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MAR Legal Hotline Notes - August 2019

Friday, August 2, 2019   (0 Comments)
Posted by: Karen DeDonato
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Does a landlord have any liability for crimes committed against tenants on the rental property premises?

A landlord may be liable for injuries caused to a tenant by a third party’s criminal act if the landlord’s negligence created an opportunity for the criminal act to occur. The landlord must have known, or should have known, that their failure to act created a situation that allowed a third party to commit a foreseeable crime.

Many landlords fear this liability, and, as a result, are tempted to institute criminal history screening policies that weed out prospective tenants with criminal histories. HUD has issued guidance on this issue, warning against blanket “no criminal history” policies because of the disparate impact they may have on minorities. The Fair Housing Act may be violated when a policy or practice has a disparate impact, meaning it has an unjustified discriminatory effect, even if there was no intent to discriminate.

Landlords should use caution when instituting prospective tenant screening policies based on criminal history to ensure that any policy serves a substantial, legitimate, and nondiscriminatory interest of the landlord, such as protection of the property or resident safety. For assistance drafting legally defensible criminal history based policies, we recommend reading NAR’s Fair Housing Act: Criminal History-Based Practices and Policies , HUD’s Office of General Counsel Guidance, and MAR’s guidance on HUD’s memo.

The buyer’s agent is demanding their commission check at closing, but I’m not comfortable paying out funds until the transaction is on record. When is payment due to the cooperating broker?

A cooperating broker is due a commission in a completed transaction in which they were the procuring cause. Almost all offers of compensation made through the MLS are unconditional.* Massachusetts laws and regulations, as well as the MLS rules and regulations, are silent as to when the payment is due to the cooperating broker.

Oftentimes, commission checks will be brought to closings with the understanding that they will not be deposited until the transaction is on record with the Registry of Deeds and the funds have cleared. While this is permissible, it is not required as the funds are not available for deposit at the time the check is given. Some brokers choose to wait until the transaction is on record before issuing any payments to the cooperating broker or excess funds to the Seller. When subscribing to  the latter practice, it is best to issue payments as soon as possible after the funds are available so as not to delay compensation due to the cooperating broker.

Payment may be made either directly from the escrow account or transferred to the operating account and paid from there. Keep in mind that funds may not be transferred out of the escrow account until the transaction has closed, and any monies paid from the escrow – either as transfers or checks to cooperating brokers – must be properly accounted for.          

*Unless the cooperative broker has received notice in writing in advance of submitting an offer that the compensation offered to their brokerage will be different from what is listed in the MLS.

Source: Massachusetts Association of REALTORS® Legal Staff
                      
Justin Davidson, General Counsel
                       Catherine Taylor, Associate Counsel
                       Jonathan Schreiber, 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 service. For more information regarding these topics authorized callers should contact the MAR legal hotline at 800-370-5342 or e-mail at legalhotline@marealtor.com.