REBA’s Standards & Forms Committee Offers Provisional Revisions to Residential Purchase and Sale Agreements Relating to Real Estate Commissions

 In response to inquiries and concerns from members, the Standards and Forms Committee is pleased to offer draft revisions to Paragraph 5.7 of REBA Form No. 66, which relates to payment of real estate broker commissions.  This Form, originally

approved in 2021, includes various rider provisions for use with residential purchase and sale agreements for single-family, 1-4 family and condominium units. 

The Committee recommends use of this draft provisional paragraph pending release of a final iteration of Paragraph 5.7, a copy of which is available by clicking here. 

The issue of broker compensation has been the subject of national and local class action lawsuits, including Sitzer v. Nat’l Ass’n of Realtors et al, Case No. 4:19-cv-00332-SRB (W.D. Mo. 2019) (commonly known as Sitzer/Burnett), Moehrl v. National Association of Realtors, No. 1:2019cv01610 - Document 184 (N.D. Ill. 2020) and locally, Nosalek v. MLS Property Information Network Inc. et al, filed in the United District Court in Massachusetts in 2021 as Case No. 20-cv-12244-PBS. 

These broker compensation cases alleged the defendants conspired to inflate real estate commissions by enforcing a cooperative compensation rule that required listing brokers to offer compensation to buyer brokers on Multiple Listing Service databases (MLS) resulting in fixed commission rates, and that some Sellers may have not been aware this resulted in Sellers paying the Buyer’s broker’s commission compensation.  The jury in the Sitzer/Burnett case agreed, finding the defendants liable for violating Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1 and awarded approximately $1.785 billion dollars to the Plaintiffs.  Following the Sitzer/Burnett verdict, over thirty copy-cat cases have been filed against over 250 defendants, and it is anticipated additional cases concerning broker compensation and policies of the various MLS companies will surface.[1]  

As a result, efforts have been made to settle several of the lawsuits, and the National Association of REALTORSâ (NAR) and many of the larger corporate defendants have entered into nationwide settlement agreements pending final Court approval. A stay has been issued in the Nosalek case until the NAR settlement is finalized. 

The below alternatives for paying the Buyer’s broker are based upon the information and settlement terms of the cases available at the time this Advisory Report was drafted.  This Form shall be reviewed and revised, if so required, once the cases conclude.

5.7     BROKERS / BROKER’S COMMISSION

 

SELLER's BROKER	BUYER's BROKER
Name:	Name:
MA Lic. No.	MA Lic. No.
Mobile #	Mobile #
Email:	Email:
Brokerage:	Brokerage:
MA Lic. No.	MA Lic. No.

 

The Listing Broker (Company)/Agent and the Buyer’s Broker (Company)/Agent shall each provide to the closing attorney within a reasonable amount of time prior to the Closing a commission statement together with the name, address, phone number, email, Agent State License ID number and Brokerage State License ID number.

 

Listing Broker (Company)/Agent’s Commission:

 

A commission in the amount of $_______________________ is due from SELLER to ____________________, being the Listing Broker (Company)/Agent, payable only upon the recording of the deed to the BUYER with the Registry of Deeds and payment of all monies due the SELLER, but not otherwise. 

 

Buyer’s Broker (Company)/Agent’s Commission:

 

A commission in the amount of $_____________________ is due to ___________________, being the BUYER’s Broker (Company/Agent), payable upon the recording of the deed to the BUYER with the Registry of Deeds and payment of all monies due the SELLER, but not otherwise, and is due from the following:

 

A.      The amount of $________________________ is due from BUYER to ____________________, being the BUYER’s Broker (Company)/Agent.   

 

B.       The amount of $________________________ is due from SELLER to ______________________, being the BUYER’s Broker (Company)/Agent, which SELLER agrees and directs shall be paid by the Listing Broker (Company)/Agent from funds held in escrow.

 

Direction to Escrow Agent: The Escrow Agent holding the Deposit as set forth in this Agreement is responsible for disbursing funds in compliance with the terms of this Agreement.  Upon the recording of the deed to the BUYER with the Registry of Deeds and payment of all monies due the SELLER, the Escrow Agent shall disburse funds as set forth above and the Escrow Agent shall disburse the balance of the deposit, if any, to the SELLER as excess deposit.  SELLER, BUYER and Escrow Agent acknowledge that all disbursements from funds held in escrow are undertaken in the Escrow’s Agent’s capacity as Escrow Agent and not otherwise.  These written instructions to the Escrow Agent constitute mutual, written instructions from the SELLER and BUYER to the Escrow Agent and supersedes any office policy of the Escrow Agent to the contrary.

_______________________________________________________________________

 

Notes:          Delete and customize the above for the agreed contract terms and delete the introductory text and the below notes from the final Purchase and Sale Agreement or Rider. 

1.       The amount of the brokers’ commissions may be filled in as the commission percentage or the calculated dollar amount.  However, if written as a dollar amount then the amount may need to be correspondingly edited in the event of a sale price change.

2.       Both Sellers and Buyers could be using the services of a broker (corporate or individual) or a designated agent.  This form uses the word “broker” to mean the Seller’s and Buyer’s representative, and the form should be edited as applicable.  However, all commission payments are made to the broker (corporate or individual) and not to the agent who works for that broker.

 

3.       The Buyer’s broker is paid the amount contracted between the Buyer and its broker.  Many brokers require a written fee agreement (sometimes referred to as a Buyer’s Commission Agreement or an Exclusive Buyer’s Agreement).  In Massachusetts, Buyer’s broker written fee agreements are not a requirement for MLS PIN as of the time this Advisory Report was drafted, however practice changes provided in some of the case settlement terms require their use.  None of the settlement terms prevent a Buyer or Seller from representing themselves and make it clear that a Buyer contacting a Seller’s broker can do so without an agreement provided that the Seller’s broker is working on behalf of and showing the property for the benefit of their Seller client.

 

4.       The Buyer’s broker commission may be paid in whole or in part by the Buyer and/or the Seller.  Both the Nosalek and NAR preliminary settlements allow the Buyer’s Offer to include a Seller concession marked for Buyer’s broker compensation that can be accepted or denied like all other Offer terms.  The breakdown of who is paying the Buyer’s broker’s commission should be clearly set forth in the P&S and the above should be edited, as applicable.

 

5.       At the time of this Advisory Report, cooperative commissions are a permissible option for Listing Brokers (Company)/Agent to employ, and therefore a third option to pay the Buyer’s broker’s commission may be as follows:

 

C.       The amount of $________________________ is due from the Listing Broker (Company)/Agent to ______________________, being the BUYER’s Broker (Company)/Agent. 

 

This option, given the current landscape, will likely become less common.  Listing brokers should take caution that it is only permissible if done correctly with supporting underlying written fee agreements, proper disclosures, not reflected in an MLS, among other requirements.

 

6.       Notwithstanding co-operative commission splits remains permissible at this time, it is noted MLS PIN has changed its practices stemming from the Nosalek case and any compensation listed on MLS PIN may not include a payment between brokers, although Sellers may choose to accept an offer term to pay all or a portion of the Buyer’s broker’s commission as an agreed term of the purchase and sale agreement.

 

7.       The NAR preliminary settlement practice changes provide that a Buyer’s agent cannot accept a larger commission than as set forth in their written fee agreement nor can they accept additional payment from any other party than the Buyer, Seller or Seller’s Listing Broker (Company)/Agent, as and if applicable

 

8.       Other parties could be acting as the Escrow Agent for the deposit, including either Seller’s or Buyer’s counsel, a title insurance company, or others.  Revise the above as applicable to identify the Escrow Agent holding the deposit.

 

9.       The Seller may direct in the purchase and sale agreement that its broker (or other Escrow Agent) shall disburse the Seller’s agreed payment (if any) to the Buyer’s broker from Seller’s funds held as escrow agent (i.e., the purchase deposit) after the closing concludes and the deed is recorded.  The case Zang v. Nrt New England Inc., 77 Mass.App.Ct 665 (2010) provides that if a party holds the deposit in escrow pursuant to a purchase and sales agreement (which is typically the Seller’s broker) they are automatically authorized and bound to comply with the purchase and sale agreement disbursement instructions for the funds it holds in escrow without the need for the escrow agent to otherwise be a party or a counter-signatory to the purchase and sales agreement. 

 

10.     REBA’s Ethical Standard No. 4 provides “An attorney shall not act as both attorney for a party in a real estate transaction and as a real estate broker to a party in the same transaction.”

---

[1]  Multi Service Listing, or MLS, is a common term for a centralized listing of properties for sale.  MLS Property Information Network, Inc, (MLS PIN), is one company that operates in Massachusetts and there are several other companies in Massachusetts and nationally that include MLS in their trade names.  To minimize confusion among the companies, specific names are used in this Advisory Report if applicable, and otherwise MLS is used to mean a centralized property listing database.

 

Answers to Frequently Asked Questions about the New Accessory Dwelling Unit (ADU) Zoning Legislation

 Michael Pill

Question: Does an ADU proponent have to wait until a local ADU

bylaw or ordinance is established by the local municipality?

Answer: No. G.L. c. 40A, § 3(11) (enacted by 2024 Mass. Acts c. 150 § 8, effective Feb. 2, 2025) is a zoning exemption allowing one ADU by right “in a single-family residential zoning district” which “may be subject to reasonable regulations, including, but not limited to” the following:

 

(1)     “310 CMR 15.000 et seq., if applicable” (i.e., Title 5 septic system regulations),

(2)     “site plan review,” by planning board, which can impose reasonable conditions on a use by right

(3)     “regulations concerning dimensional setbacks and the bulk and height of structures” and

(4)     “may be subject to restrictions and prohibitions on short-term rental, as defined in" G.L. c. 64G, § 1.

Question: What if the local municipality drags their feet in creating a local bylaw/ordinance?

Answer: One should apply for a building permit on February 2, 2025 or as soon thereafter as possible. If the municipality has not enacted a site plan review requirement or other restrictions, don’t wait for it to do so.

Question: Can a local building department deny a building permit for an Accessory Dwelling Unit if it meets the criteria of the state law?

Answer: No, unless local zoning has been amended to require site plan review, or “impose reasonable conditions,” or both, and the applicant has not satisfied those requirements.

Question: What is the process for appealing a denial of the ADU building permit application?

Answer:  G.L. c. 40A, § 8 authorizes an appeal to the “special permit granting authority” defined by G.L. c. 40A, § 1A as “the board of selectmen, city council, board of appeals, planning board, or zoning administrators as designated by zoning ordinance or by-law for the issuance of special permits.” G.L. c. 40A, § 15 requires that the appeal “shall be taken within thirty days from the date of” the permit denial.

Question: Can a municipality pass a moratorium on ADUs?  If so for how long and for what reason?

Answer: Municipalities have six months (until Feb. 2, 2025) to amend local zoning. A municipality can enact a moratorium by claiming it needs more time to develop and adopt local ADU zoning. If a municipality enacts a moratorium, but fails actively to develop zoning amendments, the moratorium is subject to judicial challenge as a stalling tactic.

One reason for seeking to obtain a building permit as soon as possible after the G.L. c. 40A, § 3(11) ADU zoning exemption goes into effect on February 2, 2025 is that G.L. c. 40A, § 6 provides: “[e]xcept as hereinafter provided, a zoning ordinance or by-law shall not apply to structures or uses lawfully in existence or lawfully begun, or to a building or special permit issued before the first publication of notice of the public hearing on such ordinance or by-law required by” G.L. c. 40A, § 5.”

In other words, if one applies for and is granted a building permit for an ADU before notice of a public hearing for a zoning amendment is published, the amendment does not apply to that building permit.

Begin construction promptly; do not let the building permit expire. That way, in addition to having “a building…permit issued,” one also will have a structure “lawfully begun,” providing additional protection under G.L. c. 40A, § 6.

Question: If you meet the dimensional setbacks of the subject zoning district as they pertain to accessory structures with the placement of the ADU, is there any reason the municipality should be allowed to place more stringent dimensional controls on the ADU's location?

Answer. The answer to this question depends on the language of a particular local zoning ordinance or bylaw, and on the facts of a particular case.

G.L. c. 40A, § 3(11) provides “that the use of land or structures for such accessory dwelling unit under this paragraph may be subject to reasonable regulations, including, but not limited to, 310 CMR 15.000 et seq., if applicable, site plan review, regulations concerning dimensional setbacks and the bulk and height of structures….”

Whether a local zoning limitation on ADUs is “reasonable” requires analysis of that provision to determine whether it can be invalidated on its face or challenged based on its application to the facts of a specific case. Court cases decided under other previously enacted zoning exemptions in G.L. c. 40A, § 3 can be applied by analogy for litigation challenging municipal zoning limiting ADUs.

Question: What does it mean when the state zoning act (G.L. c. 40A, § 1A definition of “Accessory dwelling unit” as amended by 2024 Mass. Acts, c. 150, § 7) says that an ADU is “is subject to such additional restrictions as may be imposed by a municipality, including but not limited to additional size restrictions”?

Answer: The newly enacted G.L. c. 40A, § 3(11) ADU zoning exemption opens with the mandate that “No zoning ordinance or by-law shall prohibit, unreasonably restrict or require a special permit or other discretionary zoning approval for the use of land or structures for a single accessory dwelling unit…,”

The above quoted zoning exemption should take precedence over anything to the contrary in the ADU definition left over from prior legislation.

But 2024 Mass. Acts, c. 150, § 7 reenacted verbatim most of the old definition of “Accessory dwelling unit” in G.L. c. 40A, § 1A, changing only the last portion dealing with owner occupancy and short-term rentals, as follows (amended portions of the definition are in bold face type; line breaks added):

Prior definition in G.L. c. 40A, § 1A, struck out by 2024 Mass. Acts, c. 150, § 7 (am in bold face type): “Accessory dwelling unit”, a self-contained housing unit, inclusive of sleeping, cooking and sanitary facilities on the same lot as a principal dwelling, subject to otherwise applicable dimensional and parking requirements, that:

(i) maintains a separate entrance, either directly from the outside or through an entry hall or corridor shared with the principal dwelling sufficient to meet the requirements of the state building code for safe egress;

(ii) is not larger in floor area than 1/2 the floor area of the principal dwelling or 900 square feet, whichever is smaller; and

(iii) is subject to such additional restrictions as may be imposed by a municipality, including but not limited to additional size restrictions,

owner-occupancy requirements and restrictions or prohibitions on short-term rental of accessory dwelling units.

New definition inserted by 2024 Mass. Acts, c. 150, § 7: “Accessory dwelling unit”, a self-contained housing unit, inclusive of sleeping, cooking and sanitary facilities on the same lot as a principal dwelling, subject to otherwise applicable dimensional and parking requirements, that:

 

(i) maintains a separate entrance, either directly from the outside or through an entry hall or corridor shared with the principal dwelling sufficient to meet the requirements of the state building code for safe egress;

(ii) is not larger in gross floor area than one-half the gross floor area of the principal dwelling or 900 square feet, whichever is smaller; and

(iii) is subject to such additional restrictions as may be imposed by a municipality, including, but not limited to, additional size restrictions

and restrictions or prohibitions on short-term rental, as defined in section 1 of chapter 64G; provided, however, that no municipality shall unreasonably restrict the creation or rental of an accessory dwelling unit that is not a short-term rental.

Question: Is this development approach available immediately or is there a waiting period for submitting applications?

Answer: A building permit application (or site plan review application if local zoning has been amended to impose such a requirement) for an ADU can be submitted on or after Feb. 2, 2025, which is the effective date of the G.L. c. 40A, § 3(11) ADU zoning exemption under 2024 Mass. Acts, c. 150, § 142.

Question: Title 5 - In the event of a two-bed ADU, is the local upgrade approval available to applicants, and if so, are you upgrading based on the number of new bedrooms or do you have to design a new system that's designed for the minimum of three bedrooms under title 5?

Answer: A property without access to a public sewer must be served by an on-site sewage disposal system (i.e., a septic system) which should have been designed to serve at least the number of existing bedrooms on the property.

Expanding an existing septic system or adding a second septic system for an ADU will require the services of either a Registered Sanitarian (R.S.) or a Registered Professional Civil Engineer (P.E.). The design professional must make a site-specific evaluation that includes but may not be limited to the following factors: lot area and dimensions; presence of any jurisdictional areas under the Wetlands Protection Act and Regulations (G.L. c. 131, § 40 and 310 C.M.R. [Code of Mass. Regulations]  10.00) and any local wetlands bylaw; proximity of water supply wells on the locus or on abutting properties; size, age and condition of the existing septic system; groundwater elevation; and what type(s) of soils are present on the locus.

Local upgrade approvals for septic systems are governed by the following provisions in 310 C.M.R. 15.00, known as “The State Environmental Code, Title 5…”:

 

15.401: General Provisions

15.402: Use of Local Upgrade Approvals or Variances

15.403: Local Upgrade Approvals

15.404: Maximum Feasible Compliance - Approvals for Upgrades

15.405: Contents of Local Upgrade Approval

 

A “Local Upgrade Approval” is defined by 310 C.M.R. 15.002 as “An approval granted by the Approving Authority allowing the owner or operator of an existing system, including a nonconforming system, to perform an upgrade of that system to the maximum feasible extent, all in accordance with the provisions of 310 CMR 15.401 through 15.405.”

Local upgrade approvals are granted by the “Local Approving Authority” in each municipality, defined by 310 C.M.R. 15.002 as “The board of health or its authorized agent or an agent of a health district constituted pursuant to M.G.L. c. 111, § 27 acting on behalf of the applicable board of health.”

The citation in the quotation above is incorrect; it should cite G.L. c. 111, § 27A, which authorizes two or more municipalities to establish a regional health district, with professional staff serving all municipalities in the district.

Question: Public Utilities - can they come from the primary house or is there a direct connection from the street needed for each service for the new dwelling?

Answer: This requires a site-specific evaluation and determination for each type of utility serving the property (e.g., public water or private water supply well, public sewer, electric, natural gas or propane).

Question: Is there any reason that a single-family home with a detached accessory structure cannot be conveyed to two parties as a condominium?

Answer: No. A condominium is a form of ownership generally not regulated by zoning. If the ADU is to be a condominium unit or may be rented, there should be separate metering of utilities where feasible. This may be a factor in determining whether utility service should come from the primary house or have a separate connection from the street.

A partner with the Northampton firm of Green Miles Lipton LLP, and a REBA member for more than years, Michael concentrates in land use (zoning, subdivision control, wetlands, rural water supply and sewage disposal), real property rights and restrictions, attorney & surveyor malpractice; status of roads; real estate conveyancing & contract disputes; forest & agricultural land tax classification; agricultural law, and real estate development.  He is the author of Massachusetts Practice: Real Estate Law with Forms, Volumes 28, 28A & 28B (West Publications - 2017).  Michael can be contacted at mpill@verizon.net.

                                                                      

Free Anti-fraud Title Alert

The Massachusetts Registries of Deeds and Secretary of State offer a free title alert that

sends an auto-generated email each time a document is recorded affecting your real estate or in your name with the goal of minimizing title fraud or theft.  The service is free Sign up in each County or through the Secretary of State where you or family members own real estate

 

BARNSTABLE COUNTY: 

www.barnstabledeeds.org/consumer-notification-service

 

BERKSHIRE MIDDLE DISTRICT COUNTY:    

https://cns.masslandrecords.com

 

BERKSHIRE NORTH DISTRICT COUNTY: 

https://cns.masslandrecords.com

 

BERKSHIRE SOUTH DISTRICT COUNTY:  

https://cns.masslandrecords.com

 

BRISTOL NORTH DISTRICT COUNTY: 

www.tauntondeeds.com/home/bulletins/property-fraud-alert

 

BRISTOL FALL RIVER DISTRICT COUNTY

https://pfa.uslandrecords.com

 

BRISTOL SOUTH DISTRICT COUNTY 

https://pfa.uslandrecords.com

 

DUKES COUNTY: 

www.cns.masslandrecords.com

 

ESSEX SOUTH DISTRICT COUNTY: 

www.salemdeeds.com/AlertWebSite

 

ESSEX NORTH DISTRICT COUNTY: 

https://search.lawrencedeeds.com/ALIS/WW400R.HTM?WSIQTP=SY40DC

 

FRANKLIN COUNTY: 

https://cns.masslandrecords.com

HAMPDEN COUNTY: 

https://search.hampdendeeds.com/ALIS/WW400R.HTM?WSEMAD=&WSPWD=&WSHTNM=WW000R11CN&WSIQTP=SY40I

 

HAMPSHIRE COUNTY: 

https://cns.masslandrecords.com

 

MIDDLESEX SOUTH DISTRICT COUNTY: 

https://cns.masslandrecords.com

 

MIDDLESEX NORTH DISTRICT COUNTY: 

https://cns.masslandrecords.com

 

NANTUCKET COUNTY: 

Title Alert service not available.

 

NORFOLK COUNTY: 

www.norfolkdeeds.org/services/consumer-notification-service

 

PLYMOUTH COUNTY:    

www.plymouthdeeds.org/subscribe  

 

SUFFOLK COUNTY:    https://cns.masslandrecords.com

 

WORCESTER SOUTH DISTRICT COUNTY:   

https://cns.masslandrecords.com/

 

WORCESTER NORTH DISTRICT COUNTY:

www.fitchburgdeeds.com/ALIS/WW400R.HTM?WSIQTP=SY40DC

 

10 Things to Know About the Registries of Deeds: Worcester County

The following is the second installment of a series of “10 Things to Know About the Registries of Deeds” presented by the REBA Registries Section.  This month’s installment is from Kathryn Toomey, Register of Deeds for Worcester County:  

1. Location, Location, Location: we have a newly remodeled

Registry. We are located in the Mercantile Center, Front Street, Worcester MA 01608.  We have a parking structure attached.

2. We have 4 closing rooms, and no reservations are required for use. Additionally, we have many public tables available in our large lobby areas for title examiners use – available on a first come, first serve basis.  

3. We have a large public space: the “Commonwealth Room”, which is available for use at no fee. This space holds up to 60 people comfortably. There is also a large screen TV for Zoom/Teams participation.

4. Our recorded land records are indexed back to 1961, and are unindexed from 1731-1961. Registered Land is indexed 1899-today. Our books have been moved to the archives in Boston, but we can have them brought to the Registry upon request. We have not published physical books since 2003.

5. We strongly encourage review of Registered Land documents prior to recording. Documents should be sent to Worcester.deeds@sec.state.ma.us (which is monitored by trained staff at all times). Though this review is not mandatory, we prefer it for staffing reasons and smoother recording, we offer it to make it easier, but you may skip it at your own peril.

6. We have recently launched e-recording of Registered Land, however cannot e-record for dual registered/recorded land documents. Again, review in advance of submission for e-recording in registered land is STRONGLY ENCOURAGED. It helps the flow of the recording clerk reviewing the certificate to complete electronic recording.

7. We record from 9:00 am to 4:00 pm Monday through Friday.

8. We have 4 Commissioners to Qualify on staff. Oaths are taken daily on the premises.

9. Since Covid Crisis we have maintained an average of 78% e-recording on recorded land; but WE LOVE IN PERSON VISITORS, so come on in!

10. Additional research tools available on our website include: surveyor indices (available on the home page), RR books, county records. Probate is available on Fitchburg Deeds site – we use the same indices. Probate/divorce indices are also available in book form for in person review.