The convening of the 190th General Court of the Commonwealth of Massachusetts provides a good time to review some of the legislative priorities of the Massachusetts Association of Realtors® (“MAR”). Once again, Realtors® will be focused on legislation that impacts the housing industry. The following are some of MAR’s specific legislative recommendations for the 2017-2018 session.
FIRST TIME HOMEBUYER ACCOUNTS:
The rising costs of housing and crippling student loan debt appear to be impacting younger generations and their housing choices.
This makes saving for a down payment and closing costs very challenging. Over the past few months, the Massachusetts Association of Realtors® has been working with Senator Julian Cyr (D-Truro) to develop new legislation that would create a First-Time Home Buyer Savings Account Program in Massachusetts. This new legislative proposal is one way to help overcome the challenge of saving for a down payment.
This legislation use a small state tax incentive to encourage future homebuyers to save for the purchase of a home. Specifically, this program would allow future home buyers to deposit up to $5,000 per year into a First-Time Home Buyer Savings Account and then claim that contribution as a deduction on their state income tax.
The rise of student loan debt means homebuyers need this type of assistance now more than ever. Per the 2016 Massachusetts Profile of Home buyers and Sellers, the share of first-time homebuyers in Massachusetts has dropped to a low of 35 percent—the lowest share of first-time buyers since the Profile began collecting Massachusetts data in 2003.
THE HOME BILL:
Due to the short supply of housing in Massachusetts, potential homeowners continue to face increasing housing costs. One of the many issues driving the reduced housing stock is the presence of barriers to production, many of which are found in current zoning laws. MAR, in conjunction with the Greater Boston Real Estate Board, has filed legislation addressing these barriers. Some of the key provisions are outlined here.
Multifamily construction is important as a means to provide affordable housing in the Commonwealth. State law does not require cities and towns to permit multifamily development by right in some residential zoning districts. In the absence of a mandate, few cities and towns permit multifamily development by right in any zoning district. This section of the bill promotes multifamily construction by requiring that municipalities permit multifamily development by right in one or more zoning districts that are suitable for multifamily residential development and cover not less than 1.5% of the community’s developable land area.
Accessory dwelling units provide units that can be integrated into existing single family neighborhoods to provide low priced housing alternatives that have little or 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. These sections of the legislation promote affordable in-fill housing by requiring that accessory dwelling units be permitted by right in all single-family residential zoning districts. It also prohibits zoning ordinances and by-laws from unreasonably regulating the location, dimensions, or design of an accessory dwelling unit on a lot.
In another section, the HOME Bill seeks to encourage cluster development. In comparison to a conventional subdivision, cluster developments benefit communities by preserving land for open space and recreation, reducing infrastructure costs, and protecting environmentally sensitive land. This section promotes smart growth by requiring that cluster development be allowed by right in residential zoning districts, at the density permitted in the underlying zoning district. The section also prohibits cities and towns from requiring a “proof permit” plan in connection with a cluster development application.
Two other costly barriers to housing production that the HOME Bill seeks to correct are overly restrictive local Title V and wetland regulations. The patchwork of local Title V regulations is one of the costliest barriers to housing production in areas not served by public sewer and wastewater treatment systems. Additionally, local wetland regulations that are more restrictive than state laws and regulations undermine uniformity and also may have no scientific basis. The result is duplicative application, review, and appeal processes. Both of these concerns represent significant and costly barriers to affordable housing and other development in Massachusetts.
MORTGAGE CANCELLATION DEBT RELIEF:
The general tax rule that applies to debt forgiven is that the amount forgiven, sometimes referred to as phantom income, is treated as taxable income to the borrower. MAR supports legislation that 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 the that debt. This bill 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 as well.
Each session proposals are filed that would either allow a community to create a transfer tax on the sale of property in that community or authorize a statewide transfer tax to fund specific projects. The imposition of this type of new sales tax on homes could have serious implications for the Massachusetts economy and set the wrong precedent for the Commonwealth’s tax policies. Transfer taxes would increase the bottom-line price of many homes by thousands of dollars. These bills single out home buyers and sellers and subjecting them to this new tax only further exemplifies the inequitable nature of this taxing scheme.
For the second straight session, there is a proposal to require sellers or their agents to perform a Mass Save energy audit prior to listing a home for sale and disclose to any prospective buyer the information in the energy audit at the time of the listing. Additionally, the bill commissions the design and implementation of an energy scoring and labeling system. Over and above having an enormous impact on an individual’s right to freely transfer land, such requirements would negatively affect the real estate industry in the Commonwealth. Massachusetts is home to some of the oldest housing stocks in the country and mandatory energy scoring of such older homes would significantly stigmatize and potentially devalue an individual’s largest investment. MAR hopes to work with the legislature and other stakeholders to encourage all homeowners to make energy efficient upgrades to their homes- not just those who decide to sell their home.
Co-chair of REBA’s legislation section, Mike McDonagh is the general counsel and director of government gffairs at the Massachusetts Association of Realtors, where he is responsible for overseeing MAR’s legal affairs and risk management programs for the membership. As government affairs director he is in charge of MAR’s legislative efforts. Mike can be reached by email at email@example.com.
When I look around the room at the luncheons at the REBA Spring and Fall conferences, I see many familiar faces. It is fabulous to see so many members return year after year, and decade after decade. It sometimes seems like none of us are ever going to retire. As one of my favorite members said to me recently: “Why would I retire? I love doing what I do, and I don’t play golf!” I agree, and there are only so many ball games one person can attend before the experience becomes too blasé. I am also reluctant to think about retirement because whenever I get together with my retired buddies, who used to have great work stories about criminal cases and search warrants, now they only tell stories about condo meetings and gardening. I told my old buddies from Wayland that I am not getting together with them again until they get better stories.
Supposedly with age, comes wisdom. It’s an honor to be asked to share wisdom. Some of the younger attorneys in the area that used to call me for second opinions are now more experienced and are figuring things out on their own. I have fond memories of the conversations I had with fellow members of the Mass Conveyancers Association when I was just starting out; and the lessons I learned from those experiences were invaluable. We older attorneys still call one another for counsel and emotional support; those calls usually start with: “Am I crazy, or do you agree with me that…”
So, when I heard that REBA had the need for more Mentors, I decided it was time to sign up as a REBA Mentor. I have heard so many good things from other members who have served as Mentors over the years, and I have never forgotten the enthusiasm that Past President Sami Baghdady had for the program. My initial reluctance to become a Mentor was based on a concern that I did not have the time. Sure, time is still a concern, but loss of some time will be outweighed by the benefits. Recently I had the opportunity to field some zoning questions from a young attorney that I know well, and as I was discussing the nuances of pre-existing non-conforming uses with him, he asked me some questions that made me rethink some of my counsel. We sometimes get used to thinking about issues in a linear fashion, but it can be intellectually beneficial to have someone challenge our assumptions and take us out of our comfort zones.
Hopefully, when a Mentee gives me a call I can direct him or her in the right direction. Especially in matters pertaining to zoning and land use, my initial advice will probably be: “Read the local zoning bylaw with a highlighter in your hand”. And sometimes the answer may be: “I am sure I read a case like your situation a year or so ago; I think the case was about property in Falmouth”. In any event, I am looking forward to the experience and I am sure that I will learn something in the process.
A former REBA president, Paul Alphen currently serves on the association’s executive committee and co-chairs the long-range planning committee. He is a partner in the Westford firm of Alphen & Santos, P.C. and concentrates in residential and commercial real estate development, land use regulation, administrative law, real estate transactional practice and title examination. As entertaining as he finds the practice of law, Paul enjoys numerous hobbies, including messing around with his power boats and fulfilling his bucket list of visiting every Major League ballpark. Paul can be contacted at firstname.lastname@example.org.
What began as a summer job over 40 years ago, soon became a career, at first driven by curiosity. My first day of work, I found it almost humorous, that the bank was loaning me money, but I was the one giving the mortgage. I insisted that the bank was giving me the mortgage. Thus began my first lesson, in grantees and grantors and mortgagees and mortgagors.
I soon loved what I was doing enough to want to stick with it and go to paralegal school. I was about to graduate from Boston College with a degree in psychology; a field chosen because I wanted to help people. I decided that I liked the idea of helping people with their home purchases instead of what was in their heads. Back in the day, there were only a few paralegal schools in this part of the country. I chose Bentley College.
Real estate law soon became a passion. I worked for Waters and Waters, a small law firm in Newton Centre, MA founded by my grandfather in 1908, and then by my father until 2004. Both loved what they did. It wasn’t hard to feel the energy around me. I was surrounded by lawyers who loved to teach me for as long as I would listen. Near the end of the work day, I would often be among lawyers who met at our office as members of the Massachusetts Conveyancers Association (now REBA) or the Massachusetts Association of Bank Counsel, to talk about creating new statutes and standards. (Some were even typed by me on my IBM Selectric, before white-out was created!). Thus began another passion, which was to learn as much as I could about real estate statutes and standards. After all, I had typed some bills which were brought before the Legislature and passed as laws.
The life of a paralegal was a lot simpler back then. A note and a mortgage were “it” for the closing package, and a deed if it were a sale. If there was an IRS lien, the IRS agent either came to the closing or met you at the Registry of Deeds to exchange money for a release. There were none of all the forms we see today, each closing now enough to kill a forest. A Xerox machine was a three-step process; touch-tone phones were a receptionist’s dream; there were no fax machines; and “Federal Express” was a company and a concept, not heard of yet. Computers, scans and pdf’s back then? Probably props used for a science fiction thriller. Enough with history though. That’s for an article on another day.
I’d rather give you some tips if you are starting out. Understand what you do. Love what you do. If you are a residential real estate paralegal, you deal with a lot of people on a daily basis. Don’t forget that they are the reason you are employed. Telephones still exist. Take their calls; return their calls. If you choose to communicate this way, there is no mistaking the tone of what you have to say, especially when the client hears your kind and professional voice. If the client wants to communicate by email, so be it. You tried. Now, use spell-check. Make sure your attachment is the correct one. Nothing like sending one borrower, the payoff belonging to another borrower. Label all scans, and make sure the addressee is the one you intend to email. A real big mistake when you email the compliance attorney at a bank with the same initials as your borrower. He is really not interested in seeing their HUD Settlement Statement. I won’t get into best practices; with all that is going on with CFTB, we would need days and days of seminars.
Rule Numero Uno when the client is upset: HEAR what they say and acknowledge what they are saying. Don’t forget when dealing in residential real estate law, that the house they are buying is going to be their home and where their kids are going to sleep at night. It is an extremely emotional and commotional time for them. Feel their excitement with them. If they are unhappy and are complaining, they will stop arguing when there is no one to argue with, and when they feel validated and understood. It doesn’t hurt to say that you understand; never argue back. Short of adding some colorful profanities, they are always right.
If you want to develop your career as a real estate paralegal, learn as much as you can about both residential and commercial closings and all the nuances, from A to Z. You are more flexible and more marketable this way. Many of the principles are the same. Most of the forms are different. Don’t be afraid to step outside your job description, and agree to scan and copy and the like. If traffic is bad, leave home earlier. If your boss is forced to meet with someone after 5 and needs a Paralegal to assist, once won’t hurt. Learn the closing process, beginning with the opening of a file. The more you learn, the more you know how much more there is to know. The opening of a file takes time and research when done correctly. It also saves embarrassment later on. No “oops!” when you find out too late that the property is in two counties or that it comprises two assessors’ lots. Take advantage of seminars and webinars sponsored REBA. Also take advantage of seminars held by the Massachusetts Paralegal Association (MPA), MCLE, and title insurers.
Join the REBA and attend not only those seminars, but also the networking and social events, and the semi-annual meetings. This is where you meet men and women with whom to share your passion and can seek advice and direction. This is where you meet friends, both personal and professional. This is where you are welcomed, wanted, and valued. Most important, love what you do and if you don’t, talk to others about why they do love the concentration they have chosen. If this doesn’t help, explore some other opportunities. You need to be happy in order to succeed. Your smile speaks volumes!