Massachusetts real estate disclosure law

Massachusetts High Court To Weigh In On Important Realtor MLS Disclosure Case

by Rich Vetstein on April 26, 2012

in Commercial Real Estate, Disclosures, Massachusetts Real Estate Law, Realtors, Zoning


Realtor Held Liable For Erroneous MLS Information

The Massachusetts Supreme Judicial Court has agreed to hear the case of DeWolfe v. Hingham Centre Ltd. which will consider two very important issues for the real estate community, especially agents. The first issue is the scope of a real estate agent’s duty to disclose and independently verify property information posted on the Multiple Listing Service (MLS). The second issue is 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 case was originally decided by the Appeals Court, and I wrote a full post about it here. The original opinion can be read here.

In summary, the real estate agent, relying on what turned out to be erroneous information supplied by his client, listed a Norwell property on Multiple Listing Service (MLS) and newspaper advertising as “zoned Business B.” 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. Despite the general disclaimer on the MLS system and in the purchase and sale agreement, the Appeals Court held that the Realtor could be held liable for misrepresentation and Chapter 93A violations due to providing this erroneous information.

This will be a very important case for the real estate brokerage industry, and we will be monitoring it. Oral arguments are expected to be held in late summer or early fall, with a final ruling coming a few months thereafter.

In the meantime, my advice remains the same:

  • Do not make any representations concerning zoning. Advise the buyer to go to the town/city planner or hire an attorney for a zoning opinion.
  • Never trust your client. 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. (The buyer or his attorney could have done so as well—this was a complete failure on all sides).
  • When it comes to zoning, which can be complex and variable, think twice before making blanket statements. Better to be 100% sure before going on record about whether certain uses are permissible. You can always get a zoning opinion from a local attorney.

*Hat tip to a new real estate blog on the scene, Disgruntled Neighbors by Attorney Andrew Goldstein, for bringing this to my attention.

~Rich

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Realtor Liable For Failing To Verify Zoning District Of Property Listing

by Rich Vetstein on November 11, 2011

in Commercial Real Estate, Disclosures, Massachusetts Real Estate Law, Realtors, Zoning

Realtors: You Must Independently Verify Property Information

In DeWolfe v. Hingham Centre Ltd. (embedded below), the Massachusetts Appeals Court recently considered a Realtor’s duty to disclose and independently verify zoning information about a listing property.  The agent, relying on what turned out to be erroneous information supplied by his client, listed a Norwell property on Multiple Listing Service (MLS) and newspaper advertising as “zoned Business B.” 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.

Despite the general disclaimer on the MLS system and in the purchase and sale agreement, the Court held that the Realtor could be held liable for misrepresentation and Chapter 93A violations due to providing this erroneous information.

The lesson to be learned for agents here is:

  • Never trust your client. 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. (The buyer or his attorney could have done so as well—this was a complete failure on all sides).
  • When it comes to zoning, which can be complex and variable, think twice before making blanket statements. Better to be 100% sure before going on record about whether certain uses are permissible. You can always get a zoning opinion from a local attorney.

_______________________________________________

Richard D. Vetstein, Esq. is an experienced real estate attorney who often advises real estate agents on their duties and ethical obligations. Please contact him if you need legal assistance regarding a Massachusetts residential or commercial real estate transaction.

Dewolfe v. Hingham Realty

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Nearby Waste Water Treatment Plant Causes A Stink With New Home Buyers

by Rich Vetstein on April 21, 2011

in Disclosures, Massachusetts Real Estate Law, Realtors

Does A Massachusetts Seller and Realtor Have A Legal Duty To Disclose The Existence of a Smelly Waste Water Treatment Plant?

Dear Attorney Vetstein:

We purchased our first home in September. We were unfamiliar with the area and relied heavily on the realtor’s knowledge. After living there for a couple of weeks, we went outside to grill and there was a horrid stench to the air. We weren’t able to eat outside and couldn’t figure out where the smell was coming from. After a few times of this, we researched the area and found out that there was the town’s waste water plant behind what we thought was a house, but what was actually the office. We did a Google Earth search on the plant and it is quite large. We bought the house mainly for the large yard and were looking forward to bbq’s, planting a garden and in general spending a majority of our time outside as we had moved from the city.

Do we have any rights? Had the real estate agent or seller disclosed the existence of the smelly plant to us we would have never bought this house. We want to sell and fear that the home will be unsellable.

Your truly,

Worried About The Smell

Dear Worried,

While your Realtor did you no favors, I’m afraid that you (and your Realtor) should have driven around and investigated the neighborhood before you purchased this home.

Legally in Massachusetts, a private seller has no obligation to disclose anything to you about the home or nearby conditions. A seller can only get in trouble if he is asked a direct question and flat out lies about it. Since you did not indicate that you asked the seller the specific question of whether there were any nearby waste water treatment plants, you most likely won’t have any luck pinning this situation on the seller.

The Realtor, while standing on different legal footing, is also most likely not to blame legally. Under Massachusetts consumer protection regulations governing real estate brokers, a broker must disclose to a buyer “any fact, the disclosure of which may have influenced the buyer or prospective buyer not to enter into the transaction.” This standard, however, doesn’t necessarily mean that a Realtor must disclose every single conceivable on-site or, in this case, off-site condition which may impact the buyer’s decision to purchase. The Massachusetts Supreme Judicial Court has held that off-site conditions may require disclosure only if the conditions are “unknown and not readily observable by the buyer [and] if the existence of those conditions is of sufficient materiality to affect the habitability, use, or enjoyment of the property and, therefore, render the property substantially less desirable or valuable to the objectively reasonable buyer.” In that case, the court refused to hold a seller liable for the non-disclosure of toxic waste contamination at the nearby local elementary school which gave the seller difficulty selling previously.

The key factor here is that the waste water treatment plant is out in the open and obvious to anyone searching nearby. This situation underscores the importance of having a Realtor who knows the neighborhood and also doing your own basic due diligence, i.e, driving around the neighborhood.

I do sympathize with you plight. I’m not sure why the Realtor didn’t feel it was necessary (assuming he or she knew of the plant) to tell you about the stinky plant. It’s certainly something I would have wanted to know. You also didn’t tell me whether the Realtor was the listing agent or your own buyer’s agent. A listing agent’s duty is to the seller and getting the home sold. They do their best not to divulge too much info about the surrounding area, lest they get themselves in trouble (like this case). A buyer’s agent would be much more likely to advise you of problematic conditions like the plant (assuming they know about it). If they didn’t know about it, shame on them.

Sorry to deliver the “stinky” news…

Yours truly,

Richard D. Vetstein, Esq.

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Is A Real Estate Broker Obligated To Disclose Haunted Houses Or Paranormal Activity?

by Rich Vetstein on October 31, 2010

in Disclosures, Massachusetts Real Estate Law, Realtors

haunted_houseDisclosure Obligations For Haunted Houses

On Halloween eve, I thought I would delve into the spooky topic of haunted houses and disclosure issues. Massachusetts real estate brokers struggle to sell homes tainted by shocking murders, suicides, or even suspected “haunted houses” filled with paranormal activity. These “stigmatized” properties are particularly difficult to deal with as they raise unique valuation problems and disclosure issues.

No Disclosure Rule

Under Massachusetts law, real estate brokers and sellers are under no legal obligation to disclose that a property was the site of a felony, suicide or homicide, or has been the site of an alleged “parapsychological or supernatural phenomenon,” i.e., a haunted house. Thus, buyers are on their own to discover these types of stigmas.

Here is the law, Massachusetts General Laws Chapter 93, section 114:

The fact or suspicion that real property may be or is psychologically impacted shall not be deemed to be a material fact required to be disclosed in a real estate transaction. “Psychologically impacted” shall mean an impact being the result of facts or suspicions including, but not limited to, the following:

(a) that an occupant of real property is now or has been suspected to be infected with the Human Immunodeficiency Virus or with Acquired Immune Deficiency Syndrome or any other disease which reasonable medical evidence suggests to be highly unlikely to be transmitted through the occupying of a dwelling;

(b) that the real property was the site of a felony, suicide or homicide; and

(c) that the real property has been the site of an alleged parapsychological or supernatural phenomenon.

No cause of action shall arise or be maintained against a seller or lessor of real property or a real estate broker or salesman, by statute or at common law, for failure to disclose to a buyer or tenant that the real property is or was psychologically impacted.

An easy way to determine whether a house is truly “haunted” is to hire Ghostbusters. No seriously, Google the property address and the last few prior owners and see what comes up. If there was a murder or suicide–or even ghosts– it should reveal itself.

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