Legal
10/2/2015
Notes from the MAR Legal Hotline
Michael McDonagh, MAR General Counsel
Ashley Stolba, MAR Associate Counsel
Justin Davidson, MAR Legislative & Regulatory Counsel
October 2015
Q. I just listed a property for my seller client. My seller-client informed me that the house is haunted and there are ghosts in one of the bedrooms. Am I required to disclose this?
A. Not unless asked. The Stigmatized Property Law states that absent a specific inquiry by a prospective purchaser, there is no duty for the broker to either investigate or affirmatively disclose murders, suicides, allegations of ghosts or other potential stigmas. This is because these stigmas are not actual physical defects with the property. If a consumer does ask, however, the broker or salesperson must answer the question regarding the stigma honestly and to the best of his or her knowledge. If you are representing a buyer, be sure to determine whether or not this is an important issue to your client. If it is, be sure that the question is asked.
As a reminder, REALTOR’S® always have an obligation under Chapter 93A to disclose known physical defects (leaky roof, foundation problems, etc.). The Stigmatized Property Law does not diminish this obligation. Brokers and salespersons should remember that one of the most effective ways to deal with these issues is to ask the seller to complete a Seller’s Description of Property Form and provide all prospective purchasers with a copy of the form.
Q. I know that the Real Estate Settlement Procedures Act (“RESPA”) and the Truth in Lending Act (“TILA”) laws and regulations are changing as of October 3rd, 2015. Has the MAR Forms Content Advisory Released a New Form?
A. On October 3, 2015, new federal regulations governing the closing process will take effect and will have an impact on our industry and on your business. The new laws will only apply to closings where the loan application was made on or after October 3rd. In light of these changes, MAR has prepared a new form that will be available on all MassForms® electronic forms platforms. If you subscribe to Massforms®, the form will automatically be added to your library. You can also find a copy of the form, along with other information about TRID, here: https://www.marealtor.com/members/government-affairs/tila-respa-integrated-disclosure
The Form is intended to be used as an addendum to the Contract to Purchase and/or the Purchase and Sales Agreement. Under the new regulations, there are certain circumstances where the closing may need to be delayed in order to allow for sufficient time for the lender to provide copies of the new Closing Disclosure, which will replace the HUD-1 Form. This addendum will allow the buyer and seller to agree to extend the closing in anticipation of such delays. It also requires the buyer and seller to use reasonable efforts to provide the closing attorney with information regarding any adjustments needed for closing. As always, it is recommended that REALTORS refer the buyer and seller to their attorney to answer specific legal questions they might have about this form.
Q. Where can I get more information about TRID?
A. The Consumer Financial Protection Bureau (CFPB), together with the National Association of REALTORS® (NAR) created numerous helpful documents, which can be found here: http://www.consumerfinance.gov/regulatory-implementation/tila-respa/.
More information can also be found on NAR’s website here: http://www.realtor.org/topics/trid-tila-respa-integrated-disclosure