible for evaluating business tools and technologies for agents and brokers and providing recommendations and reports to the existing Membership Committee for perspective on new benefits and resources to provide to members. If you have a background or prior experience in the technology field or like to explore and analyze new technologies, please consider volunteering for this task force.

Our RPAC Fundraising Task Force will focus on promoting member awareness and understanding of RPAC and will help organize activities and event fundraisers to help GBAR achieve our RPAC fundraising and participation goals. 

If you have interest in either or both task forces please contact Susan Melanson at smelanson@gbreb.com
 
Seeking Volunteers for Technology & RPAC Fundraising Task Forces
GBAR
All GBAR members are invited to the Annual Awards & Networking Breakfast, next Friday, June 22 at the Venezia Restaurant in Boston from 9:30 a.m. to 12:30 p.m. This event honors and celebrates the professional achievements and community accomplishment of our members and has strong emphasis on networking with peers and industry affiliates, and truly sitting back and enjoying the day.
In addition to the REALTOR® of the Year award, we also present the Andrew F. Hickey Distinguished Service Award, Good Neighbor Award, REALTOR® Spirit Award, and the Affiliate Member of the Year Award. Click here to learn more about each award

This event is a great way to get out of the office environment and kick off summer with your team. Tables of 10 and individual tickets are available. We hope to see you there!

Join Us to Honor Members at the GBAR Awards Breakfast
GBAR

Click the button below to read the May/June 2018 RHA NextGen Member Newsletter featuring stories on:

  • RHA - Caritas Communities Site Clean-ups
  • Member Spotlight of Tom Higgins, Leasing Development Manager at Chestnut Hill Realty
  • NAA Apartmentalize
  • New Community Spotlight: The Harlo

Click for Newsletter

NextGen Member Newsletter May/June
GBREB
Do to inclement weather, the June 4th RHA Golf Outing has been postponed. RHA Staff will be in contact about the new date.
RHA June 4th Golf Outing POSTPONED
GBREB
BOMA UPDATE BANNER
New Offering for BOMA Members!
Interested in getting your Certificate in Building Automation Systems (BAS)?

BOMA Boston is partnering with the Wentworth Institue of Technology on a new certificate program. The Building Automation Systems (BAS) certificate is designed for Building Owners and Mangers Association (BOMA) Boston members who have two - four years of professional experience in construction, facilities, or as an engineer, electrician or HVAC technician. In addition to the basic principles of facilities management, students will learn facilities project management and hands-on training in various Building Automation Systems, and demos on various control systems. This program is conveniently formatted for adult learners, with fast-paced seven week courses that allow you to quickly gain career-enhancing skills.

Continuing Education Units/Credits: Upon successful completion of the program, students will receive 6.3 Continuing Education Units (CEUs), nto college credit. Courses are designed to be taken on at a time and in sequence.

Click here for more information on course requirements.

Schedule
This course is scheduled each Wednesday night beginning June 27 through August 15, from 6-9pm. There is no class during the week of July 4th. The cost for this course is $750 per student.

Location
Wentworth Institute of Technology, College of Professional and Continuing Education
550 Huntington Avenue, Boston, MA 02115.

Registration
To register, contact CPCE at 617-989-4300 or 800-323-9481, or CPCE@wit.edu.
Building Automation Systems Certificate! Starting June 27th
GBREB
Sales of single-family homes and condominiums in April increased from year ago levels in Greater Boston as rising mortgage rates, an influx on new listings for sale, and continued strengthening in home values fueled an increase in market activity, according to data issued today from the Greater Boston Association of REALTORS® (GBAR).

Sales of detached single-family homes experienced a modest increase of 0.2 percent in April as 853 homes were sold compared to the 851 homes sold in April 2017. This year’s sales total is the ninth highest figure on record for the month of April and is a 19 percent increase on the March 2018 sales total of 728 homes sold. The condo market experienced a more significant increase in sales activity, seeing a 16.2 percent increase from 739 homes sold in April 2017 to 859 last month. Last month’s condo sales total is the fifth highest on record for the month and is an 8.5 percent increase on the 738 condos units sold in March 2018.

 “The mild weather this winter allowed for an early start to the spring market which is evident by the growth in sales this April,” observed GBAR President Marie Presti, broker-owner of The Presti Group in Newton.  

Notably, this marks the first month that sales of single-family homes and condominiums have risen on a year-over-year basis since October and November 2017, respectively. 

“Buyers this spring are finding more homes to choose from along with less competition as higher interest rates and home prices have softened demand, especially at the upper end of the market,” Presti stated. “That’s led to fewer multiple offer scenarios, less seller exuberance, and more normalcy in the negotiation process,” she said.

Still, the median sales price of single-family homes continued to increase last month to a new record-high for the month of April at $612,000. This reflects a 3.7 percent increase in median sales price from April 2017 of $590,000. Likewise, the condo market experienced an increase in median sales price, from $520,000 in April 2017 to $593,629 last month. This is a 14.2 percent increase and is a record-high median sales price for the month of April.

“Despite the increase in new listings for sale, the reality is buyer demand continues to far exceed housing supply and that’s putting upward pressure on home prices.  As a result, homes and condos are selling quickly, typically in a month to five weeks if priced right, and most are selling at or above asking price,” Presti noted.  

Indeed, even though new listings for detached single-family homes rose 11 percent in April from April 2017 and 39 percent from March, active listings declined 15 percent last month, from 2,999 homes for sale last April to 2,541 listings at the end of April 2018.  Similarly, in the condo market, new listings improved 21 percent in April over year ago levels and 36 percent from one month earlier, the number of active condo listings fell 5.1 percent from 1,875 in April 2017 to 1,751 this April.

“Looking forward, we see an increase in pending sales, so we can anticipate a strong month of May and continued steady sales this spring,” Presti noted.

In the single-family home and condo markets experienced increases in pending sales last month, with the single-family market increasing 12.1 percent from 1,338 pending sales in April 2017 to 1,500 last month, and condos rising 9.1 percent from 1,104 to 1,204 in April 2018.

For additional information regarding April 2018 Greater Boston Housing statistics, including our new interactive housing market data dashboard, visit the Monthly Housing Market Reports page.
Greater Boston Home Sales Bounce Back in April
GBAR
Real estate agents are under an obligation to present all offers to their seller client. The REALTOR® Code of Ethics Article 1, Standard of Practice 1-6 states that offers and counteroffers must be submitted as objectively and as quickly as possible. However, not all real estate agents are REALTORS® and required to abide by the Code. In Massachusetts, 254 CMR 3.00 also requires all agents to present offers and states: “All offers submitted to brokers or salespeople to purchase or rent real property that they have a right to sell or rent shall be conveyed forthwith to the owner of such real property.” Many MLS Rules and Regulations, including MLSPIN, also require that a seller agent present all written offers to their client. The MLS may also have a rule that allows buyer representatives to request to be present for the presentation of the offer to the seller. Despite the requirement that offers be presented, there is no legal obligation to acknowledge receipt or send a formal rejection of an offer, making it seem like your offer is floating out in the great abyss. Under both Massachusetts licensure law and the REALTOR® Code of Ethics, the only situation in which a real estate professional is exempt from presenting an offer to a seller is if the seller client has provided an explicit instruction to the agent to not present offers that do not meet certain criteria, such as a minimum price. 

If you are concerned that your offer may not be presented, or hasn’t been presented at all, the best action you can take as a buyer’s agent is to ask that the seller provide you a formal rejection in writing. That will demonstrate that the offer was presented and the seller chose not to accept those terms. The buyer can then move on, or submit a new offer with different terms.  In recognition of this issue, the Professional Standards Committee of the National Association of REALTORS® voted at their May 2018 meeting in Washington DC to amend Standard of Practice 1-7.  Under the newly amended SOP 1-7, of Article 1, a listing broker or agent will now be required to respond in writing that an offer was submitted to the seller if the cooperating broker who submitted the offer so requests. The listing broker or agent must respond in the affirmative unless the seller has provided written notification waiving the obligation to have the offer presented.

A buyer may choose to contact the seller directly to inquire as to the status of their offer, but it is likely that this course of action will ruffle some feathers. If a seller wishes to work with a buyer directly, they would not have hired an agent. 

A last resort, if you are truly convinced that the listing agent has withheld your offer, is to file a complaint with your local REALTOR® association or the Board of Registration. This is not an option to take lightly, but is available if necessary.

If you have questions about this article or any other matter pertaining to your real estate business, please contact Attorney William G. Mullen, III or the brokerage counseling hotline at 617-399-7842.
Was My Offer Presented?
GBAR
Legislation filed late in the session by Governor Baker to require home energy audits before a home could be listed for sale has been shelved by the Joint Committee on Telecommunications Utilities and Energy.  Bill H.4371, “An Act Relative to Consumer Access to Residential Energy Information” was reported out not to pass upon expiration of time granted Committees to consider legislation. Earlier this year the Committee sent similar legislation S.1839, “An Act Relative to Home Energy Efficiency” to a study.  

The Greater Boston Real Estate Board and Massachusetts Association of REALTORS® oppose any new law that would require an energy inspection prior to the sale of an individual’s home and the creation and use of a mandatory energy score. Such provisions would add expense, time, and complications to an already complicated transaction without creating any measurable energy efficiency investment in homes. Additionally, the proposed mandatory government energy labeling requirements could have significant negative impacts on homeowners and the housing market across the Commonwealth.
Bill Requiring Energy Audits Before Listing Shelved
GBAR
This year’s REALTOR® Day on the Hill event is fast-approaching and will be held on Thursday, June 7th at the State House in Boston.  As you know, this event is a great opportunity for REALTORS® to meet with legislators to voice their opinions about issues and concerns facing the real estate industry. This year, the REALTOR® organization’s list of legislative priorities includes support for Land Use and Zoning Reforms: The H.O.M.E. bill, First Time Home Buyer Savings Account, Mortgage Forgiveness Debt Relief, and Copper Pipe Theft Prevention.

Additionally, again this year we are offering free shuttle bus service that will run to and from the State House on the day of the event. One bus will leave from our suburban office location at 68 Main Street in Reading and another will have two pick-up points, first at the Sheraton Four-Points Hotel at 1125 Boston-Providence Highway in Norwood and second at the Holiday Inn at 55 Ariadne Rd. in Dedham. Limited seating is available so if you would like to reserve a seat on one of the buses, please email Kevin at kbutler@gbreb.com and indicate which bus you plan to take. 
Gov. Baker to Address REALTORS at Day on Beacon Hill
GBAR
If you need to schedule a smoke and carbon monoxide detector inspection don’t wait until the last minute!  The Boston Fire Department (BFD) allows for a smoke certificate to be good for 90 days, unlike the Commonwealth of Massachusetts which only allows for 60 days. Please encourage your sellers to apply for an inspection as soon as the purchase and sale is signed so they can get on the schedule for the Boston Fire Department. This will allow for plenty of time to get the inspection done and allow for corrective action when the home does not pass. Remember, during the spring, the BFD experiences a high volume of inspections so please plan ahead. 
 
Boston FD Urges Homeowners to Order Smoke & CO Detector Inspections at P&S
GBAR
GBREB NEWS

If you need to schedule a smoke and carbon monoxide detector inspection don’t wait until the last minute!  The Boston Fire Department allows for a smoke certificate to be good for 90 days, unlike the Commonwealth of Massachusetts which only allows for the 60 days.   Encourage your sellers to apply for an inspection as soon as the purchase and sale is signed so they can get on the schedule for the Boston Fire Department.   This will allow for plenty of time to get the inspection done and allow for corrective action when the home does not pass.  During the spring the BFD experiences a high volume of inspections so please plan ahead. 

Scheduling A Smoke Inspection In Boston
GBREB
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

Upcoming Events

Event
CBA Education: Real Estate Investments
Boston Landing
4:00pm
 
2018 CBA Charity Softball Tournaments
Moakley Softball Fields
8:00am
 
2018 CBA Charity Golf Tournament
Dedham Country & Polo Club
11:00am