Quick Links:

• ACCESS the new MA home inspection disclosure form (this will also be available in the GBREB and MAR digital forms libraries soon)
• REVIEW a summary of the final regulations on Mass.gov
• DOWNLOAD a summary sheet you can provide to consumers with the disclosure
• READ the full regulations on Mass.gov
• VIEW recorded MAR Webinar

Member Advisory:
Tucked into the 2024 Massachusetts housing bond bill was a provision designed to preserve a residential buyer’s ability to conduct a home inspection.The text of the section reads as follows:

The executive office of housing and livable communities [EOHLC]  shall promulgate regulations to ensure that no seller of a residential structure or a residential condominium unit, or an agent thereof, shall: (i) condition the acceptance of an offer to purchase on the prospective purchaser’s agreement to waive, limit, restrict or otherwise forgo any prospective purchaser’s right to have the structure or unit inspected, except when the sale of the structure or unit is to occur at an auction conducted by an auctioneer licensed under chapter 100; or (ii) accept an offer to purchase from a prospective purchaser, or an agent thereof who, in advance of the seller’s acceptance of an offer, informs the seller, either directly or indirectly, that the prospective purchaser intends to waive, in whole or in part, the prospective purchaser’s right to inspection; provided, however, that the seller may accept such an offer without violating this section if the prospective purchaser is: (A) the spouse, sibling, child, parent, grandparent, grandchild, great-grandchild or great-grandparent of the seller; or (B) the former spouse of the seller and the sale of the structure or unit is being made pursuant to a [divorce] judgment or order under chapter 208; provided further, that other limited exceptions may be provided for by regulation.

The EOHLC has now issued regulations implementing the statute. Here are the highlights:

• The properties covered by the law have been defined by the EOHLC to include (1) a building or structure containing one-to-four residential units, (2) a residential condominium unit and (3) stock in a residential cooperative corporation. In addition to the exemptions recited in the statute, the EOHLC has broadened the exception for sales to “Relatives” of the seller to include the seller’s “spouse or domestic partner or, whether by blood, marriage, or adoption, their sibling, child, brother, sister, aunt, niece, uncle, nephew, parent, father-in-law, mother-in-law, son-in law, daughter-in-law, stepparent, stepchild, stepbrother, stepsister, half brother, half sister, grandparent, grandchild, great-grandchild or great-grandparent.”There are also new exemptions for (1)mortgage foreclosure sales or deeds in lieu of foreclosure, (2) deeds reconveying property in order to release a debt, lien or other security obligation, (3) transfers to a Relative for estate planning purposes, including through a trust so long as at least one of the designated beneficiaries is a Relative and (4) sales of newly-built residential properties where the first written purchase contract (presumably including an accepted offer) is executed prior to the substantial completion of construction and the seller offers an express written warranty for a term of at least one year promising that the work will be completed in a good and workmanlike manner in accordance with applicable building laws and regulations and that the components of the dwelling will function properly, including at a minimum heating, cooling, plumbing and electrical systems and the roof, foundation, masonry structure. For this purpose, “substantial completion” means that construction is substantially complete so that the dwelling may be occupied, whether or not a certificate of occupancy has been issued by the local city or town.
• The provisions of the statute forbidding a seller from forcing a buyer to forgo a home inspection or refusing to accept an offer unless the buyer agrees to waive an inspection have been left pretty much intact under the new regulations. The EOHLC has gone one step further and will now require listing brokers or sellers marketing property on their own to provide a written disclosure form to prospective buyers not later than the signing of the first written contract for the sale of the property, customarily an offer to purchase. Both the seller and the buyer as well as the seller’s agent (if any) must sign the form, which has been designed by the EOHLC and is available as a Greater Boston Real Estate Board standard form. The form advises the buyer of the right to have the premises inspected by a licensed home inspector of the buyer’s choice. A buyer who elects to have an inspection must be given a “reasonable period of time” after execution of the contract to decide whether to proceed with the transaction if the results of the inspection are not satisfactory to the buyer. What constitutes a reasonable period of time is to be agreed upon by the parties. Any seller’s agent must acknowledge that the seller has been informed of the seller’s obligations and that the disclosure form has been provided to the buyer. Prospective buyers should continue to receive the brochure, published by the Office of Consumer Affairs, educating consumers about the home inspection process.
• For purposes of the regulations, a home inspection is generally defined as disclosing building conditions which are readily accessible and observable and issuing a written evaluation, as more particularly described in standards of practice promulgated by the Board of Registration of Home Inspectors.
• No offer to purchase or purchase and sale agreement may include a provision which would frustrate the purpose of a home inspection, including without limitation by (1) unreasonably limiting the buyer’s ability to schedule, receive and review a home inspection report or (2) prohibiting a buyer from choosing not to proceed with the transaction if the results of a home inspection are not satisfactory to the buyer. However, the parties may agree (1) to limit the buyer’s right to cancel the purchase if the “estimated aggregate cost of repairs does not exceed a reasonable monetary threshold amount agreed upon by the parties” or (2) reasonably limit the buyer’s entitlement to a refund of a deposit if the buyer chooses not to go forward.
• A buyer whose offer has been accepted and who received the required disclosure form may subsequently waive, limit, restrict or otherwise forgo a home inspection provided that such decision is not influenced or required by the seller or the seller’s broker.
• Violations of the regulations, except by someone participating in the isolated sale of a private home for residential use, will (in the case of not providing the required disclosure form) or may (in certain other cases) constitute an unfair or deceptive act under the Consumer Protection Act (Chapter 93A). Brokers and salespersons may also be subject to disciplinary action by the Board of Registration. Additionally, in an action for damages brought against a seller within one year from the date of the first written contract with a buyer, the seller’s failure to comply with the regulations may be viewed as evidence of an intent to misrepresent or conceal a material fact.
• The new rules will become effective on October 15 but will not apply to transactions where an offer or purchase and sale agreement was executed on or before that date.

As always, members needing additional assistance should reach out to their brokers.

Philip S. Lapatin
Holland & Knight LLP