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GBREB strives to ease the Massachusetts Housing Crisis

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.

Massachusetts Housing Crisis


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First, let’s review terminology here so that everyone is on the “same page”.  In Massachusetts, there are three primary statuses of real estate licensees (suspended and revoked licenses are not considered in this discussion):  Active; Inactive and Expired.

1.  “Active” status indicates that the licensee is in good standing with the Board of Registration of Real Estate Brokers and Salespersons, has completed the required number of continuing education credits during the prior renewal period and has paid the licensing fee for the current two-year period ending on his/her birthday.  Individuals with active real estate licenses may lawfully engage in the business of real estate with members of the public and derive commission-based income or a salary from their employer from their efforts.

2. “Inactive” status indicates that the licensee is in good standing with the Board of Registration of Real Estate Brokers and Salespersons, has not completed the required number of continuing education credits during the prior renewal period, but has paid the licensing fee for the current two-year period ending on his/her birthday.  Individuals who hold inactive real estate licenses may not engage in the business of real estate with members of the public, but may receive referral fees, except as described below.  

3. “Expired” status indicates that the licensee is no longer in good standing with the Board of Registration of Real Estate Brokers and Salespersons, has not completed the required number of continuing education credits during the prior renewal period(s) and has not paid the licensing fee for the current (or past) two-year periods ending on his/her birthday.  Individuals who hold expired real estate licenses may not engage in the business of real estate with members of the public and may not receive compensation for their services or receive referral fees.

Massachusetts General Law Chapter 112, Section 87XX ½ created an “inactive” license status for those licensees who have not completed the required continuing education credits.  As inactive licensees are prohibited from affiliating with a broker, a referral fee may be paid to them directly. This is the only instance where a salesperson can receive a referral fee directly. Massachusetts General Law Chapter 112, Section 87RR requires that an active salesperson’s referral fee must be paid to the broker in which they are affiliated.

Most questions to the Broker Legal Hotline deal with salespersons who have left the business and are still in their two-year renewal cycle and are considered “active”, but are no longer actively selling real estate (i.e. they retired or permanently left the business).  As stated above, the only way for a salesperson with an “active” license to be compensated is to be affiliated with a broker.  Certain “referral only” brokerages have been established where “active but not practicing” licensees may hang their licenses solely to earn referral income.  However, because of Mass General Law Chapter 112, Section 87XX ½, once a salesperson’s license becomes inactive, the individual is no longer allowed to hang their license with the referral only brokerage company.  Therefore, many salespersons make the personal decision to keep their license "active"; a solid reason being that the referral only brokerage is responsible for collecting the fee from the referring brokerage, thus decreasing the amount of personal follow up necessary when trying to collect the referral fee from a brokerage who has been less than forthcoming with their obligations.  On the downside, there typically are costs associated with belonging to a referral only brokerage.

It is important to note that a licensee with an “active” license cannot elect to become “inactive.”  The change of status only becomes effective upon the next renewal period when the licensee pays a licensing fee and certifies that they have not obtained the required number of continuing education credits for the prior two-year period. 
Can a Broker Pay a Referral Fee to Someone With an Inactive License?
Earlier this month, the Massachusetts House of Representatives and Senate passed legislation to tax and regulate short term rentals. The House bill would create a tiered tax system, include a variety of specific regulatory requirements, and provide cities and towns the discretion to limit the duration of rentals. The Senate version of the bill would create a uniform tax on all rentals and would allow cities and towns to decide how to regulate short-term rentals.  

Since these bills have major differences, a conference committee consisting of three members from each chamber will need to be appointed to reconcile the differences and agree on a final bill to send to Governor Baker. Both chambers have included language that would require any platform or entity (including brokers and salespersons) to be responsible for collecting and remitting taxes if they are also collecting the rent for the owner.

The Massachusetts Association of REALTORS® (MAR) along with the Greater Boston Real Estate Board (GBREB) have raised concerns in both chambers on the issues of private property rights and broker's obligations to collect and remit taxes, and will continue to monitor these bills. For more information, please read this article from the Commonwealth Magazine. 
Mass. House, Senate Pass Short-Term Rental Bills
A phishing email, purportedly from the “REALTOR® Party via DocuSign,” has been sent to some National Association of REALTOR® (NAR) members. NAR says the email, which contains an attachment, is a phishing attempt, and recipients should delete it. If you’ve opened the email and entered your DocuSign credentials, you should log into DocuSign and change your password immediately. Remember never to act on or click on any links in emails that appear suspicious or for which you cannot verify the sender via a telephone call. It’s a good idea to provide this advice to clients, too.

Spam emails can't be prevented entirely, but REALTORS® can reduce the amount of unwanted email that comes into their in-boxes. And on the flip side of the coin, REALTORS® who use email to find and work with clients can take steps to ensure that their own electronic communications aren't seen as spam.

For more information on cyberscams and cybersecurity best practices, visit NAR’s webpage.
New Email Scam Targeting REALTORS®
On April 30, GBAR is sponsoring an event entitled “Blockchain: Digitally Rebuilding the Real Estate Industry”, hosted by CoreTrendz, which focuses on blockchain technology, the world's leading software platform for digital assets.

Blockchain technology is a transformational force of significance to all real estate industry stakeholders and professionals. The first property transactions have already been recorded on blockchain, and the technology promises to revolutionize the industry by streamlining the purchase and sale of land, preventing data loss, bringing greater efficiency to pricing, and dramatically optimizing the mortgage and escrow processes.

This exclusive event, headlined by Avi Spielman, one of the world’s leading experts on blockchain and real estate, will introduce key topics, including: 

A non-technical introduction of blockchain fundamentals
Blockchain as it relates to current issues and inefficiencies in property titles
Government and legal issues associated with distributed ledger innovation,
The most important real estate blockchain trends and start-ups to be aware of.
Click here to register and use the discount code “GBAR2018” at checkout to save when you sign up!
GBAR Sponsoring Blockchain Technology Seminar
Last month, members of the GBAR Charitable Grants Task Force met to review grant applications submitted by local housing groups and agencies requesting assistance from the GBREB Foundation. As there are many worthy organizations that need financial assistance, the committee recommended 15 local, non-profit housing and homeless assistance organizations that would most benefit from receiving a grant from GBAR. The GBAR Board of Directors have approved the following organizations to receive a grant of $2,000: A Place to Turn in Natick, Allston Brighton Community Development Corp. in Brighton, Boston Sock Exchange in Wayland, Caritas Community, Inc. in Braintree, Creative Living in Andover, Family Promise Metrowest in Natick, Housing Families in Malden, Mission of Deeds in Reading, Old Colony Habitat for Humanity in Attleboro, Project Just Because in Hopkinton, RESPOND, Inc. in Somerville, and Second Chances, Inc. in Somerville. Additionally, the following organization will receive a $500 grant: Council of Social Concern in Woburn, and Newton at Home in Newton.

All recipient organizations will be recognized and honored at the 2018 GBAR Awards & Networking Breakfast on Friday, June 22.

Please remember, when you pay your REALTOR® dues you have the option to voluntarily donate to the GBREB Foundation. We sincerely appreciate every donation, as it allows us to continue our charitable efforts and give back to the communities we serve.
GBAR Awards $25,000 to Local Housing & Homeless Assistance Agencies

Click the button below to read the March/April 2018 RHA NextGen Member Newsletter

Click for Newsletter

NextGen Member Newsletter Mar/Apr

On Tuesday April 3rd, Governor Baker announced that he would be filing new legislation to add more requirements to home sales transactions. The bill, H.4371, would require sellers to complete a home energy audit prior to sale. The bill would capture single family homes and homes with up to four units listed for sale. The bill would also direct the state Department of Energy Resources to establish an energy scoring program for the sale of residential property. The Governor’s bill is similar to S.1839 An Act Relative to Home Energy Efficiency sponsored by the late Senator Kenneth Donnelly.

Under current state law home inspectors and associate home inspectors are required to provide a document outlining the procedures and benefits of a home energy audit to all clients purchasing a single-family residential dwelling, a multiple-family residential dwelling with less than five dwelling units, or a condominium unit in structure with less than five dwelling units.  In addition, Massachusetts residential consumers currently pay a surcharge on their energy bills for energy audits they can have performed on their home at no additional cost.   

The Greater Boston Real Estate Board (GBREB) and Massachusetts Association of REALTORS® (MAR) have consistently opposed adding new requirements at the time of property transfer. GBREB and MAR have expressed concern the legislation will unnecessarily complicate and delay the home buying process as well as impact the negotiation of contracts regarding the acceptability of the ratings. In addition, GBREB has raised concerns regarding stigmatizing older homes and adversely impacting home values.  

The legislation has been referred to Joint Committee on Telecommunications, Utilities and Energy for a public hearing. 

Gov. Baker Seeks to Require Energy Audits Prior to Home Sale
April 2018 marks the 50th anniversary of the passage of the Fair Housing Act in the United States.  In commemoration of Fair Housing Month, today’s Legal Brief will discuss discriminatory practices and lead paint testing.

The Massachusetts lead paint law (most recently modified in December 2017) applies to structures built before 1978, where a child under the age of six resides.  The law specifically stipulates that property owners must remove or cover (encapsulate) dangerous levels of lead on window sills measuring five feet or less from floor, stair tread or ground, from handrails and from railing caps.  All other “Accessable/Mouthable” (“A/M”) surfaces only need to be at an intact standard for compliance.  “Friction” (or “F”) surfaces, which include door edges, door jambs and stair treads, require de-leading of all points of potential friction, stair treads will need to be de-leaded in their entirety, and these surfaces cannot be encapsulated. 

Whenever any residential premises containing dangerous levels of lead in paint, plaster or other accessible structural material undergoes a change of ownership and as a result a child under six will become or will continue to be a resident therein, the new owner shall have 90 days after becoming the owner to obtain a Letter of Full Compliance or a Letter of Interim Control.  Further, the owner’s legal obligation exists regardless of the owner’s knowledge of the presence of lead paint.  

As such, any new owner with a child under six must address this issue within the first 90 days they reside in the property or they will be in violation of the law after that period.  Further, current owner’s who reside in the property with a child under the age of six who had not previously tested for lead paint, cannot now refuse a buyer’s right to test for fear that lead paint will be found on the property and they will be found to be in violation. 

In property sales, the Childhood Lead Poisoning Prevention Program requires owners of property built before 1978 who are selling or leasing with an option to purchase and any agent who is involved with the sale or lease to provide prospective purchasers with information regarding the compliance status of the property.  Also included in this information is a Property Transfer Lead Paint Notification package explaining the Lead Law, legal responsibilities, the hazards of lead paint, etc.; a copy of any lead determination inspection, risk assessment and/or compliance documents; information about lead poisoning which occurred at the property; and information about any criminal complaints that have been brought against the owner for violations of the Lead Law. 

A real estate agent has the following responsibilities in property sales:

(1) Read or allow the buyer to read the Notification form;
(2) Verbally inform the buyer of the possible presence of lead and the provisions of the Lead Paint Law;
(3) Verbally inform the buyer of the availability of a lead paint inspection; and
(4) Have the buyer sign the Notification form that has been filled out by the seller of the property.

Note: Sellers and real estate agents are in violation of the federal and Massachusetts law if the buyer signs the Notification form prior to receipt of the Seller’s written responses on that form.

Although Massachusetts law states that the completed Property Transfer Lead Paint Notification form must be acknowledged by all parties prior to the signing of the purchase and sales agreement, the Notification form must actually be signed by both parties prior to the acceptance of any offer, in instances where an Offer To Purchase Residential Real Estate is utilized, because such offer is a binding contract for the sale of the property and the Purchase and Sale Agreement is simply a reiteration of the terms of the offer with other terms and conditions for performance thereunder. The law allows the buyer 10 days in which to have a lead inspection performed. If lead is discovered, the buyer may withdraw from the sales transaction.

Does a seller have the ability to refuse to allow a potential buyer to perform a test for lead hazards on a property?  No, any potential buyer has an absolute right under Federal and State law to perform such testing prior to becoming obligated under a sales contract.  But can the seller legally instruct the listing agent to inform all potential buyers to waive this right, or that they will reject an offer?  No, any instructions along these lines would potentially give rise to a fair housing violation for discriminatory practices against families with children under the age of six and lead to liability on behalf of both the seller and listing broker for participating in discriminatory behavior.

Similarly, a property owner cannot refuse to sell or lease property to a person(s) with children under the age of six in order to avoid the lead paint law requirements. If a seller does, the property owner will be discriminating against families with young children in order to avoid testing or de-leading a unit with a rental.  As such, a listing broker must follow all the lead paint laws to inform consumers of their rights under the law and avoid potential liability.  Listing brokers must beware of potential liability for participating in discrimination if property owners refuse to follow the law, or instruct you to avoid following lead paint or fair housing laws. 

Are there penalties if an owner or brokers fail to comply with the lead paint law notification requirements?  Yes, M.G.L. chapter 111, section 197A(e), states that an owner who fails to comply is (1) liable for all damages caused by the failure to comply (including medical expenses and special education expenses); (2) a penalty of up to $1,000; and (3) subject to a M.G.L. chapter 93A (Consumer Protection Act) lawsuit if the person is in the real estate business (e.g. a real estate broker or builder).  In addition, all Federal and State penalties under fair housing laws are also applicable, including, but not limited to, actual damages, punitive damages, injunctive relief, civil penalties upwards of $10,000 for a first offense and loss of your business and broker’s licenses.   

Following all applicable lead paint and fair housing laws is a sound business decision.
Discrimination and Lead Paint Testing...Refusal to Allow Testing is Unlawful!


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