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MAR Legal Hotline Notes - August 2018

Thursday, August 2, 2018   (0 Comments)
Posted by: Karen DeDonato
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August Notes from the MAR Legal Hotline

I’ve heard that the Board is really cracking down on escrow accounts; what are some of the main things to watch out for?

Three of the most common escrow account pitfalls our members encounter are:           

1. Commingling of Funds. Funds cannot be transferred from the escrow account to an operating account until the transaction has closed. We often hear of members who preemptively transfer funds from their escrow to their operating account so that they can bring a check for the co-broker at closing. Even if it is a near certainty that the transaction will close as scheduled, this is an impermissible commingling of funds. There is nothing in 254 CMR 3.10(a) that would prohibit the disbursement of funds directly from the escrow account after the closing has occurred.

2. Having Non-Broker Signatories. The Board interprets 254 CMR 3.10(a) as allowing for only brokers to keep and maintain escrow accounts. Neither salespeople nor unlicensed individuals, such as a bookkeeper, may have check signing authority.

3. Escrow Accounting: The broker is responsible for keeping a proper account of the escrow account. This requires not only tracking all deposits and distributions, but also maintaining copies of each check deposited into and withdrawn from the escrow account for a period of three (3) years from the date of issuance. The check register must be kept for a period of ten (10) years.

I have a seller who has a surveillance system installed in their home – do I have to tell potential buyers that they are being recorded?

Yes, it is a crime in Massachusetts to secretly hear or record another individual without their knowledge and consent pursuant to Massachusetts General Laws Ch. 272, § 99.  A device that only records video with no audio, however, is permissible under the statute. As a listing agent, it is important to inquire whether a seller has any type of surveillance in the house that records audio, and whether it will be in operation during any showings and open houses. If a seller has a device that records audio and intends to record showings and open houses, notice must be given to all individuals subject to recording. Placing a sign in an obvious location, such as on the front door, to notify potential buyers and their agents of the recording is sufficient to constitute consent. Including a note about the recording in the MLS listing is also recommended. If, after notice of the recording, an individual still chooses to enter the property, that constitutes consent to be recorded. As technology becomes a greater part of our day-to-day lives, this has become a much more frequent issue. As the penalties for recording without consent are significant, it is imperative to properly address this issue with sellers.

        Source: Massachusetts Association of REALTORS® Legal Staff
Michael McDonagh, MAR General Counsel
Justin Davidson, MAR Legislative & Regulatory Counsel
        Catherine Taylor, Staff Attorney

         The information and services provided through the Massachusetts Association
         of REALTORS® is intended for informational purposes and does not constitute legal
         advice, nor does it establish an attorney-client relationship. The Massachusetts
         Association of REALTORS®, by providing this service, assumes no actual or 
         implied responsibility for any improper use of responses to questions through this
         service. The Massachusetts Association of REALTORS® will not be legally
         responsible for any potential misrepresentations or errors made by providing this
         For more information regarding these topics authorized callers should contact the
         MAR legal hotline at 800-370-5342 or e-mail at