Contracts, Purchase and Sale Agreements, and Leasing
Contracts, purchase and sale, and leasing
This domain tests Massachusetts contract formation and the documents that move a transaction from offer to closing, plus the residential landlord-tenant rules that licensees encounter in leasing. Expect questions on the statute of frauds, contingencies, Title V, and security deposits.
Contract basics
Real estate contracts must be in writing and signed by the party to be charged (statute of frauds). The typical Massachusetts sequence is a written Offer to Purchase, followed by a more detailed Purchase and Sale Agreement (P&S), often within 10–14 days. Contingencies should be specific: financing, home inspection, title, appraisal, and septic (Title V). A "time is of the essence" clause makes deadlines enforceable.
Purchase and sale specifics
The P&S must include the Title V Property Transfer Notification for properties with septic systems. For pre-1978 housing, the seller must provide the lead-paint disclosure and EPA pamphlet. Before closing, the seller must obtain a smoke and carbon-monoxide detector certificate from the local fire department.
Leasing
A landlord may take at most one month's rent as a security deposit and must hold it in a separate, interest-bearing escrow account in a Massachusetts bank. A receipt is required, and the deposit must be returned within 30 days of move-out with an itemized list of damages. Last month's rent must also be held in a separate account. A lease cannot waive the implied warranty of habitability.
Worked example
A buyer signs an Offer to Purchase with a financing contingency and a 10-day inspection period. The seller accepts. On day 12, the buyer's lender denies the loan. Because the financing contingency was written into the offer, the buyer can terminate and recover the deposit. If the buyer had waited until after the contingency deadline, the seller could argue the buyer breached and keep the deposit.
Traps
Using an oral agreement for a sale. Missing the Title V notification in the P&S. Commingling a security deposit with operating funds. Assuming a 30-day return rule applies to last month's rent the same way it applies to security deposits.