Important Forms for Buyers & Sellers of Real Estate
As a courtesy to my customers and clients, these forms are being presented for you to review ahead of time, prior to making an appointment with me. Some forms are used exclusively for Buyers, while others are used exclusively for Sellers. At the same time, there are certain forms that are used both by Sellers and by Buyers. You will be a more informed consumer by having the opportunity to review these forms prior to meeting with a real estate broker.
1. REAL ESTATE CONTRACTS FOR SELLERS --
Whether you are a potential Seller or a potential Buyer, at the very first meeting, all real estate agents are required, by law, to present you with the Massachusetts Mandatory Licensee – Consumer Relationship Disclosure, which is also referred to as the Agency Disclosure. This is not a contract. It is simply a disclosure. State law also mandates that the agent ask the consumer to sign an acknowledgement that he or she has received the disclosure. Believe me, I know how uncomfortable it feels to have someone ask you to sign something at the very first meeting, but Massachusetts law requires me to do so. I am also finding that many agents are not doing this until they "get to know" their customer or client. They are in violation of Massachusetts laws and they may be violating other laws without your even knowing it.
Once you agree to enter into a relationship with a real estate agent to sell your property, the next step is to sign an Exclusive Right to Sell Listing Agreement, which is a pre-printed form that is used throughout much of Massachusetts. Without your written permission, I cannot legally put your property into the state-wide Multiple Listing Service (MLS PIN), nor can I place a sign in front of your property or even market the property. The Exclusive Right to Sell Agreement states that you are hiring me to sell your property and that I am obligated to represent you as a Sellers Agent. All other agents, including other agents working as independent contractors in my office, will act as Buyer Agents. They will represent the Buyer in the transaction, but I will pay them out of the brokerage fee that you are paying me in order to sell your property.
In addition to signing an Exclusive Right to Sell Listing Agreement, we also have a form called Consent to Dual Agency. What this states is that in the event that I already have a Buyer client who may be interested in your property, you will allow me to show your property to my Buyer client. Furthermore, since I already have a previous agreement with this Buyer to represent his interests, and since I now have an agreement with you, the Seller, to represent your interests, I must then act as a Dual Agent, which means that I will not be able to represent either party in the transaction, but at the same time, I do have a duty to be fair and honest in my dealings with all parties. This rarely happens, but when it does, I have never had a problem working this way. Of course, both parties must give me written permission, ahead of time, in order for me to show one of my listings to one of my Buyer clients. Buyers who call me as the result of one of my signs, flyers, or through my extensive internet marketing campaigns will be customers and I can then show them your property without having to be a Dual Agent. If this paragraph confuses you, then you're not alone. Many real estate agents who do not keep themselves up to date on current real estate laws and practices do not understand this concept either.
For those whose properties were constructed prior to 1978, state and federal law mandates that you read and sign the CHILDHOOD LEAD POISONING PREVENTION PROGRAM (CLPPP) PROPERTY TRANSFER LEAD PAINT NOTIFICATION, which is an eleven page document that discusses the lead paint law, the dangers of lead paint, and how the law impacts Sellers, Buyers, tenants, and landlords in Massachusetts. If you have any knowledge of having lead based paint in your house, you are required to disclose this. If you do not know whether or not your house has lead based paint, there is also a place for you to acknowledge this. Generally people do not know whether or not they have lead based paint in their house unless an inspection for lead based paint was done sometime in the past. However, in order to err on the side of caution, we generally assume that any property constructed prior to 1978 may have lead based paint unless we test otherwise for it.
Massachusetts is one of many states that does not require a Seller to sign a written disclosure statement when selling a property. However, that does not absolve a Seller from disclosing known defects in a house that may not be obvious to a person who views the property. The real estate Board publishes a Seller's Statement of Property Condition that some Sellers will sign. Those who choose not to sign this disclosure are asked to sign a Waiver of Sellers' Disclosure. Either way, as a Seller, you are required to disclose all known defects that would not be obvious to a person viewing the property. Failure to disclose could result in a lawsuit, and the courts have been awarding treble damages under the Massachusetts Consumer and Business Protection Act (Massachusetts General Laws, Chapter 93A).
For those who may feel somewhat reluctant to enter into a written contract because you are not sure if I will do a good job for you, I will offer you something that no other agent will do. At the time that we decide to list your property, I will offer you an Unconditional Written Guarantee, which states that if you are unhappy with my services or if we encounter a problem which we cannot resolve, then you can fire me immediately and cancel our contract without penalty.
2. REAL ESTATE CONTRACTS FOR BUYERS --
Whether you are a potential Buyer or a potential Seller, at the very first meeting, all real estate agents are required, by law, to present you with the Massachusetts Mandatory Licensee – Consumer Relationship Disclosure, which is also referred to as the Agency Disclosure. This is not a contract. It is simply a disclosure. State law also mandates that the agent ask the consumer to sign an acknowledgement that he or she has received the disclosure. Believe me, I know how uncomfortable it feels to have someone ask you to sign something at the very first meeting, but Massachusetts law requires me to do so. I am also finding that many agents are not doing this until they "get to know" their customer or client. They are in violation of Massachusetts laws and they may be violating other laws without your even knowing it.
Once you decide to hire a real estate agent to help you find a new home, the next step is to sign an Exclusive Buyer Agency Agreement, which is a pre-printed form that is used throughout much of Massachusetts. Without a written contract, I cannot legally represent you and look out for your best interests when purchasing real estate. Furthermore, without a commitment from you to work exclusively with me instead of going around to all of the various agents in town, I cannot commit to clear my schedule to spend my time with you and to spend money on gasoline showing you houses. The Exclusive Buyer Agency Agreement states that you are hiring me to help you find a property and that I am obligated to represent you as a Buyers Agent. It does not cost you any additional money to have representation, as I am compensated at the closing out of the total commission the Seller pays to the listing broker.
In addition to signing an Exclusive Buyer Agency Agreement, we also have a form called Consent to Dual Agency. What this states is that should I get a listing in the future which might be of interest to you, you will allow me to show my client's listing to you. Furthermore, since I now have an agreement with this Seller to represent his interests, and since I previously had an agreement with you, the Buyer, to represent your interests, I must then act as a Dual Agent, which means that I will not be able to represent either party in the transaction, but at the same time, I do have a duty to be fair and honest in my dealings with all parties. This rarely happens, but when it does, I have never had a problem working this way. Of course, both parties must give me written permission, ahead of time, in order for me to show one of my listings to one of my Buyer clients. In the past, none of my Seller clients have expressed any concerns about my showing their house to a Buyer client, as it is in their best interests to allow all interested parties the opportunity to see their property.
Once you decide that a particular property is right for you, the next step is to submit a written Offer To Purchase. This form spells out your offering price, along with the terms of the purchase and any special conditions or contingencies. The Seller with either accept this initial offer, reject this initial offer, or make a counter offer.
Along with the Offer to Purchase, you will receive a Mold Disclosure, which encourages you to have an inspection performed to determine whether or not dangerous levels of mold exist in the house. Mold is something that is not easy for an untrained person to recognize, and most home inspectors do not check for mold. You will also be given a copy of the Home Inspectors Facts for Consumers sheet, which provides valuable information regarding the importance of having a home inspection done and when the home inspection should be performed.
If the property was constructed prior to 1978, state and federal law mandate that the Seller provide you with a signed copy of the CHILDHOOD LEAD POISONING PREVENTION PROGRAM (CLPPP) PROPERTY TRANSFER LEAD PAINT NOTIFICATION, which is an eleven page document that discusses the lead paint law, the dangers of lead paint, and how the law impacts Sellers, Buyers, tenants, and landlords in Massachusetts. If the Seller has any knowledge of having lead based paint in the property, they are required to disclose this. If the Seller does not know whether or not the house has lead based paint, there is also a place for him to acknowledge this. Generally people do not know whether or not they have lead based paint in their house unless an inspection for lead based paint was done sometime in the past. However, in order to err on the side of caution, we generally assume that any property constructed prior to 1978 may have lead based paint unless we test otherwise for it. After reviewing this notice and the Seller's written disclosure, you are also required to sign the document.
Usually within two weeks of an accepted offer, and once all home inspections have been completed and issues, if any, have been satisfied, the next step is for both parties to sign a Purchase and Sale Agreement. There is a Purchase and Sale Agreement for Condominiums and there is a separate Purchase and Sale Agreement for land, single-family, and multi-family properties. Often times, attorneys will modify the standard forms presented here, and it is typical for them to draft their own riders in order to protect their client's interests.
Sellers should also make themselves familiar with the Offer to Purchase and with the Purchase and Sale Agreements that were presented in this section.
Copyright (C) Randal L. Struckus, 2007. All rights reserved.