Massachusetts Continuing Education Course – 2 Credits. This course will exam ways a licensee can reduce risk as much as possible by ensuring accuracy of information, checking all data, and advising clients and customers to perform their own due diligence and seek legal counsel.

1. Due Diligence in Seller Representation in
Residential Real Estate Transactions
RE97R15
Jody OBrien

2. Definition
due dil·i·gence
nounLAW
reasonable steps taken by a person in order to satisfy
a legal requirement, especially in buying or selling
something.

3. Agent – Attorney -­ Consumer
• Role of the agent
• Role of the Attorney
• Role of Buyer/Seller
Special Needs
Diligence
Other Providers

4. You are not….
• Home Inspector
• Septic designer, installer or inspector
• Town official
• Plumber, electrician, contractor, roofer etc.
• Appraiser or Assessor
• Engineer
• Surveyor…….
Unless you say you are…..then you are!

5. • DeWolfe V Hingham
Center Realty
• Zonning
• Commercial v
residential
• Representation made
in writing (ad & MLS)
• Representation made
by agent in verbally
to buyer
• Quinlin V Clasby
• Zoning
• Multifamily
• Representation made
by agent in MLS
• Representation made
during showing
• No public records
verification
• Disclosure becomesyour
representation
• Public records
obtained
• Owner interviewed
• Disclosure becomes
others

6. DUE DILIGENCE CHECKLIST

7. Public Record
• Have a checklist
• Have a reason for
more or less
• Don’t forget to read
and review the
gathered documents
• Don’t interpret, advice
or explain beyond your
scope of expertise
• Document all
discoveries and
activities beyond your
checklist

8. Checklist
• How does your checklist compare to the definition?
– “Reasonable effort”
• What are the boundaries of your research?
• What are the red flags?
• What documentation will your checklist produce?
• What responsibility will the seller have?
• Does the seller acknowledge that responsibility?
• What responsibility will the buyer have?
• Does the buyer acknowledge that responsibility?
• Lets look at some items you may want to consider on
your Due Diligence Checklist…….

9. Registry of Deeds
• Deed review
– Rights of way, easements
– Ownership
– Life estates
– Restrictions, covenants
– Legal description of property

10. Registry of Deeds
• overview
– Liens
– Orders of Notice
– Plot Plans
– Title V restrictions

11. Town/City Hall
• Field/Assessor’s card review
– Accuracy
– Owners
– Dimensions
• Lot size
• House square footage
• Taxes
– Paid/unpaid
– Betterments

12. Town/City Hall
Permits
• Filed and fully executed
– Building, plumbing, electrical, etc.
– Completed and signed off
• Special permits or variance

13. Sellers’ Statements
– Who should fill out
the form
– Full disclosure of all
known defects
– Yes – No – Unknown

14. Home Inspection
– Accompany, or not?
– Reports
– Negotiation
– Repairs
– Documentation
– Disclosure

15. CONDOMINIUMS

16. Condominiums
• Master Deed
• Declaration of Trust
• Unit Deed
• Bylaws, Rules and
Regulations
• Budget, Special
Assessments,
• Pending litigation
• Owner occupancy,
Number of units,
owned by more than
one owner
• Reserve Study
• Minutes, etc.
• First right of refusal
• 6d Certificate
• Rental/pet restrictions
• Management/Trustees
• Certificate of
Insurance
• HUD approvals

17. MULTI UNIT DWELLINGS

18. Multi-­Unit Dwellings
• Tenants
– Tenancy agreements/Leases
• In writing v verbal
• Notice required to accommodate sale, or
transfer
– Pending litigation or evictions
– Security deposits/Last month’s rent held in MA
banks, if held
• Occupancy certificates
• Verification of units permitted

19. In-­laws and Accessory Units
• Community zoning bylaws vary
• Restrictions
• Transferability

20. Environmental Issues
• Contamination, mold, Asbestos, EMF, Radon
• Underground tanks
• Wet Lands
– Local -­ Conservation Commission
– State -­ DEP (Department of Environmental
Protection)
– Federal – EPA or Army Core of Engineers
– Documentation
• Orders of Condition
• Certificate of Compliance
• Rivers Protection Act

21. Lead Paint Disclosure
– Required disclosure for sellers of houses built
before 1978
– “Does this house have lead paint?”
– Proper completion of the form
– Documentation
• Inspection report
• Certificates of Compliance,
• Risk Assessment
• Letters of Interim Control

22. CONTRACTS TO PURCHSE

23. Offers and P & S
• Dates
• Note specific clauses and the bases/origins for the
language
• Not an abdication, or waiver, of your common law
duties
• Verification of accuracy of information
– Names, addresses, Book/Page references
• “AS IS” CLAUSES
– If willful non-­disclosure of known defect is found,
clause may not survive in court

24. PRE CLOSING TO CLOSING

25. • Final utility readings (electric, gas, water/sewer, etc.)
• Smokes and carbon monoxide
• Tax Stamps
• Municipal Lien Certificate
• Title V
• TRID timeline
• Walk-­through

26. THINGS TO CONSIDER

27. • Walking the line between licensee and attorney
• Agency relationship and Fiduciary Duties
Learn to recognize red flags and guide Sellers to the
proper authoritative source
• If you do not know the information, know where to find
the information
• Recognize the limits of your own knowledge
• Do your homework and research
• Be the source of the source
• Remember, licensees are not attorneys unless they’ve
passed the bar!

28. Resources
• NAR
– Legal Scan – quarterly review of legal cases
• Richard Vetstien’s Blog
– Massrealestatelawblog.com

29. Jody O’Brien
The RE/Education Company
Committed to Professionalism in Real Estate through Education
Blog
www.reeducator.com
Presentation
www.slideshare.net/ReEducationCompany
Social Media
www.twitter.com/reeducator
www.youtube.com/msreeducator
www.facebook.com/reeducator
www.linkedin.com/in/reeductor
Thank you for Attending