RE08RC08:MassachusettsReal Estate License Law and Regulations

by | Dec 1, 2012 | Closing Attorney


— Real estate closing attorney in Massachusetts guiding those buying a house or selling their home. Our lawyers answer questions on : purchase sale agreement, closing costs, title company, title insurance, refinance mortgage, estate planning, probate court and commercial real estate, as we serve all of Greater Boston, Massachusetts including the South Shore, Metrowest and elsewhere in Eastern Mass.

RE08RC08:MassachusettsReal Estate License Law and Regulations

1. Board of Registration of Real Estate Brokers and Salespersons

A. The Board

1) Composition of the Board

2) License oversight

3) Enforcement authority

2. Licensing Requirements

A. M.G.L. c. 112, §§ 87PP – 87DDD1/2

B. Code ofMassachusettsRegulations 254 2.00 et. seq.

  1. Pre-license education
  2. Examination
  3. 1 year affiliation – At least 25 hours per week for at least 52 weeks completed within a two-year period
  4. Other requirements
  5. Exemptions
  6. Massachusettsattorney
  7. Massachusettslaw school student
  8. Reciprocity/Education Waivers

C. Business entities

  1. Limited Liability Companies and Partnerships
    a. Insurance requirements
  2. General and Limited Partnerships
  3. Corporations and Limited Liability Companies (LLC).

D. No unlicensed compensation

E. Continuing Education

1) 12 Hours at Board Approved Schools and Instructors

2) Exemptions

a. Licensed by reciprocity in MA without having to take the examination

  • Must complete the approved program of the home state or the MA program
  • When exempt in the home state NOT exempt in MA

b. MA attorneys in good standing

3) Any candidate for renewal who fails to complete continuing education but pays the license renewal fee shall be renewed as Inactive.

3. What constitutes practice of real estate?

A. Sale, lease, exchange of an interest in real property

M.G.L. c. 112, § 87PP

B. Exemptions from license requirement

  1. Property managers while acting under a contract
  2. Principals (buyer or seller)
  3. Developers selling their own property
  4. Other exemptions

C. Gifts and Inducements

  1. From brokers only
  2. To principals (buyer/seller)
  3. Agents prohibited from sharing compensation with those who need to be licensed but are not.

D. Co-broker relationship allowed across borders with duly licensed broker of other jurisdictions

E. Employee versus independent contractor
1) Advisability of written relationship agreement

F. Promotional sales of out-of-state land development (M.G.L. c. 112, § 87AA)

4. Active– Inactive Status (M.G.L. c. 112, § 87XX1/2)

A. Inactive status is the same as unlicensed except that inactive licensees may accept a referral fee from an Active broker for the procurement of a prospect.

1) Inactive licensees may not affiliate

2) Inactive salespeople may not accumulate experience toward broker licensure

B. Referral fees

1) Payment to an inactive licensee for the procurement of prospects

2) Payment of referral fee to an Active un-affiliated salesperson prohibited

5. Disclosures

A. Brokerage relationship disclosure on all property types for purchase or sale.

  1. Providing written disclosure at first personal meeting to discuss a specific property with a prospective buyer or seller.
  2. Buyer / Seller Agent
    a. Using the State mandated form
  3. Dual Agent
    a. Obtaining written consent and notice

B. Written Fee disclosure to prospective residential tenants

C. Disclosure of all fees and commissions

1) Net listings illegal for sales or rentals

D. Disclosure of broker or salesperson personal or familial interest

E. Broker options to purchase

F. Home Inspection brochure and recommending home inspectors

  1. Buyer’s Agent may recommend
  2. All other prohibited including Dual Agents

6. Handling money

A. Deposits

  1. Accepted offers
  2. Purchase and sales agreements

B. Escrow funds

  1. Commingling prohibited
  2. Record keeping
  3. Interest and non-interest bearing accounts
  4. Only brokers have the authority to access funds

Disputes

  1. Purchase and sales agreement to govern
  2. M.G.L. c. 112, § 87AAA (d) as it relates to disputes

7. Board disciplinary authority over agents relating to practice

A. M.G.L. c. 112, § 87AAA

B. 254 CMR 3.00

C. Highlights of disciplinary authority

  1. Misrepresentation
  2. Undisclosed principal
  3. Undisclosed dual agent
  4. Failing to account for or remit funds
  5. Paid commission to unlicensed person
  6. Undisclosed commission
  7. Inducing a party to break a contract
  8. Commingled funds
  9. Failed to provide purchase and sales
  10. Discriminatory practices
  11. Net listing
  12. Practicing while impaired
  13. Practicing while the license is expired
  14. Falsifying license applications and license renewal applications
  15. Failing to report a criminal conviction

8. Professional standards of practice

  1. Address reporting
  2. Business Name
  3. Display of license
  4. Salesperson may not practice unless affiliated
  5. Advertising
    1. Broker identification
    2. Salesperson prohibited
    3. Discrimination prohibited
  6. Record keeping
  7. Conveying offers
  8. Attorney services
  9. Sharing of Fees
  10. Written notification to Board of affiliation

9. Brokerage Relationships (254 CMR 3.00(13))

A. Consensual dual agency – residential properties

B. Designated Agency – residential properties

C. Sub-agency representation

D. Non-agent Facilitator

 

Required handouts and reference materials: MGL ch. 112 sec. 87pp through 87DDD1/2 inclusive, 254 CMR

 

 


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