MA Real Estate cheat sheet

Licensing authority: the Board of Registration of Real Estate Brokers and Salespersons, operating under M.G.L. c. 112, §§ 87PP–87DDD and the Board's regulations at 254 CMR.

Salesperson applicant: at least 18, good moral character, 40 hours of approved pre-license education, and a passing exam; a salesperson must be affiliated with a licensed broker to act.

Broker applicant: 40 hours of broker pre-license education plus three years of full-time experience as a licensed salesperson.

Continuing education: 12 hours per two-year license cycle, completed before renewal.

Trust funds: the broker must deposit client and escrow funds in a separate trust account and retain related records for three years.

Compensation: commissions and referral fees may be paid only to or through licensed brokers; no fee may be paid to an unlicensed person.

Advertising must identify the licensed brokerage name; a salesperson may not advertise or hold out as an independent brokerage.

A salesperson may not accept compensation directly from a consumer; the money goes to the affiliated broker, who then pays the salesperson.

Fiduciary duties summarized as OLD CAR: obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care.

Agency disclosure must be made in writing at the first personal meeting and before the consumer reveals confidential information.

Dual agency requires the written informed consent of both buyer and seller; without that consent the licensee may not represent both sides.

Designated agency: the broker may assign one licensee to represent the buyer and another to represent the seller, with the written consent of both parties.

Facilitator (non-agent) status: the licensee assists with forms and process without representing either party, owes honesty and accuracy, but not loyalty or confidentiality, and requires written consent.

Material property defects known to the licensee must be disclosed to all parties regardless of which side the licensee represents.

The duty of confidentiality survives termination of the agency relationship.

Compensation does not create agency: a listing broker paid by the seller may represent the buyer only with proper disclosure and consent.

Statute of Frauds (M.G.L. c. 259, § 1): a contract for the transfer of an interest in land must be in writing and signed by the party to be charged.

Massachusetts practice: the parties sign an Offer to Purchase, then a standard-form Purchase and Sale Agreement within the stated number of days; the P&S is the binding contract.

The P&S should identify the parties, the property, the price, the deposit, the closing date, and be signed by both buyer and seller.

Common P&S contingencies: mortgage financing, home inspection, sale of the buyer's property, and title review; each must be satisfied or waived in writing.

Earnest money is customarily held in the listing broker's escrow account and applied to the purchase price at closing.

Buyer default may result in forfeiture of the deposit as liquidated damages; seller default generally requires return of the deposit.

Licensees may fill in blanks on standard or promulgated forms but may not draft contract language, which is the unauthorized practice of law.

A 'time is of the essence' clause makes stated deadlines enforceable, so missing a deadline can itself constitute breach.

Forms of co-ownership: tenancy in common (no survivorship), joint tenancy (with survivorship), and tenancy by the entirety (married couples only, with survivorship).

Fee simple absolute is the largest estate of ownership; a life estate ends at the holder's death and the remainder passes to the named remainderman.

Legal description methods: metes and bounds, lot and block on a recorded plan, and, for registered land, reference to the Land Court certificate of title.

Adverse possession in Massachusetts requires 20 years of actual, open, notorious, exclusive, adverse, and continuous use (M.G.L. c. 260, § 21).

An easement appurtenant benefits a neighboring parcel, while an easement in gross benefits a person or entity; a prescriptive easement requires 20 years of adverse use.

Zoning Act (M.G.L. c. 40A): special permits and variances are decided by the zoning board of appeals, and a variance requires four affirmative votes of a five-member board.

Subdivision control (M.G.L. c. 41, §§ 81K–81GG): dividing land into lots may require planning board approval; an ANR plan is filed for divisions that do not create a subdivision.

Nonconforming (pre-existing) uses may continue under c. 40A but may not be substantially extended or altered without zoning relief.

Three approaches to value: sales comparison (typical residential), cost (new or special-purpose property), and income (income-producing property).

Sales comparison adjustments: if the comparable is superior to the subject, subtract value; if inferior, add value.

Cost approach: value = land value + cost new of the improvements − accrued depreciation.

Depreciation categories: physical deterioration, functional obsolescence, and external (economic) obsolescence.

Income approach: value = net operating income ÷ capitalization rate; capitalization rate = NOI ÷ value.

Gross rent multiplier = sale price ÷ gross rent; value = GRM × the subject's gross rent.

Highest and best use must be legally permissible, physically possible, financially feasible, and maximally productive.

Massachusetts assesses property at full and fair cash value for the fiscal year, but assessed value is not automatically equal to current market value.

Loan-to-value ratio = loan amount ÷ the lesser of appraised value or purchase price; down payment = 1 − LTV.

PITI = principal, interest, property taxes, and hazard insurance; mortgage insurance and association dues add to the borrower's monthly obligation.

TRID/RESPA timing: the Loan Estimate within three business days of application, and the Closing Disclosure at least three business days before consummation.

RESPA prohibits kickbacks and unearned fees for referrals of settlement services; routine referrals without payment are permitted.

Adjustable-rate mortgage: index + margin = fully indexed rate, and initial, periodic, and lifetime caps limit payment increases.

Mortgage contingency clause: if the buyer cannot obtain the specified financing, the buyer may terminate and recover the deposit.

Mortgage priority generally follows recording order, so the first recorded mortgage is the first lien.

Massachusetts residential foreclosure is by power of sale with statutory notice, and certain home loans carry a 150-day right to cure.

Deed execution: the grantor signs and acknowledges the deed before a notary and delivers it; the grantee is not required to sign.

A quitclaim deed conveys whatever interest the grantor may have, with no covenants or warranties of title.

A Massachusetts warranty deed contains covenants of seisin, right to convey, against encumbrances, quiet enjoyment, warranty, and further assurance.

Deeds are recorded at the Registry of Deeds for the county (Land Court for registered land) and give constructive notice to later purchasers.

Massachusetts deed excise tax is $4.56 per $1,000 of consideration and is customarily paid by the seller.

Resale certificates for 1–4 family homes: a fire department smoke and carbon monoxide detector certificate and, where applicable, a Title 5 septic inspection.

Massachusetts homestead: automatic protection of $125,000, raised to $500,000 by recording a declaration of homestead.

Massachusetts closings are attorney-conducted; the settlement statement, deed recording, and disbursement of funds occur at consummation.

Federal Fair Housing Act protected classes: race, color, religion, sex, national origin, familial status, and disability.

Massachusetts (M.G.L. c. 151B) adds marital status, sexual orientation, gender identity, age, ancestry, veteran status, and source of income, including housing subsidies.

Prohibited practices include refusing to sell or rent, steering, blockbusting, redlining, offering different terms, and discriminatory advertising.

Disability: housing providers must permit reasonable accommodations in rules and reasonable modifications, generally at the tenant's expense, when needed for equal access.

Advertising must contain no discriminatory preference; use the Equal Housing Opportunity logo and describe the property rather than a preferred buyer or tenant.

M.G.L. c. 93A prohibits unfair or deceptive acts or practices in trade or commerce, and the Attorney General's regulations at 940 CMR 3.00 apply to real estate advertising and brokerage conduct.

Lead paint: for pre-1978 housing, sellers and landlords must disclose known lead hazards and provide the EPA pamphlet, and Massachusetts requires the property transfer notification form.

Antitrust: licensees may not fix commissions, allocate markets, or boycott competitors; commission rates are always negotiable.