Major Change To Current Practices | Expect Delays and Bumpy Road Starting Oct. 3

I just finished yet another closing where a national lender issued the closing documents the morning of the closing, and worse, issued a revised TIL (Truth in Lending) disclosure during the middle of the closing! Under the new TILA-RESPA Integrated Disclosure Rules (TRID) set to start on October 3, this too-common practice would have resulted in a closing delay of up to 7 days, to the dismay of everyone in the transaction.

The new TRID rules are game-changing regulations which threaten to disrupt and delay closings across the country. The new rules, already pushed back once due to industry outcry, go into effect in about 60 days on Oct. 3. I am very worried that lenders, Realtors and closing attorneys are not at all prepared for one of the most significant changes in how we do business. Experts are predicting that closings will be delayed, 60 day loan approvals will be the new normal, and new forms will bewilder buyers. “Expect a one- to two-week delay in closings,” said Ken Trepeta, director of real estate services of the government affairs branch for the National Association of Realtors, when describing the impact of TRID.

Currently, we are finishing one of the strongest spring markets in a decade, but I’m quite concerned that come Fall, the new TRID rules will put the fall market into an ice bath. The best thing that every real estate professional can do is get educated and get prepared now for these changes. August is typically a slow month, so use it to get ready. My team will be doing a roadshow Powerpoint seminar to any local real estate office to explain the new changes. Contact me at for more info.

New Closing Disclosure Replacing the HUD-1 Settlement Statement: 3 Day Rule

Under TRID, there will be a new settlement statement called a Closing Disclosure, which must be issued to the borrower at least 3 days prior to closing. If that does not occur, the closing will be delayed for up to 7 days. We are hearing that lenders will require that the information contained in the Closing Disclosure (all fees, closing costs, taxes, insurance, escrows, credits, etc.) be finalized 7-10 days prior to closing, to give them enough time to generate the new Closing Disclosure in a timely fashion.

What does that mean for us professionals? It means that everything will need to be pushed up and done faster than before. That goes for titles, CPL’s, broker commission statements, invoices for repairs, insurance binders, condo fees, recording fees, title insurance, everything. And it means we can all expect delays as everyone adjusts to the new timetables and rules.

Practice Pointer: A new TRID addendum/rider has been released by the Mass. Association of Realtors which allocates risk and responsibility between buyer and seller. I suggest that all brokers and practitioners use this or similar language for their purchase and sale agreements. Please see this post for more information.

What Forms Will Be Signed At Closing?

Lenders will require the new Closing Disclosure (embedded below) be signed by the borrower at closing. However, although the Closing Disclosure was intended to replace the current HUD-1 Settlement Statement, the geniuses at CPFB neglected to put a signature line for the sellers on the new Closing Disclosure. I’m not making this up. And we are no longer supposed to use the “old” HUD-1 Settlement Statement. Thus, our title insurance companies are telling us that there may be three settlement statements signed at closing: a Closing Disclosure for the buyer, a Closing Disclosure for the seller, and a combined Closing Disclosure. ALTA has created a new Combined Settlement Statement which can be found here.

Bank of America was asked whether it would require the use of the ALTA model forms, and it stated in a June 9 memo that it prefers the ALTA model if a closing attorney chooses to use a settlement statement to supplement the Closing Disclosure (CD), but specified that the settlement statement figures must reconcile to the CD and a copy of the settlement statement must be provided to the bank. The bank also stated that all revisions to fees and costs will require bank approval and an amended CD. In other words, closing attorneys will not be allowed to revise fees and costs by simply supplementing the CD with a settlement statement.

60 Day Approvals/Closings The New Normal?

With any historic change to how lenders disclose fees and approve loans, there’s going to be a steep learning curve — and delays. You can count on that. Industry insiders say the days of 30 and even 45 day loan approvals may be over, at least temporarily. Sixty (60) day approvals may be the new normal, and agents should build the longer timeframe into their offers and purchase and sale agreements and educate their buyers and sellers accordingly.

Repairs and Walk-Throughs

Since lenders will require all fees and credits finalized 7-10 days prior to closing, this will significantly impact how we handle repairs and credits. Agreed upon repairs also affect how the appraisal is conducted which will further impact the timelines. Experts are suggesting that Realtors consider doing walk-throughs at least 14-21 days prior to closing instead of the typical day before or day of walkthrough, because all repair issues and credits should be set in stone at least 7-10 days prior to closing and changes in fees and credits on the day of closing will not be permitted by the lender. Some experts are even saying that agents should do two walkthroughs, one within the TRID timelines and one immediately prior to closing. Also, under TRID paid outside closing (POC) items will be discouraged by lenders.

Take-away:  Realtors should be warned that repairs contained in the purchase and sale agreement will have the potential to delay closings under the TRID rules. Ensure that any repairs are completed 14-21 days prior to closing. Better yet, don’t have the seller make repairs at all; use closing cost credits instead. 

No More Back to Back Closings?

Due to the high potential for delays caused by TRID, back-to-back or piggyback closings may be a thing of the past, at least for now. A delay with a closing obviously has a domino effect on a back to back closing. The best practice, at least for the first few months of the new TRID era, is to schedule closings at least 3 days apart. Seller/buyers will have to prepare for this reality with bridge loans, use and occupancy agreements, or temporarily staying with your nearest relatives.

1416821334979Partner with Trusted and Verified Providers

Now more than ever, Realtors are going to want to partner with lenders and closing attorneys who have been vetted and verified as fully compliant with the TRID rules, so there will be minimal disruption and delay on their transactions. Realtors and loan officers should ask their closing attorneys whether they are compliant with the ALTA (American Land Title Association) Best Practices, which is quickly becoming the standard for TRID compliance. Under the ALTA Best Practices, the attorney will have passed an intensive initial due-diligence screening, a third-party internal audit, background and credit check, extensive review of applicant’s experience, business model and policy loss history, and licensing verification. The closing attorney should also have secure document encryption capabilities and privacy/technology policies in place. My office has been vetted and verified by Stewart Title which has a comprehensive website on the TRID rules. If your buyer wants to use his personal attorney who does not specialize in real estate, explain to him or her why that is a mistake which could ultimately delay the closing. 

Bumpy Road Ahead?

In my opinion, the TRID rules are the biggest change to the industry in 20 years, and will be much more difficult to implement than the new GFE and 3 page HUD of several years ago. As discussed above, my team will be doing a roadshow Powerpoint seminar to any local real estate office to explain the new changes. Contact me at to schedule your complementary seminar.

More information:

Mass. Ass’n of Realtors Webinar on TRID with Ruth Dilingham, Special Counsel
National Ass’n of Realtors Webinar with Phil Schulman
Old Republic Title FAQ on TRID
CFPB Webinar Rebroadcast May 2015

CFPB Closing Disclosure by Richard Vetstein


Tax-Information-about-Employees-and-Contractors-3SJC Issues Long Awaited Ruling That Agents Can Be Classified as Both Independent Contractors and Employees, But Leaves Questions

The Supreme Judicial Court has just released its long awaited opinion in Monell, et al. v. Boston Pads, LLC, (link here), ruling that Massachusetts real estate and rental agents can remain classified as independent contractors under the state’s real estate licensing and independent contractor law. The ruling keeps the traditional commission-only independent contractor brokerage office model in place, with brokers allowed to classify agents as 1099 independent contractors, without facing liability for not paying them salary, overtime or providing employee benefits. A collective deep breath should be heard throughout the entire Mass. real estate industry this morning.

Although the ruling determined that real estate agents are exempted from Massachusetts’s independent contractor law, the Court left open whether future plaintiff employees could build a case on other legal theories, and the Court deferred to the Legislature to enact a bill to address any murkiness which remains with the law.

Despite the question left behind by the justices, Gregory Vasil, CEO of the Greater Boston Real Estate Board told Banker and Tradesman said that, “We’re pleased with the outcome.” “It preserves the right of choice for our members. It doesn’t change the industry, it doesn’t change the status quo. It’s pretty clear you can have both independent contractors and employees.”

Corrine Fitzgerald, 2015 president of the Massachusetts Association of Realtors and broker-owner of Fitzgerald Real Estate in Greenfield, agreed, calling it a “good decision.”

Rental Agents Sue Jacob Realty For Overtime Wages

This lawsuit was brought by a group of disgruntled rental agents at Jacob Realty seeking to recoup lost overtime and minimum wages. As is customary in the industry, Jacob Realty classified the agents as independent contractors, paying them on a commission-only basis and making them responsible for payment of their own taxes and monthly desk fees. At the start of their employment, however, the agents signed non-disclosure, non-solicitation and non-compete agreements. They had to own day planners, obtain a cellphone with a “617” area code, adhere to a dress code, submit to mandatory office hours and to various disciplinary actions if they did not meet their productivity goals — requirements typically reserved for employees, not independent contractors.

Court Holds That Agents Can Be Classified Either as Independent Contractors or Employees

The SJC was tasked with balancing the independent contractor laws and the real estate licensing law — which in many critical aspects the Legislature left directly in conflict with each other. Justice Hines, writing for the Court, noted the difficulty in construing the two laws, stating that “the real estate licensing statute makes it impossible for a real estate salesperson to satisfy the three factors required to achieve independent contractor status, all of which must be satisfied to defeat the presumption of employee status.”

The Court ultimately concluded that a real estate agent could be classified as either an independent contractor or an employee, but that the agents at Jacob Realty were unable to demonstrate they were employees in this particular case. The Court, however left open for another case the ultimate questions as to whether all real estate agents should be classified as independent contractors. The justices said that “in light of the potential impact of that issue on the real estate industry as a whole and its significant ramifications for real estate salespersons’ access to the rights and benefits of employment, we think it prudent to leave that issue’s resolution to another day, when it has been fully briefed and argued. Should the Legislature be so inclined, it may wish to clarify how a real estate salesperson may gain employee status under the real estate licensing statute.”

This ruling is somewhat frustrating. The SJC punted on the major question that everyone in the industry has been waiting on for a year now. I love when that happens (insert sarcasm here). Whether the Legislature takes up this issue remains to be seen. In the meantime, brokers and office managers can sleep a little better tonight knowing that the chances they will be sued over employee classification has gone down considerably, but they still may be awoken someday with a nightmare in the hands of a creative plaintiff’s wage and hour attorney.



10981956_10153123954712492_3979037511274380989_nReal estate professionals, you are cordially invited to a fabulous night of pampering at Metrowest’s hottest style salon, Beauty Parlr! Attendees will enjoy complimentary blow-outs by professional hair stylists, including Moroccan oil treatment, head massage and your choice of style.

Date: April 30, 2015
Time: 4pm-7pm
Venue: Beauty Parlr, 1 Watson Place, Building 3 Floor 3, Framingham, MA 01701

Wine, cosmos, cheese and nibbles will be provided, along with the latest in jewelry fashions for spring and summer. This event has limited space, so please RSVP to

Due to limited space, you must reserve a blow-out appointment in advance: Please call Beauty PaRLR at 508-202-9538 or email Limited space available, first come first serve basis.

A professional photographer will also be available for head shots (additional fee).

Sponsored by Attorney Richard Vetstein of the Vetstein Law Group, P.C.Bryan Brown of Guaranteed Rate, and Matt Naimoli and Zack Gould of G&N Insurance.

We hope to see you there!



Predictions On the Spring Real Estate Market from a Panel of Local Experts

“There’s no curb appeal if there’s no curb!” — Rona Fischman, 4 Buyers Real Estate

We are less than a week away from March, which usually signals the beginning of the frenzied spring real estate market in Massachusetts. However, unless you’ve been hibernating with the bears up in Maine, there’s a slight problem. We have snow. Lots. Of. Darn. Snow. The winter has wrecked havoc with everything, and that includes the real estate market.

Boston Magazine is bullish on the spring market, but what do the real experts think? I put the questions to my network of experienced local Realtors and mortgage professionals. I asked them if the snow will push back the traditional start of the spring market? What are inventory levels in your area? Do you have sellers waiting for better weather before they list? Are buyers waiting or are they trudging thru the snow to view listings? Do your see the spring as a buyer or seller market? Loan officers, where do you see rates and products this spring?

Here’s what they said, and don’t forget to clink their websites for more info.

ali-corton“I’m seeing a very sluggish start to 2015. Snow, cold temps, ice dams and the general malaise that’s set in on our region are all factors. I hear buyers are getting preapprovals and a few select properties have received multiple offers. But, overall it’s been slow and until sellers get houses prepped for market the buyers will wait on the sidelines.” — Ali Corton, Realty Executives Boston West, Framingham

Inman_Sep14_600x-144054“Inventory is definitely down here in Cambridge & Somerville — today we have just 31 active singles/condos/multis in Cambridge, compared with 46 last year on 2/26. In Somerville, we have 27 active listings today, compared with 40 last year. Granted, even those 2014 figures are really pathetic, as we’ve been dealing with extremely low inventory for the past several years, but this year is an extreme case. Funny thing is, those agents who are putting their sellers’ homes on the market are seeing plenty of traffic at open houses and showings, receiving multiple offers, and getting record-high prices, so I don’t know why anyone is hesitating to list.” — Lara Gordon, Coldwell Banker, Cambridge/Somerville

danielsteamsidebar2“The market in Sudbury is certainly slower than a typical winter market, but there are plenty of buyers hoping to take advantage of low rates and opportunities with motivated sellers. Like with any market, homes in popular price points that are prepared and priced right, are selling quickly and in some cases, resulting in multiple offers. Buyers aren’t as hesitant to go through the process now as Sellers are. Sellers are hesitant for many reasons, lack of curb appeal – which in many cases, great curb appeal adds value to the house, the thought of buyers trudging through their houses with snow on shoes (even though it’s always requested to remove shoes), ice dam damage, the thought of moving when the desire to hibernate is much more appealing and last but certainly not least, the liability involved in having a house on the market when snow/ice/icicles can potentially cause harm can be scary for homeowners. The Spring market should be strong, with plenty of pent up demand and after the winter of ’15, more city buyers looking for a beautiful garage with a nice house attached!” — Gabrielle and Carole Daniels, Coldwell Banker Sudbury

heidi-zizza amyuliss2“Definitely slower right now than usual. The market reports are quiet. I think everyone is tired of the snow and I have properties with ice dams affecting closing dates etc… I think Spring is going to POP everyone is going to be excited about warm wetaher but expect some wet basements….The market is just stagnant. Sellers want to sell but feel as if their home is not ready to be shown. Buyers jump on MLS everyday looking for new listings but slim pickings. If we could only get them all on the same page.” Heidi Zizza and Amy Uliss, mdm Realty, Framingham“Inventory in the Somerville-Cambridge metro area has been low for two years. This February, it was very low. I am anticipating another seller’s market, but less drastically uneven in 2015, compared to 2014 and 2013. This winter is likely to push people to move. I anticipate that people who planned a move in the next 2-4 years may jump sooner. City dwellers who struggled to park and find places to pile snow are anxious for off-street parking and some land. Over-housed suburban residents will sell to right-size into managed condos (where someone else hounds the plow guy to get there.) Retirees may head for warmer climes sooner. We all complain; home owners can do something about it. I suspect that inventory levels will become more even by late spring. Sellers will delay putting their houses on the market until after the snow is melted and their roof and ceiling damage is repaired. I have heard of two transactions that fell through because of ceiling leaks. There could be more stories about this, since so many houses have sprung leaks.” — Rona Fischman, 4 Buyers Real Estate Cambridge

bcav.png“Will there ever be a better time to buy a home? Mortgage rates are very close to 2 year lows today, and I expect them to stay down in this range thru 2015.  I think we see the 30 year fixed traded in the 3.75% to 4.25% for most of 2015.  This is still at a historical low at 4.25%. Continued economic weakness overseas, Banks/Lenders closing loans quicker and lowering their fees contribute to low mortgage rates all year folks!” — Brian Cavanaugh, RMS Mortgage Boston

284083_1902949570525_2002933_n“I have a few buyers and we have been walking thru knee deep and higher snow just to see some of these homes, agent’s don’t shovel thier listings nor do their sellers. I had one agent tell me the door would be open only to get there and walk through waste deep snow to find the door was locked and we could’nt see the house. I have buyers looking but the lack of good homes currently on the market is frustrating.” Sherry Stone-Graham, Touchstone Partners, Chelmsford

1631571.jpg“Even though we’ve had a “delayed winter” by having bulk snowstorms pretty much all at once instead of spread out throughout the last few months, it has slowed the market down in Southborough and Westborough although it hasn’t halted it entirely. There are 25 houses in varying price bands in my hometown of Southborough to choose from, with about 20% of them being in the over $900,000 range and just about 16% being in the $350-400,000 band. Despite the snow and the varying inconveniences that come along with it, over the last 45 days there were still 11 houses that are pending sale, which in my opinion still a positive sign. Interestingly enough, in neighboring Westborough, although the population exceeds that of Southborough and the snowfall hasn’t been much different, there are currently only 13 houses actively for sale, although the same 45 day period there were 15 pending sales. The majority of the active Westborough listings are in the $1M+ range, with the second highest in the $700-800k range. Ten of those pending sales ranged from the $200,000-400,000 price point, which may show that there is a definite need for inventory in those price bands to balance out the market.” — Jennifer Juliano, Keller Williams, Southborough-Westborough

1003349_10152067454786102_1832678940_n“With Janet Yellin’s recent speech, we may see rates start to step up by June, 2015. Just recently the international and domestic markets played theme park as they see-sawed back and forth causing rates to jump between about 3/8 over the last 3 months. However, in comparison to 1 year ago today, rates are still about 1% lower. So, bring on the inventory consumers.” — Jeff Chalmers, contact_katherine-newGuaranteed Rate, Norfolk

“My sellers in Winchester, Arlington, Woburn, Stoneham, and Melrose are waiting until the snow is more manageable. Homeowners are extremely preoccupied (and rightly so) with protecting their current homes. The more immediate demand is for ice dam removal!” — Katherine Waters-Clark, Arlington

779_photo“There were a few days where it was impossible to show in Boston. Otherwise things haven’t really slowed too much! In addition The Spring market seems to be beginning early as I am seeing more and more listings hitting the market. All in all the Boston real estate market remains extremely strong!” — Craig Anne Lake, Luxury Residential Group LLC, Boston

1688078.jpg“Bristol, Plymouth and Norfolk counties, lots of buyer calls and showing through the snow. Open houses averaging 3-4 families, inventory extremely low, prices going up, new construction permitted but held back from snow, sellers asking me to call back in March/April to list. My prediction is a sellers market first half of year then based on inventory to demand we will see if it equals out. Right now we are doing print materials, polishing off the listing and buyer presentations and balancing with rest and entertainment because April 1 st the flood gates are going to open and you better be rested and in shape to work extremely hard building your inventory and business to bring you through next winter with no worries. REST, AIM. FIRE!” — Dan Gouveia, Keller-Williams, SouthCoast

10014301_10152691646478077_8626708505441128924_o“I am in the Franklin area and the snow has definitely pushed back potential sellers, but the buyers are out there! They are looking, going to Open Houses and acting now while rates are low and PMI just went down as well. My advice would be to clean off that snow and get your house on the market now while inventory is low.” — Amber Cadorette, Keller-Williams Franklin

1765406.jpg“I agree, buyers are definately out going to open houses even with the record breaking temps and snowfall! I think the prediction that interest rates will be increasing next year has a lot to do with it. Personally, I don’t feel sellers are waiting for spring to list their homes. I listed two properties today (Northbridge) and will be listing another (Needham) next week.” — Anita Bertone, Keller-Williams Wrentham

“Buyers are swarming anything new to the market priced well – I have had multiple offers on my recent listings. The snow is NOT stopping the buyers so sellers should not wait till Spring when inventory will be better whicimages.aspxh usually lessens the value of their home. Supply and Demand…Little Supply + High Demand = More $$$ in Seller’s pockets!” — Anne Silverman, Realty Executives Boston West

Thank you to all the contributors to this post, especially Gabrielle Daniels who came up with the creative title! I’m sure this will be a much-read and much-shared article in the coming months. Let’s hope that this Ice Age ends soon and we can start buying and selling homes!

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I will be speaking at the upcoming Metrowest Resourceful Realtor Meeting on March 2, 2015 at John Harvard’s Brewhouse at Shoppers World, Framingham. Networking starts at 5:45PM with dinner and speakers starting at 6:30PM. Any licensed estate agent welcome.

I’ll be talking about the latest court rulings and legislation affecting Massachusetts real estate law, intermixed with a few colorful war stories from the front lines. Topics will include the status of the independent contractor office model, the new CFPB closing disclosures and settlement statements, and a rental housing update.

Also speaking is Sandy Krenz, a 30-year interior designer and consultant with Debsan Paint in Natick. She will talk about color and decorating trends.

RSVP to with your choice of dinner (see invite).


massachusetts condominium super lienWe had another interesting year in Massachusetts real estate law. From that controversial $60,000 discrimination penalty for asking a prospective renter “where are you from?”, to the influx of Airbnb rentals, to the tragic murder of Realtor Beverly Carter during a showing, and finally Gov. Patrick’s disappointing scuttling of the title clearance bill.

With pro-business Charlie Baker in the Governor’s Office, the fate of the independent brokerage model with the Supreme Judicial Court, and significant regulatory changes to title and closing services, we should expect another eventful year in 2015. Without further ado, I give you my outlook for 2015:

The Charlie Baker Effect

Gov. Deval Patrick was no friend to the real estate industry, often kowtowing to ultra-liberal activists. Case in point was when he killed the title clearance bill which had broad support within the Legislature and would have helped hundreds of homeowners get out of toxic titles. A new era is here with Republican and former CEO, Charlie Baker. Hopefully the Governor Elect will be more supportive of homeowners, developers, real estate agents, lenders and others in the industry. On the legislative table this year will be comprehensive “smart” zoning reform (including 40B affordable housing development reform), another effort at the title clearance bill and maybe even landlord-tenant legal reform.

Will Realtors Be Treated As Employees or Remain Independent Contractors?

The SJC should decide the closely watched case of Monell v. Boston Padsa class action brought by a group of disgruntled real estate agents at Jacob Realty claiming they should be treated as employees instead of independent contractors. Hanging in the balance is the fate of the historically independent, commission based real estate brokerage office model. An unfavorable result at the SJC would essentially turn this model upside-down, requiring brokerages to pay their agents minimum and overtime wages and provide all the statutory benefits afforded to employees. The real estate office as we know it today would likely cease to exist.

CFPB Compliance: New HUD-1 Statement, GFE, TIL, Back Office Procedures

The new Consumer Financial Protection Bureau rules, which go into effect this summer, have the potential to drastically change how loans are disclosed and transactions closed, affecting loan officers, Realtors and closing attorneys alike. Gone are the Good Faith Estimate, Truth in Lending Statement (TIL) and HUD-1 Settlement Statement, replaced with a longer Loan Estimate and Closing Disclosure. The disclosure timetables will be much, much stricter — the final Closing Statement must be given to the borrower no later than three business days before closing. Lenders and closing attorneys will have to work more efficiently and quicker to meet these new deadlines. Closing attorneys who are ALTA Best Practices Certified will have a competitive advantage over those who aren’t. Smaller firms could fall by the wayside.

Housing Court Expansion

This year will likely see the expansion of Housing Court jursidiction state-wide including in Middlesex, Norfolk and Barnstable counties. The Housing Court will be available in high density rental towns including Cambridge, Framingham, Brookline, Waltham, Dedham, Malden and Somerville.

I hope you all have a happy, healthy and prosperous New Year!



Update 6/3/15: SJC Rules In Favor Of Brokerage Office, Agents Can Remain Independent Contractors 

SJC To Hear Important Employment Classification Case

The critical question of whether real estate agents are governed by the state’s strict independent contractor law is now headed to the Supreme Judicial Court, the highest appellate court in Massachusetts. The SJC will hear arguments in December, and a decision is expected in the Spring of 2015.

Hanging in the balance is the fate of the historically independent, commission based real estate brokerage office model. An unfavorable result at the SJC would essentially turn this model upside-down, requiring brokerages to pay their agents minimum and overtime wages and provide all the statutory benefits afforded to employees. The real estate office as we know it today would likely cease to exist.

The case is Monell v. Boston Pads, LLC, a class action brought by a group of disgruntled real estate agents at Jacob Realty, one of the largest real estate offices in Boston. As I wrote about in this post, Judge Robert Cosgrove ruled last year that the agents should be considered independent contractors and not employees. Given the importance of the case, the SJC granted direct appellate review.

The Massachusetts Association of Realtors has filed a friend of the court brief, in support of classifying agents as independent contractors. I agree with the MAR that real estate agents should be classified as independent contractors given its unique and historically independent business model.

However, this is a very difficult case to handicap. The problem arises when brokerages, such as Jacob Realty, ask its agents to do many of the things traditional employees must adhere to, such as required office hours, dress code, and performance benchmarks. This is especially so where courts have, in the last few years, strictly interpreted the independent contractor and wage laws in other industries. The more requirements imposed on agent, the more likely they should be treated as employees and not independent contractors, the argument goes.

Also likely to play a large role is that in 2008 the Legislature tried — and failed — to amend the law to make real estate agents exempt from the independent contractor law. Governor Patrick vetoed the legislation. This legislative history hurts the brokers.

There is a decent chance this case could go against the industry. In that event, I hope the MAR has legislation ready to preserve the existing office model so there will be no adverse effect on Realtors. And by then, Gov. Patrick — who’s been no friend of the real estate and title business — will be long gone from office.

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Beverly-Carter-jpgShould The Real Estate Industry Change The Way Agents Do Showings and Open Houses?

What other industry requires unaccompanied female (and male) agents to meet perfect strangers in empty houses? None. One would think this is a recipe for disaster. It is.

Last night, authorities found the body of Arkansas real estate agent Beverly Carter, days after she vanished while showing a house to a prospective customer. Aaron Lewis, 33, has been apprehended and admitted to the kidnapping after being questioned by police, ABC News said.

This is not the first time an agent has been murdered, raped or assaulted while on the job. According to the latest Bureau of Labor study, the real estate industry experiences about a 40% higher rate of on-the-job crime than the average profession. Indeed, one my close Mass. Realtor friends was accosted several months ago and was very shook up about it.

My mother was a long time Realtor. My father recalls how nervous he was that some stalker would do something terrible at an open house or showing. Thankfully that never happened.

There must be a better way. I think the time has come for a change. What can be done?

Should open houses be outlawed? Should open houses be allowed only if there are two agents present? Most Realtors say they are a waste of time anyways. Should Realtors have a special exemption under the law to carry mace, a taser or even a handgun? What about a new lockbox system so prospective home buyers can peek into a home themselves without an agent present? What about some type of panic button device or other technology? Here is a great article on Using Technology for Realtor Safety.

What is your office doing to protect your personal safety? What is the National Association of Realtors and local chapters doing about this issue?

Regrettably, the NAR issued a rather weak statement on the Beverly Carter tragedy:

“As both a REALTOR® and an Arkansan, I am saddened by this morning’s news of Beverly Carter’s untimely death. My heart goes out to her family, her friends, her co-workers, and everyone whose life Beverly touched in her 49 years with us.

Working in real estate involves risk and, unfortunately, that risk takes many forms. As an industry, we collectively work very hard to promote safety awareness among our members. We are fully committed to educating REALTORS® about potential threats and providing them with resources to protect themselves.

I urge all REALTORS® to honor Beverly Carter by keeping safe and looking out for each other.”

“Keeping safe and looking out for each other” frankly isn’t going to cut the mustard in my humble opinion. The NAR should be at the forefront of this issue, and doing a lot more than telling agents to “keep safe.” That doesn’t help anyone. 

How about paying for some of the personal safety devices for agents as part of the membership dues? How about lobbying Congress and state legislatures for exemptions for personal defense weapons like mace, tasers and firearms? How about lobby for increased criminal penalties for crimes against Realtors? Anything but telling agents to “keep safe”….

For its part, the Massachusetts Association of Realtors has issued its own Realtor Safety Tips.

There has to be a better way.

As always, I’m here to support real estate agents anyway I can.


100316_photo_vetstein-2.pngRichard D. Vetstein, Esq. is a Massachusetts real estate attorney who works with Realtors every day. He can be reached at


Where-are-you-from-512x273Innocent Small Talk Apparently Illegal, According to Boston Fair Housing Commission

The seemingly innocent question posed by a Boston rental agent to Gladys Linder when they were searching for an apartment was “Where are you from?”

“Venezuela,” she answered.

Gladys and her husband went on to find an apartment a month later without further incident. But she found the question about her national origin insulting and upsetting.

This is Massachusetts, and you know what came next.

Stokel filed a complaint with the Boston Fair Housing Commission, claiming that rental agent’s question was discriminatory and caused her to suffer fear, anxiety and sleeplessness over a three-year period.


Massachusetts General Laws Chapter 151B and the Boston Fair Housing Commission Regulations make it illegal for any licensed real estate broker “to cause to be made any written or oral inquiry or record concerning . . . national origin.”

Although this was the agent’s first discrimination complaint and there was no discriminatory impact on the tenants at all, the Commission found that the question itself was unlawful and issued one of the largest penalties I have seen in recent years — $10,000 in emotional distress damages, plus $44,000 in attorney’s fees and costs and a $7,500 civil penalty against the broker — a whopping $61,500 in total liability for this single question, not to mention the tens of thousands the agent had to pay for defense legal fees.

The ruling can be found here:  Linder v. Boston Fair Housing Commission, Mass. Appeals Court (Dec. 17, 2013).

Appeals Court Uses Some Much Needed Common Sense

The case went up on appeal, and fortunately the Massachusetts Appeals Court exercised some common sense and slashed the award, likely by more than half pending further proceedings. But the court let stand the commission’s ruling that the one innocuous question did indeed violate the discrimination laws. So the broker will remain on the hook for a sizable liability.

Honestly, I’m having a lot of trouble with this ruling. It appears that the broker was simply engaging in some harmless small talk by asking the applicant where she was from. There was no evidence that the broker refused to rent to her or took any other discriminatory action against them. What if the applicant had a Southern accent and said she was from Alabama? That’s not illegal discrimination, but since she is from another county, it makes the question unlawful discrimination? Unbelievable! This is one of those cases where the anti-discrimination laws result in a totally absurd result.

So thank you to the Boston Fair Housing Commission for making small talk illegal. Unfortunately, the lesson to be learned from this case for rental agents and Realtors: Don’t ask a client where they are from. I kid you not. Only in Massachusetts…


100316_photo_vetstein-2.pngRichard D. Vetstein, Esq. is an experienced Massachusetts real estate attorney who often consults with Realtors and rental agents on their legal and ethical duties. He can be reached at


We had a great turnout today for our Massachusetts Real Estate Market Report, again presented and moderated by veteran real estate reporter Scott Van Voorhis of Banker & Tradesman and Scott writes for the well-known Real Estate Now Blog which is an invaluable resource.

For this installment, we added a little twist, holding a panel discussion and interactive Q&A with Ali Corton of Real Estate Executives Boston West, Chuck Silverston of Prudential Unlimited in Brookline and Dee Reddington of Bank of Canton. Ali was representing the ‘burbs. Chuck was representing the urban, Boston-Brookline market, and Dee was giving the lender perspective. We were live tweeting the event at Twitter #marealestate where you can check out the live stream.

Some take-aways from the presentation and discussion were as follows:

  • As reported just about everywhere, the Massachusetts real estate market remains very strong
  • Year over year, 16% increase in both sales volume and sales prices
  • The government shutdown has had no demonstrative effect on the market, nor on the lending environment
  • Lack of buildable land, desirability of the Greater Boston market (as always) has resulted in high demand, low inventory environment.
  • Inventory is down 30% over 2012 (which was down over 2011), putting upward pressure on prices and demand. Bidding wars common for well-priced, good quality homes in desirable communities. This is creating a frenzied dis-equilibirum in certain markets which isn’t necessarily healthy.
  • The low inventory is the “new normal.” Get used to it.
  • Interest rates are forecast to dip down a bit heading into spring market 2014, with eventual rise through the remainder of 2014 and 2015.  Overall, the interest rate environment remains very favorable to buyers and the market as a whole.
  • First time home buyers must be open to fixer-uppers and not updated homes. Otherwise, they will be in very tough competition for move-in condition homes in the good towns.
  • Lenders are doing loans for low credit (FICO 620 range) borrowers. ARMs making comeback.
  • Chuck pointed out the “Patriot Effect” for open houses on Sundays. People are staying home to watch the game. Advises trying open houses on Saturdays.
  • Ali Corton says that Metrowest sellers are routinely getting asking price or very close to that right now, and will continue to do so while inventory remains low

We are interested in hearing your thoughts on today’s market. Feel free to post your comments below!


Real-Estate-AgentsReviewing this blog, it occurred to me that I’ve never written about real estate agency and designations, which is one of the more confusing aspects of real estate broker agency law. Personally, I think that all the recent disclosure forms and regulations imposed by the Mass. Board of Real Estate, while well-intended, have made this area unnecessarily complicated. I’ll try to explain broker agency in plain English.

Massachusetts Mandatory Licensee Consumer Relationship Disclosure

The Massachusetts real estate brokerage industry is highly regulated by both state law and regulations, as well as local and national codes of ethics. Under state regulation, once you sit down with a Massachusetts real estate agent to discuss a specific property, the agent should give you a form called the Massachusetts Mandatory Licensee Consumer Relationship Disclosure. The disclosure form describes the five types of agency relationships between and among buyer, seller, and agent:

Seller’s Agent – This is typically known as a listing agent. The real estate agent represents only the seller, not the buyer. The listing agent owes the seller undivided loyalty, reasonable care, disclosure, obedience to lawful instruction, confidentiality and accountability. However, a listing agent must disclose all known material defects in the real estate to buyers.

Open Houses:  Open houses are often the cause of disputes as to agency and commissions. Under Mass. regulations, at any open house the listing agent must conspicuously post and/or provide written materials explaining to attendees the relationship they may have with the agent conducting the open house. If a buyer is working with an agent (but the agent is not present at the open house) it’s a good idea to write the name of the agent’s name and leave the agent’s card at the sign-in, otherwise the listing agent could be considered the procuring cause of the buyer which could cause a dispute down the road.

Buyer’s Agent – A buyer’s agent works for the buyer only. The agent owes the buyer undivided loyalty, reasonable care, disclosure, obedience to lawful instruction, confidentiality and accountability. Like a listing agent, a buyer’s agent must disclose any known material defects in the real estate. Some agents are exclusive buyer agent’s and do not take on listings. An advantage of using a buyer’s agent is that you can be assured the agent will work only for you, the buyer, and will have no relationship with the listing agent’s office, as is common with designated and dual agencies described below.

Designated Seller’s and Buyer’s Agent – This type of agency occurs when a listing agent refers an agent working in the same office to represent the buyer. So, two agents in the same office are representing both sides of the transaction. The happens a lot when an unrepresented buyer is introduced to the property at an open house, and the listing agent will refer the buyers to a fellow agent in her office. This is usually the smart and prudent choice to avoid the conflicts inherent in being a dual agent representing both buyer and seller, discussed below. Both buyer or seller must agree to a designated agent agency in writing. The designated agent owes her client the same duties and obligations discussed above.

Dual Agent – A dual agent represents both sides of the transaction — buyer and seller –but can be a risky proposition. The upside for the agent is that he or she keeps the entire commission, but the agency can be fraught with potential conflicts of interest. Dual agency is allowed only with the express and informed consent of both the seller and the buyer. Written consent to dual agency must be obtained by the real estate agent prior to the execution of an offer to purchase a specific property. A dual agent shall be neutral with regard to any conflicting interest of the seller and buyer.

Non-Agent Facilitator – This is the rarest of all agencies. When a real estate agent works as a facilitator that agent assists the seller and buyer in reaching an agreement but does not represent either the seller or buyer in the transaction.

What is a “broker” vs. a “salesperson”?  Under the Massachusetts regulations governing real estate agents, a real estate broker runs the real estate office and is the broker of record, overseeing the transactions of all salespersons (agents). A broker must complete 40 additional hours of education and must work for a broker for at least three (3) years before they can move on to licensure as brokers. A broker is responsible for accepting and escrowing all funds, such as a deposit placed on the purchase of a home, and for finalizing transactions. A real estate broker must supervise any transactions conducted by a salesperson. Every local real estate office, even the large ones like RE/MAX, Century 21 and Coldwell-Banker, will have a broker/office manager in charge of the office. The small, independent real estate offices are typically operated by a single broker, with perhaps a handful of salespeople.

real estate salesperson is what most folks consider real estate agents. When a person first passes their real estate exam, they become a “salesperson.” A salesperson must be affiliated with, and work under, a broker, either as an employee or as an independent contractor, under the supervision of the broker. A salesperson can not operate his own real estate business. A salesperson also has no authority or control over escrow funds.

What Is A Realtor®? A Realtor is a real estate broker or salesperson who is a member of the National Association of Realtors and has agreed to conduct herself under the comprehensive NAR Code of Ethics. Not all real estate agents are Realtors. Membership in the NAR gives a Realtor full access to the entire Multiple Listing Service providing a national database of all sold and listed properties. Realtors can also file complaints against each other and the organization accepts complaints from consumers. Complaints can affect membership status and fines can be levied against agents who are found guilty of wrongdoing by a multi-member panel of their peers. The NAR does not have the ability to suspend a real estate licenses–that action can only be accomplished by the Mass. Board of Real Estate.


RDV-profile-picture.jpgRichard D. Vetstein, Esq. is a Massachusetts real estate attorney with over 15 years of experience. If you have any questions regarding real estate agency, please contact him at or 508-620-5352.

Massachusetts Mandatory Licensee Consumer Relationship Disclosure


MA real estate agent independent contractor law

Fate of Long-Standing Massachusetts Brokerage Model Hangs In Balance

As first reported by David Frank in Massachusetts Lawyers Weekly, the critical question of whether real estate agents are governed by the state’s strict independent contractor law, which would entitle agents to minimum wage, overtime and benefits, is headed to the Appeals Court. According to Hillary Schwab, the attorney to a group of real estate agents who filed suit against Jacob Realty in Boston, “this is the first case in Massachusetts where the concept of employment misclassification and the real estate industry have ever been dealt with in the same opinion.” An unfavorable result at the Appeals Court would essentially turn the Massachusetts real estate brokerage model upside-down, as it has historically operated with agents considered independent contractors and paid on a commission-only basis. If brokerages were required to pay their agents minimum and overtime wages and provide all the statutory benefits afforded to employees, the real estate office as we know it would likely cease to exist.

Jacob Realty Agents Required To Adhere to Dress Code, Mandatory Office Hours

The Appeals Court will consider the case of Monell, et al. v. Boston Pads, LLC, (embedded below) brought by a group of disgruntled real estate agents at Jacob Realty. According to Curbed Boston, Jacob Realty is part of a larger network of Boston rental companies (Jacob Realty, NextGen Realty and Boardwalk Properties) with 150 rental agents, making them one of the largest rental offices in Boston.

As is customary in the industry, Jacob Realty classified the agents as independent contractors, paying them on a commission-only basis and making them responsible for payment of their own taxes and monthly desk fees. At the start of their employment, the agents signed non-disclosure, non-solicitation and non-compete agreements. They had to own day planners, obtain a cellphone with a “617” area code, adhere to a dress code, submit to mandatory office hours and to various disciplinary actions if they did not meet their productivity goals.

Lower Court Rules In Favor of Broker

Superior Court Judge Robert Cosgrove issued a ruling on July 15, 2013 that the agents should be considered independent contractors and not employees under the Massachusetts Real Estate Brokerage Act. But Cosgrove said it was difficult to read the brokerage law and independent contractor law consistently. The real estate statute explicitly provides that an agent may either be an employee or an independent contractor, he noted. In the same sentence, the law reiterates that agents must remain under the auspices of a broker. In contrast, the judge wrote, the independent contractor statute requires salespeople to be free from the control and direction of employers in order to be correctly classified as an independent contractor.

The problem arises when brokerages, such as Jacob Realty, ask its agents to do many of the things traditional employees must adhere to, such as required office hours, dress code, and performance benchmarks. This is especially so where courts have, in the last few years, strictly interpreted the independent contractor and wage laws in other industries. The more requirements imposed on agent, the more likely they should be treated as employees and not independent contractors, the argument goes.

What’s Next?

The case now heads up to the Massachusetts Appeals Court, and perhaps even the SJC — where the stakes will be much higher. This case is very hard to handicap because, as I said before, the courts as well as state and federal labor agencies have really been cracking down with the independent contractor law in favor of employees. Rest assured, I’ll be monitoring this case. I expect the MAR and GBREB will file friend of the court briefs and take a further appeal if there’s an unfavorable result. There will surely be lobbying efforts at the Legislature to preserve the historical independent contractor brokerage model.

Monell v. Boston Pads


images-10Overview of  “Standard” Changes to the GBREB Form Purchase and Sale Agreement

Missing mortgage discharges, problematic  probates, “Ibanez” foreclosure issues and other title defects are always an unwelcome surprise to a seller, their Realtor and attorney. But they are unfortunately a common part of life in the real estate conveyancing world. The “standard” purchase and sale agreement form commonly used by Realtors and attorneys (Greater Boston Real Estate Board) provides for what happens in a transaction if a title defect is discovered and cannot be cleared quickly.

The GBREB form, paragraph 10, which is still in widespread use, provides as follows:

If the SELLER shall be unable to give title or to make conveyance, or to deliver possession of the premises, all as herein stipulated, or if at the time of the deed the premises do not conform with the provisions hereof, then any payments made under this agreement shall forthwith be refunded and all other obligations of the parties hereto shall cease, and this agreement shall be void without recourse to the parties hereto, unless the SELLER elects to use reasonable efforts to remove any defects in title, or to deliver possession as provided herein, or to make the said premises conform to the provisions hereof, as the case may be, in which event the Seller shall given written notice thereof to the Buyer at or before the time for performance hereunder, and thereupon the time for performance hereof shall be extended for a period of thirty days.

The standard provision is, unfortunately, outdated and problematic. Accordingly, experienced Realtors and attorneys are taught to modify this provision from the outset as follows:

If the SELLER shall be unable to give title or to make conveyance, or to deliver possession of the premises, all as herein stipulated, or if at the time of the deed the premises do not conform with the provisions hereof, then any payments made under this agreement shall forthwith be refunded and all other obligations of the parties hereto shall cease, and this agreement shall be void without recourse to the parties hereto, unless then the SELLER shall elect to use reasonable efforts to remove any defects in title, or to deliver possession as provided herein, or to make the said premises conform to the provisions hereof, as the case may be, in which event the Seller shall given written notice thereof to the Buyer at or before the time for performance hereunder, and thereupon the time for performance hereof shall be extended for a period of thirty days.

These standard modifications ensure that the Seller is initially responsible for clearing any title defects and gives them 30 days in which to do so. If the Seller cannot clear the title defect within 30 days, then both parties have the option of terminating the deal and all deposits must be returned.

Limiting Seller’s Financial Exposure

To limit the seller’s out of pocket expenses to clear title defects, real estate attorneys representing the seller will often insert language such as this at the end of paragraph 10:

Reasonable efforts shall be defined as the Seller’s expenditure of no more than $________, exclusive of all voluntary encumbrances which secure the payment of money which Seller shall be obligated to remove.

The dollar amount is typically anywhere between $1,000 – $4000 depending on the purchase price.

Protecting The Buyer

On the buyer side, what happens if during the 30 day extension cure period, the buyer’s rate lock expires and interest rates are floating up (like now)? Experienced buyer attorneys will often insert the following language in their  riders:

Notwithstanding anything to the contrary contained in this Agreement, if SELLER extends this Agreement to perfect title or make the Premises conform as provided in Paragraph 10, and if BUYER’S mortgage commitment or rate lock would expire prior to the expiration of said extension, then such extension shall continue, at BUYER’S option, only until the date of expiration of BUYER’S mortgage commitment or rate lock.  BUYER may elect, at its sole option, to obtain an extension of its mortgage commitment or rate lock or the Seller may elect to pay for same.

This language will ensure that the buyer doesn’t wind up floating up the interest rate river with an untimely rate lock expiration. This situation has come up rather frequently over the last several months as interest rates have increased dramatically.

This is just one, albeit a very important, part of how an experienced real estate attorney works up the purchase and sale agreement. I will do some more posts on other aspects of the P&S Agreement. Stay tuned!


Richard D. Vetstein, Esq. is a Massachusetts real estate closing attorney with offices in Framingham and Needham, MA. He can be reached at or 508.620.5352.



Massachusetts real estate closing attorneyExpands Realtors’ Disclosure Liability and Invalidates Exculpatory Clause In Standard Form Purchase and Sale Agreement

Unfortunately I have some bad news for Massachusetts real estate agents, as the Supreme Judicial Court recently ruled against a Realtor for failing to properly verify a representation made on MLS concerning a listing’s zoning classification. The closely watched case is DeWolfe v. Hingham Centre Ltd. (SJC-11168) (embedded below).

Zoned For Business or Residential?

The lawsuit was brought by a buyer of a hair salon business who relied upon what turned out to be erroneous information supplied by the listing agent (through information provided by the seller). The broker represented on the Multiple Listing Service (MLS) and newspaper advertising that the property was zoning “Business B,” which allowed a hair salon. Further, the broker placed at the property copies of pages from the town’s zoning by-law that listed hair salons as “Permitted Business Uses” in the Business B District. The property was not, in fact, zoned for business use; it was zoned residential, thereby prohibiting the hair salon the buyer wanted to open at the property. The buyer sued for misrepresentation and violations of the Consumer Protection Act, Chapter 93A.

Ruling: Realtors Have Duty to Exercise “Reasonable Care” In Making Zoning Representations

In an unanimous opinion by Justice Barbara Lenk, the SJC stated that while a real estate broker may ordinarily rely upon information provided by his client, where such reliance is unreasonable in the circumstances, an agent has a duty to independently investigate the information before conveying it to a prospective buyer.

The court ultimately held that all Massachusetts real estate agents have a duty to exercise reasonable care in making representations as to a property’s zoning designation.

Here, the owner testified that he told the real estate broker that the property was zoned “Residential Business B.”  The experienced broker apparently knew that there was no such zoning district in Norwell, and instead advertised the property as zoned “Business B.”  In addition, the broker was aware of no prior business use of the property, and had observed houses – not businesses – adjoining the property on either side.  Based on these facts, the SJC concluded that a jury could find that the broker was on notice that the information provided by the owner was unreliable, and acted unreasonably in representing the property as zoned “Business B” without conducting any further investigation.

Exculpatory Clause in Standard Form P&S Not Applicable

The SJC also rejected the broker’s argument that the exculpatory clause in the standard form purchase and sale agreement barred the buyer’s claims. The familiar contract language provides:

The BUYER acknowledges that the BUYER has not been influenced to enter into this transaction nor has he relied upon any warranties or representations not set forth or incorporated in this agreement or previously made in writing, except for the following additional warranties and representations, if any, made by either the SELLER or the Broker(s): NONE.

The justices held that, under the confusing, double-negative language quoted above, a buyer can rely on prior written representations that are not set forth or incorporated in the agreement. Therefore, the agreement did not protect the broker from liability arising from the written misrepresentations in the newspaper ad, the MLS listing, and the inapplicable zoning by-law placed at the property.

The SJC has sent the case back to the trial court for a possible jury trial or, most likely, towards settlement. And hopefully the Greater Boston Real Estate Board is re-drafting its poorly worded exculpatory clause.

Advice For Realtors Going Forward

  • Do NOT say or write anything on MLS or anywhere else concerning a property’s zoning status. Make the buyer conduct his/her own independent research.
  • If your MLS requires input of zoning status, put the zoning with the following disclaimer:  *subject to buyer verification
  • Never trust your client when it comes to information concerning the property. I hate to say this, but when it comes to disclosures, it’s true.
  • Always independently verify information about the property from available public sources. Here, the agent could have simply gone down to the town planning office to verify whether the property was zoned commercial or residential.


RDV-profile-picture-larger-150x150.jpgRichard D. Vetstein, Esq. is a Massachusetts attorney with substantial experience in real estate disclosure litigation brought by buyers against Realtors. Please contact him at or 508-620-5352.


Dewolfe v. Hingham Center

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redfin-logo-tag-webControversial New Internet Practice Raises Confidentiality Concerns & Realtor® Scorn

The internet based real estate brokerage company, Redfin, is now arming buyers and sellers with insight into the negotiations that take place when the firm’s clients submit winning — and losing — offers to buy a home. On its heavily trafficked website, the Seattle-based brokerage is now displaying “Offer Insights” detailing intimate details of negotiations surrounding offers that Redfin agents submit on listings. Redfin claims that buyers can opt out of the program, and no addresses are revealed before closing. (But, addresses are shown for sold properties).

Here is an example for two properties in Quincy, one where an offer was accepted and one where it was rejected:

redfin offer insights copy

Confidentiality & Ethical Concerns?

From a strategic and marketing perspective, this new idea is certainly creative, as it gives Redfin agents and their potential clients a competitive advantage over other agents and aids in providing transparency in the marketplace. However, posting details about private contractual negotiations raises some thorny legal and ethical concerns, and many non-Redfin listing agents are crying foul.

Some Realtors assert that the details of offer negotiations are private and confidential, and therefore, cannot be disclosed without the consent of all parties to the transaction, especially the seller. I don’t necessarily buy into that. I’m not aware of any legal confidentiality protection given to private contract negotiations — indeed they are 100% discoverable in litigation, at least in Massachusetts. A buyer and seller are in an adversarial position, so there is no special legal relationship between them warranting a duty to keep negotiations private.

I can see why a seller would be very upset to find out that the juicy details of negotiations are posted on the internet for the world to see. A seller may certainly want to know this before entertaining a Redfin offer. Moreover, a seller (and a creative attorney) could manufacture a tortious interference claim if a Redfin Offer Insight proves to interfere with a potential deal with another party. That’s a lawsuit for another day…

MLS Rules and NAR Code of Ethics

Some Realtors say that the Redfin practice violates Multiple Listing Service rules and the NAR Code of Ethics. Multiple listing services have rules for commenting on sites which contain MLS information. A seller may instruct her listing agent to disallow public comments on listings. A Redfin buyer’s agent could be in violation of MLS rules if he leaves remarks about the house or negotiation, according to some non-Redfin agents. It will be up to the particular MLS to enforce its own rules against agents; they have no legal effect per se.

The National Association of Realtors Code of Ethics prohibits Realtors from using confidential information of clients for the Realtor’s advantage or the advantage of third parties unless the clients consent after full disclosure. The catch is that “confidential information” is defined as whatever state law says is confidential.  As I said earlier, private contract negotiations are not legally confidential in Mass., so I’m doubtful this would apply.

In sum, the Redfin Offer Insight feature may well be legal, but tight-walks through the ethical rules governing MLS’s and Realtors. As long as they don’t disclose names or property addresses until the deal closes, I think it’s ok legally (in Massachusetts), and I do appreciate giving buyers as much market information as possible. On the flip side, it may put non-Redfin listing agents at a competitive disadvantage. Maybe that’s why they are crying foul?

Agents, what are your thoughts? Post your comments below.


RDV-profile-picture-larger-150x150.jpgRichard D. Vetstein, Esq. is a nationally recognized real estate attorney who writes frequently about legal issues facing the real estate industry. He can be reached at



A Simple Email Disclaimer Cannot Hurt & Can Only Help

Boilerplate email disclaimers at the bottom of messages are so ubiquitous that most of us hardly notice them anymore. They certainly take up a lot of text space and can be annoying to some, but are they legally effective or just plain toothless?

In the real estate context, where Realtors and attorneys write in the language of contract everyday, I believe that a short and simple email disclaimer may help, and certainly cannot hurt, the sender (aside from annoying a snarky recipient or two). In this post, I will discuss a few common real estate situations where an email disclaimer could come into play, then give you the disclaimer that I use in my emails. Now I have my own disclaimer here: A court will determine each case individually, and there is no guarantee that any particular disclaimer will be effective in any given case.

Contract Negotiations

The most common situation where an email disclaimer could come into play is during real estate contract negotiations. For many agents and attorneys, e-mail has become the default mode of communication, replacing the telephone and the outdated fax. E-mail, however, can provide the “smoking gun” in litigation because it’s nearly impossible to delete permanently, and people tend to be more casual and less introspective before hitting “send.” And don’t get me started with texting, which is even worse.

Realtors must remember that under Massachusetts agency law they are agents with actual or apparent legal authority to bind their clients to the statements they make in emails and other forms of communication. Like the Miranda warnings given by the police, a real estate agents’ statements “can and will be used against them in a court of law.” The same is true for attorneys.

A case in point: In the recent well-publicized case of Feldberg v. Coxall, a Massachusetts judge ruled that a series of e-mail exchanges between the buyer and seller’s attorney, the last one attaching a revised, but unsigned, offer to purchase, could create a binding contract even though no formal written agreement was ever signed. This is also one of the first cases applying the new Massachusetts E-Sign law to preliminary negotiations in real estate deals. There have been cases in other jurisdictions holding that e-mails can result in a binding contract even though the parties may have assumed otherwise.

Practice Pointer:

“Emails sent or received shall neither constitute acceptance of conducting transactions via electronic means nor shall create a binding contract in the absence of a fully signed written agreement.”

This is the new email disclaimer that I’ve formulated after the Feldberg ruling. It does two things. First, it provides that only a fully signed contract can bind the parties. Second, it attempts to counter the presumption in the E-sign Act of conducting the transaction electronically via email. It has not been tested in court yet, but again, aside from taking up some pixel space, it can’t hurt. Now remember, this type of disclaimer would favor a selling/listing agent, but not necessarily a buyer’s agent, because the buyer’s agent would typically want to enforce preliminary negotiations. So, caveat emptor (buyer beware).

Practice Pointer: “Subject to final client review/approval”

Another best practice that Realtors and attorneys should get in the habit of doing is to write “subject to final client review and approval” or words to that effect in the midst of email contract negotiations and draft agreements being circulated. This could sway a court from determining that a binding deal was formed, and plus, it gives you an “out” in case a client has last minute changes.

Confidential Communications

Attorneys love to use long confidentiality disclaimers in their email. Do they work? Occasionally. Do they matter in real estate? I still think so.

First, the concept of legal confidentiality is limited to those situations governed by legal privilege. There is an attorney-client privilege between lawyers and their clients, obviously. While there is no legal privilege between a Realtor and his/her client as for communications solely between the agent and the client, the attorney client privilege will likely attach to emails and communications between and among the real estate agent, the attorney, and the client provided that legal advice is being given. But a particular email does not automatically get confidentiality protection simply because the attorney is copied on it. Some courts have pointed to email disclaimers as a factor in upholding the confidentiality. But there have been many court rulings where judges have discarded the disclaimers.

While attorneys should absolutely have a confidentiality email disclaimer, do Realtors need one? I say yes, because sometimes emails between attorney and client wind up in Realtors’ inboxes and sometimes they get forwarded on purpose or by mistake when they shouldn’t, and that could waive any privilege which is attached and become the “smoking gun.”

Practice Pointer:

I use this simple email disclaimer:

CONFIDENTIALITY: This e-mail message and any attachments are confidential and may be privileged.

The best practice, of course, is to cleanse and delete portions of any email with attorney-client or confidential information before forwarding. And of course, THINK BEFORE YOU HIT SEND!

**Thank you to Cambridge MA Realtor Charles Cherney for suggesting this topic!


RDV-profile-picture-larger-150x150.jpgRichard D. Vetstein, Esq. is a nationally recognized real estate attorney who writes frequently about legal issues facing the real estate industry. He can be reached at


realtor mag copyI wanted to share a recent article I authored for Realtor Magazine which was published in their January/February 2013 edition. The article is based on the Massachusetts court opinion in Feldberg v. Coxall, which I wrote about previously in this post. The court ruled that under recently passed electronic signature laws, emails between agents or attorneys could form a binding agreement even where there was no signed offer or written purchase and sale agreement. That’s a scary proposition for any agent! In the article, I suggest using a disclaimer in your email signatures to avoid having emails come back to bite you.


IMG_1490Yesterday my firm sponsored a very informative breakfast seminar with veteran real estate journalist Scott Van Voorhis of Banker & Tradesman and who offered his predictions on the 2013 Massachusetts real estate market. The presentation included a lively question and answer session with the 40+ Realtors attending from all over the Greater Boston area. Here are some take-aways from the seminar (in no particular order):

  • “Bright and sunny early, but with a chance of severe job cuts later.” According to Mr. Van Voorhis, the Fiscal Cliff and upcoming Debt Reduction negotiations may be the biggest obstacle remaining in the path of a sustained real estate recovery. At stake are anywhere from 50,000 – 70,000 jobs in Massachusetts if the current slate of proposed budget cuts pass — to defense (i.e., Raytheon), health care, hospitals, and medical research, and tech sectors. If Massachusetts sees severe spending cuts by the federal government, the Route 128 corridor will be most impacted. The current impact is of “wait and see” with defense contractors and tech companies waiting to see how the federal budget battle with be resolved. They are putting new hires on hold and bracing for possible cuts. The fact that Congress will likely wait until the last minute to resolve these important issues doesn’t help the market any!
  • We’re back…. Median sale prices in many suburbs are now back to 2005 levels. Natick’s median price is $418,500, just off from its ’05 high. Needham has surpassed its ’05 record with a median price of $670,000. Burlington has broken its ’05 record at $407,000 median price. A major driver of the real estate recovery is the tech-sector, with Route 128 lab space expanding by 50%, or 3.5 million square feet of space, since 2007, enough to fill three Prudential Towers of space. Shire in Lexington and Genzyme in Framingham have led with way.
  • Tear-Downs On The Rise. Builders are doing tear-downs instead of large scale subdivisions, where financial risk is minimal. Early data indicates increasing market activity in tear-downs in Lexington, Newton and Needham, for example.
  • Low Inventory of Move-In-Ready Homes. The attending Realtors lamented about the dearth of move-in-ready homes in the sought after towns. As we know, there is hardly any buildable land in Massachusetts, and builders have not been doing subdivisions for several years. The agents say bidding wars are back in a big way for these properties, which creates problems with potentially low bank appraisals as the “comps” must catch up with new sales data. The low inventory also affects potential home sellers, especially the empty nesters who are “paralyzed” as one agent described, waiting on the best time to sell.
  • Buyers’ Lack of Vision. We discussed that the current generation of buyers would rather pay a premium for a move-in-ready home with the requisite gourmet kitchen with granite and stainless steel appliances, rather than pay less for a fixer-upper. Some Realtors have enlisted trusted contractors to scope out fixer-uppers along with buyers, so they can envision the potential of a lower priced home.
  • Condos Remain Strong Sector. Condominiums remain the new starter home for many buyers, especially singles. Inventory is strong and pricing remains affordable in many communities. With interest rates still at historic lows and the mortgage interest tax deduction still in place, purchasing a condo is much cheaper than renting. The consensus is that condos will remain a strong sector through 2013.
  • Short Sales Strong & Less Time Consuming. As noted by veteran short sale negotiator Andrew Coppo of Greater Boston Short Sales LLC, short sales are now becoming far less time consuming with the new Fannie Mae short sale guidelines in place since the summer. Mr. Coppo reports that short sales are taking merely 60 days to get approval, and Bank of America finally “getting it” by implementing its computerized Equator streamlined short sale system. Also, the Mortgage Debt Relief Act was extended through 2013, giving short sale sellers tax forgiveness for discharged debt. There are still lots of underwater and struggling homeowners, so 2013 will remain another strong year for short sales.

What are your predictions and thoughts for the 2013 Massachusetts real estate market? We would love to hear from you!


RDV-profile-picture-larger-150x150.jpgRichard D. Vetstein, Esq. is a Massachusetts real estate attorney who writes frequently about new legislation concerning the real estate industry. He can be reached at


2011-20121I always look forward to recapping the year that was, and bringing out the crystal ball to predict the year ahead. This year, like years prior, was an active year for Massachusetts real estate law, with several important court rulings, legislative developments, and emerging legal trends. The year 2013 is expected to be just as busy.

Eaton v. Fannie Mae and Fannie Mae v. Hendricks Foreclosure Rulings

Another year, another pair of huge foreclosure rulings by the Massachusetts Supreme Judicial Court. On June 22, 2012, in Eaton v. Federal Nat’l Mortgage Ass’n, the SJC held that lenders must establish they hold both the promissory note and the mortgage in order to lawfully foreclose. This posed major problem for the vast majority of conventional mortgages which lenders securitized and sold off on the secondary mortgage market, thereby splitting the note and mortgage among various securitized trusts and mortgage servicers. Responding to pleas from the real estate bar, the SJC declined to apply its ruling retroactively, thereby averting the Apocalyptic scenario where thousands of foreclosure titles would have been called into question. My prior post on the Eaton ruling can be read here.

The FNMA v. Hendricks case had the potential to change Massachusetts foreclosure practice, but the SJC rejected the challenge. The court upheld the validity of the long-standing Massachusetts statutory form foreclosure affidavit which provided that the foreclosing lender has complied with the foreclosure laws,rejecting the borrower’s claim that the affidavit was essentially robo-signed.

New Medical Marijuana Law Has Landlords, Municipalities Smoking Mad

Burned up Massachusetts landlords and anti-pot local pols are still fuming with concern over the state’s newly passed but hazy medicinal marijuana law. The law — rolling out Jan. 1 — mandates the opening of at least 35 medicinal marijuana dispensaries, and grants users the right to grow a two-month supply of marijuana at home if they cannot get to a dispensary because they are too sick or too broke. The new law also potentially opens landlords up to federal prosecution for violating the federal controlled substances laws. Many towns and cities are contemplating banning dispensaries or passing zoning by-laws regulating their locations. My prior post on the new marijuana law can be read here.

539wApartment Rental Occupancy Limits

In 2013, the SJC will consider the Worcester College Hill case which will significantly impact landlords renting apartments to students and in other multi-family situations. The question is whether renting to 4 or more unrelated persons in one apartment unit requires a special “lodging house” license which would, in most cases, make it cost-prohibitive to rent to more than 3 unrelated persons. (Lodging houses require a built-in fire sprinkler system, for example). The SJC will hear oral arguments in the case on January 7, 2013.

Foreclosure Prevention Act Passed

On August 3, 2012, Governor Deval Patrick signed the Foreclosure Prevention Act. The new law requires that lenders offer loan modifications on certain mortgage loans before foreclosing. Unfortunately, the law did not fix the problem with existing title defects resulting from the U.S. Bank v. Ibanez case in 2010. (Sen. Moore’s office plans to re-introduce Senate Bill 830 in 2013). My prior post on the new law can be read here.

SJC To Consider Realtor’s Liability for Erroneous MLS Info

Sometime in 2013, the SJC will issue a very important opinion in the controversial DeWolfe v. Hingham Centre Ltd. disclosure case where a Realtor was held liable for failing to verify the zoning of a listing on the Multiple Listing Service. The Court will also consider whether the exculpatory clause found in the Greater Boston Real Estate Board’s standard form purchase and sale agreement legally prohibits a buyer’s misrepresentation claim against the real estate agent. The Massachusetts Association of Realtors and the Greater Boston Real Estate Board have filed friend of the court briefs urging the SJC to limit Realtors’ disclosure obligations in the case. My prior post on the case can be read here.

Good Faith Estimate, TIL, and HUD-1 Settlement Statement To Change Dramatically

In the second major overhaul of closing disclosures in three years, the Consumer Financial Protection Bureau will be rolling out in 2013 a new “Lending Estimate” and “Closing Estimate” which will replace the current Good Faith Estimate, Truth in Lending Disclosure, and HUD-1 Settlement Statement. The changes are part of the Dodd-Frank Act, and has the lending and title insurance industries scrambling to figure out who should be ultimately responsible for the accuracy of closing fees and other logistics in delivering these new disclosures. My prior posts on the topic can be read here.

mw_1011_FISCAL_CLIFF_620x350Fiscal Cliff Anxiety Syndrome

The Year In Review would not be complete without mention of the dreaded Fiscal Cliff. As of this writing, President Obama and the House (which even rejected its own Speaker Boehner’s last proposal) have been unable to work out a deal to resolve the more than $500 billion in tax increases and across-the-board spending cuts scheduled to take effect after Jan. 1, 2013. If there is no deal, and the country goes over the fiscal cliff, the consensus is that it will have quite a negative effect on the economy and the real estate market in particular.

Upcoming Event! On January 8, 2013, we are sponsoring a breakfast seminar with veteran real estate journalist Scott Van Voorhis, who will offer his predictions on 2013. Please email me to sign up. The Facebook Event invitation is here. The venue is Avita in Needham, 880 Greendale Ave., Needham, MA.


Richard D. Vetstein is an experienced Massachusetts real estate attorney who hopes the White House and Congress can get their acts together and pass a compromise bill to avoid the Fiscal Cliff.


High Anxiety Heading Into 2013

The term Fiscal Cliff should be as ubiquitous as “Merry Christmas” and “Happy Holidays” through the year-end, especially if President Obama and Congress cannot work out a deal to resolve the more than $500 billion in tax increases and across-the-board spending cuts scheduled to take effect after Jan. 1, 2013. If there is no deal, and the country goes over the fiscal cliff, the consensus is that it will have quite a negative effect on the economy and the real estate market in particular. (I debated using the word “disastrous” because there is a segment of commentators who say the housing market may survive a fall off the cliff).

There are four particular aspects of the Fiscal Cliff which could impact the real estate market.

1.  Expiration of Unemployment Benefits. Emergency jobless benefits for about 2.1 million people out of work will cease Dec. 29, and 1 million more will lose them over the next three months if Congress doesn’t extend the assistance again. Unemployed, even those receiving assistance, cannot and do not purchases homes. Democrats and President Obama want the unemployment benefits extended, but the Republicans are attempting to use this as leverage for their own fiscal cliff agenda. The real estate market will surely suffer if benefits aren’t extended.

2. Mortgage Forgiveness Debt Relief Act. The Mortgage Forgiveness Act is set to expire December 31. This tax break is critical for short sales, relieving homeowners from being taxed on any mortgage debt that was forgiven through a short sale, foreclosure or loan modification. If distressed homeowners are subject to tax on millions in debt forgiveness, short sales will likely decrease dramatically.

3. Mortgage Interest Tax Deduction. Once the sacred cow tax break for millions of middle and upper class homeowners, the mortgage interest deduction is reportedly on the chopping block. The National Association of Realtors and real estate groups have been apoplectic in urging no change to this important benefit to homeowners. Eliminating the mortgage deduction would raise taxes on all homeowners, and could dissuade renters from becoming homeowners.

4.  FHA/Fannie Mae Bailout. The Federal Housing Administration, the lender of choice for first-time homebuyers, is nearly insolvent and it could require a taxpayer bailout next year, according Edward J. Pinto, a fellow at the American Enterprise Institute. Pinto claims the 78-year-old agency is $34.5 billion short of its legal capital requirement. “If it were a private company, it would be shut down,” argues Pinto. These aren’t the only issues threatening the real estate market. Since Fannie Mae and Freddie Mac were taken over by the government in 2008, taxpayers have plowed  $180 billion into them to keep them operational. This mess needs to be fixed next year.

Well, if your stomach isn’t in knots, mine is. Luckily, we have some medicine for you!

On January 8, 2013, we are sponsoring a breakfast seminar with veteran real estate journalist Scott Van Voorhis, who will offer his predictions on what 2013 will bring. Please email me to sign up. The Facebook Event invitation is here. The venue is Avita in Needham, 880 Greendale Ave., Needham, MA.


Richard D. Vetstein is an experienced Massachusetts real estate attorney who hopes the White House and Congress can get their acts together and pass a compromise bill to avoid the Fiscal Cliff.


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