California Dual Agency Case – Horiike v. Coldwell Banker

Midsection of judge reading document at desk in courtroom

On Tuesday, November 22nd, 2016, the California Supreme Court issued its opinion on Horiike v. Coldwell Banker, which focused on the interpretation of the California dual agency statute, Civ. Code sec 2079.13(b). The court affirmed the appellate court’s opinion by holding that, pursuant to that statute, each of the salespeople involved in a dual agency transaction owe fiduciary duties to both the buyer and the seller. It is important to note that this decision is entirely based on the literal interpretation of the California agency statute and will have no effect on agency issues here in Massachusetts.

For more information on the case, please visit:  http://realtormag.realtor.org/daily-news/2016/11/22/dual-agency-role-expanded-in-calif-high-court-ruling

The Impact of Recreational Marijuana on Real Estate

Large Indoor Marijuana Commercial Growing Operation With Fans, Greenhouse, Equipment For Growing High Quality Herb. Cannabis Field Growing For Legal Recreational Use in Washington State
Large Indoor Marijuana Commercial Growing Operation

On November 8th 2016 Ballot Question #4, which will allow for the recreational use of marijuana, was passed by Massachusetts voters in a fairly wide margin of 54% to 46%. Under the new law, the use of marijuana for recreational purposes will be legal starting on December 15, 2016. However, the sale of the drug from regulated retail stores will not be permitted until the beginning of 2018. So how will this new law impact real estate? Here are a few considerations to keep in mind, but watch for more information from MAR on this issue in the coming weeks and months.

The first thing to consider is that although legal under state law, marijuana remains a Schedule 1 illegal substance under federal law. Up until this point the federal government has taken the position that it will not enforce federal law in those states that permit recreational marijuana usage. However, there is no guarantee that they will keep this position in the future as more and more states change their laws to allow for the use of marijuana.

How will the legalization of recreational marijuana affect landlord-tenant relationships and the rights of each party? As written, the law will allow for landlords to prohibit the smoking of marijuana on their property, but owners should be sure to check the language of their lease agreements to make sure the issue is covered. Just as a landlord may prohibit smoking of cigarettes in an apartment, they may also prohibit smoking of marijuana.

How will the new law affect residential transactions? Similar to the laws in Colorado and other states, the law will permit residents to cultivate a certain amount of the drug in their homes for personal use. This could potentially impact the homeowners insurance policy if there is a loss due to issues related to water damage, electrical fires and mold issues.

When listing a home where cultivation is occurring, it is prudent to have a conversation with the seller prior to any showings or open house. A seller should consider removing or relocating equipment during the listing period.

Finally, the new law provides cities and towns with some ability to regulate or prohibit the sale of marijuana at retail locations within their community.

It is likely that additional regulations will be enacted and changes to the law itself may be made by the legislature before 2018. This will hopefully provide some additional time to clarify some of the issues that relate directly to the real estate industry.

The Unintended Consequences of the Not so ‘Simple’ Home Energy Label

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By Annie Blatz, 2016 President, Massachusetts Association of Realtors®

Unless we contact our legislators within the next few weeks, state government could require all homes to be inspected and scored on energy efficiency before they could be sold here. Unlike Miles Per Gallon (MPG) and Energy Star ratings, which only appear on new cars and appliances, there is a proposal before the legislature that would require government testing and labeling on all homes before they are sold. The program could stigmatize entire neighborhoods and communities of older housing stock in Massachusetts.

These potential mandatory energy inspections and scoring provisions are only a small part of S.2400, An Act to promote energy diversity, which is now in House-Senate Conference Committee.  These provisions requiring a home inspection and rating before selling a home would be extremely harmful to the Massachusetts housing market and would disproportionately hurt home values for low- and moderate-income homeowners and possibly entire neighborhoods.

Proponents like to compare home energy labels to MPG ratings of new cars or Energy Star scores on new appliances. But older cars and appliances are not rated and neither should older homes. Following New York and Rhode Island, our state has the third oldest median house age at 57 years, according to the latest data from the U.S. Census Bureau, American Community Survey. If passed, these requirements would be like putting a new MPG requirement on a 50-plus-year-old car; it doesn’t make sense.

According to the American Council for Energy-Efficient Economy (ACEEE) State Energy Efficiency Scorecard, Massachusetts has been the number one most energy efficient state in the country since 2011. While improved energy efficiency is an important goal for all of us, a blanket “MPG” requirement on all homes would have significant and very real unintended consequences. A labeling system not only would have negative impacts on older homes, but would significantly impact low- and moderate-income communities where homeowners cannot afford to make upgrades. Essentially a state statute could result in depressed home values, especially in our older neighborhoods.

In addition to disproportionally hurting low and moderate-income homeowners, the requirement of an energy audit prior to listing a home for sale would complicate and delay an already complicated process of buying and selling a home. Currently the number of homes for sale is critically low and this would make it even more difficult for potential sellers to list their home for sale. This is not how you encourage a healthy real estate market and a strong economy.

What we need is a common sense approach to energy efficiency and alternatives already exist. We need to continue to work with our utility providers to promote the strictly-voluntary Mass Save program to all homeowners. This program provides an incentive-based approach to energy efficiency rather than a punitive home inspection/label mandate. We should remind buyers to consider a Mass Save audit shortly after purchase or as part of their home inspection process.   We should also make it easier to build new homes that set the standard for energy efficiency.

This all starts with the Conference Committee understanding that requiring energy inspections and home energy labeling before you can sell a house in Massachusetts provides no energy efficiency, but is merely another government mandate. We urge the Conference Committee to reject the energy auditing and labeling provisions contained in the Senate version of this bill.

The REALTORS® Legislative Meetings & Trade Expo is Underway | The Wednesday Word

Massachusetts REALTORS(R) and Government Affairs Staff meet with Congressman Joe Kennedy (D-MA) in D.C.
Massachusetts REALTORS® and Government Affairs Staff meet with Congressman Joe Kennedy (D-MA) in D.C.

The annual REALTORS® Legislative Meetings and Trade Expo is fully underway this week. REALTORS® from across the country are meeting in D.C. to attend sessions and visit their members of Congress to advocate for federal issues affecting the real estate industry and private property rights.

Over 150 REALTORS® from Massachusetts are on Capitol Hill this week. Constituent REALTORS® as well as MAR Leadership, MAR Government Affairs Staff, and REALTOR® Federal Political Coordinators (FPC) will meet with members of the Massachusetts Congressional Delegation and U.S. Senate.  This year’s federal talking points include:

  • G Fees: Prohibit guarantee fees (G-fees) from being extended for unrelated government spending.
  • HR. 3700: Open access to condominiums and make other needed housing reforms by supporting the “Housing Opportunities through Modernization Act” (HR 3700).
  • Flood Insurance: Provide private flood insurance options.
  • Housing Tax Incentives: Preserve the Mortgage Interest Deduction and Like-Kind Exchanges.

REALTOR® FPCs will meet with their Member of Congress or Senator to present these talking points as well as district data and other federal issues. Click here to read more on the issues in your Congressional District.

The annual meetings bring REALTORS® to the forefront on Capitol Hill showing the effectiveness of the REALTOR® Party and grassroots advocacy. To see the full Hill visit schedule, visit the MAR website. Click here to see a full schedule of events in D.C. and be sure to visit the Realtor Action Center site for National legislative info and updates.

(Please note: This blog post was prepared by MAR Legal Staff: Michael McDonagh, General Counsel; Ashley Stolba, Associate Counsel; Justin Davidson, Legislative & Regilatory Counsel; and Christine Howe, Public Policy and Finance Coordinator)

NAR 2016 Legislative Issues Brief: Prepare for the NAR Legislative Meetings in D.C | The Wednesday Word

US-capitolAs we approach the end of the first quarter and the state and federal legislative cycles are in full swing, now is the time to review the NAR Legislative Issues Brief and prepare for the NAR Legislative Meetings and Trade Expo to take place from May 9th-May 12th in D.C.

Annually, NAR releases Legislative Priorities that provide the basis for the Legislative Talking Points at the mid-year meetings in May. The Issues Brief outlines the Federal issues, NAR’s position, and how they affect REALTORS®, home buyers, and private property owners.

The key issues in 2016 include:

HOMEOWNERSHIP & REAL ESTATE INVESTMENT TAX POLICIES

The growing federal debt, weak economic recovery, and continued growth of tax complexity have kept tax reform near the top of the national agenda. Members of Congress from both Houses and both parties have expressed a high level of interest in reforming the tax system, and President Obama has also expressed qualified support, especially for corporate or business tax reform. This ongoing debate places a variety of tax laws, including those affecting commercial and residential real estate, under increased scrutiny.

  • State and Local Tax Deductions
  • Mortgage Interest Deduction
  • Mortgage Debt Cancellation Tax Relief
  • Capital Gains

CREDIT, LENDING AND INSURANCE POLICIES

Overly stringent lending standards have continued to limit the availability of affordable mortgage financing for credit worthy consumers. Federal policymakers are weighing a number of proposals aimed at creating healthier housing and mortgage markets. Additionally Congress must reauthorize the National Flood Insurance Program to avoid the potential loss of 40,000 home sales each month according to NAR research.

  • Credit Availability
  • GSE (Fannie Mae/Freddie Mac) Restructuring, Liquidity and Lending
  • FHA Lifetime Mortgage Insurance Premiums
  • FHA Condominium Requirements & Financing
  • National Flood Insurance Reauthorization

BUSINESS OPERATIONS

Protecting the business operations of members is always a priority for NAR. There are a number of issues before Congress and the Federal Regulatory Agencies that could have a significant impact on the business operations of real estate firms.

  • Dodd-Frank Act Regulations (TRID Implementation)
  • Technology Issues (Patent Reform, Net Neutrality, Data Privacy & Security)
  • Appraiser Independence Regulations

COMMERCIAL

More than $1.2 trillion in commercial real estate loans will come due over the next few years, and many of these deals will have trouble getting financing. NAR supports consideration of legislation and regulations to protect and enhance the flow of capital to commercial real estate.

  • 1031 Like-Kind Exchanges
  • Basel III
  • Lease Accounting
  • Waters of the United States

To track the issues, follow the Federal Issues Tracker . Be sure to stay updated on the Mid Year talking points by visiting: http://www.realtor.org/midyear.nsf/ Stay tuned for more Mid Yea updates by visiting The MAR Report every Wednesday.

(Please note: This blog post was prepared by MAR Legal Staff: Michael McDonagh, General Counsel; Ashley Stolba, Associate Counsel; Justin Davidson, Legislative & Regulatory Counsel; and Christine Howe, Public Policy and Finance Coordinator)

Special Senate Committee on Housing Adopts Three Realtor® Priorities | The Wednesday Word

The Special Senate Committee on Housing has released their final report containing several recommendations for legislators moving forward, including three priorities that help Realtors® and support Private Property Rights: Accessory Dwelling Units (ADUs); Multi-family Housing; and Mortgage Forgiveness Debt Relief. If adopted, these items would be huge wins for the Association and homeowners across the state.

Massachusetts Association of Realtors® and Greater Boston Real Estate Board Government Affairs Staff have been members of the Senate Committee on Housing, providing valuable insight to the Committee’s subcommittees and group as a whole. While this report is a step in the right direction, more work still needs to be done to ensure legislation containing these provisions is passed.

Read more below to see the impact these priorities would have on private property rights:

Accessory Dwelling Units

ADUs, also known as “in-law apartments,” provide units that can be integrated into existing single family neighborhoods to provide low-priced housing alternatives that have little to no negative impact on the character of the neighborhood.  Current state law does not require that zoning ordinances and bylaws permit accessory dwelling units in residential zoning districts, whether by right or with a special permit.

Multi-family Housing

Multifamily construction is important as a means to provide affordable housing in the Commonwealth.  Current state law allows municipalities to adopt a zoning law permitting multifamily housing construction in nonresidential zoning districts with a special permit but does not require municipalities to permit multifamily development by right. By requiring municipalities to permit multifamily development in zoning districts suitable for such development, and by establishing a minimum density for those developments, housing production is increased and allows for more affordable units to be built.

Mortgage Forgiveness Debt Relief

The general tax rule that applies to debt forgiven treats the amount forgiven, sometimes referred to as phantom income, as taxable income to the borrower. Proposed legislation would allow homeowners to complete loan modifications, short sales and foreclosures for which they have debt forgiven without making them liable to pay state taxes on that debt. This would mirror the federal law, the Mortgage Debt Relief Act of 2007, to allow taxpayers to apply for this exclusion on their state tax return.

Read the full text of the Committee’s report.

(Please note: This blog post was prepared by MAR Legal Staff: Michael McDonagh, General Counsel; Ashley Stolba, Associate Counsel; Justin Davidson, Legislative & Regulatory Counsel; and Christine Howe, Public Policy and Finance Coordinator)