Fresh eggs sign in the Berkshires of Massachusetts waht are a realtor's responsibilities when talking about zoning?

What Are a Realtor’s Responsibilities When Talking About Zoning?

What ARE a realtor’s responsibilities when talking about zoning with a client here in the Berkshires? It makes sense for a successful realtor to describe all aspects of a featured property. Prospective buyers are likely interested in the interior design, the layout, the exterior appearance, landscaping, outbuildings, and numerous other aspects of the property. One question that arises time and again is whether the property can be used in the manner desired by the prospective buyer. Many listings feature the zoning that applies to the property and describe various uses of the property that are possible. Unfortunately, without the proper, specific disclaimer language, a realtor can be held liable for statements made about the zoning of a particular property.

Why does zoning matter?

As a brief summary, cities and towns in Massachusetts may regulate the use of land, as well as the buildings and structures. Each town in Berkshire County has adopted a zoning bylaw containing these rules concerning the use of land in that town. Each town’s zoning bylaw is unique, and thus each town’s rules concerning what use can be made of land in that town are also unique. If that is not complicated enough, most towns have multiple zoning districts. This means that some parts of the town may be used only for residential purposes, while some areas may be used for other purposes, such as commercial, industrial, and so on. Obviously, it is important to know how a particular property may be used and what buildings or structures may be placed on the property. This is true both about possible future uses and buildings, as well as existing uses of, and buildings on, the property. There are many pitfalls associated with zoning. For instance, one cannot assume that a building or use is legal simply because it has been on the property for a long period of time.

A conscientious realtor can be put in a difficult position: the realtor wants to provide all available information to a prospective buyer, but does not want to make statements about zoning that could later prove problematic. The worst-case scenario, of course, is that the realtor tells a buyer that the property can be used in a certain manner (such as a building lot), and that the buyer purchases the property and then later is shocked to learn that the property is unbuildable.

What can a realtor say about zoning and how can she/he be protected?

A realtor can always give their best sense of the permitted uses when referencing zoning: they should clearly state that the buyer should not rely on their representations as to zoning or use of the property. It is probably not enough to have a general disclaimer in boilerplate language at the end of the listing.

Unfortunately, this issue has gone to court several times. The Massachusetts Supreme Judicial Court has held that a realtor may be liable for misrepresentations about zoning if the realtor: (1) in the course of their business, or in a transaction in which they had a *800 pecuniary interest, (2) supplied false information for the guidance of others (3) in their business transactions, (4) causing and resulting in pecuniary loss to those others (5) by their justifiable reliance on the information, and that the realtor (6) failed to exercise reasonable care or competence in obtaining or communicating the information.  DeWolfe v. Hingham Ctr., Ltd., 464 Mass. 795, 799–800 (2013). In short, the broker has a duty to exercise reasonable care in making representations to prospective buyers. A realtor has a duty in Massachusetts to investigate before making representations as to the zoning classification of a property.

The best practice? If a realtor is going to mention zoning, the realtor should explicitly state that the buyer should not rely on the realtor’s representation about zoning and should investigate the applicable zoning themselves.

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Disclaimer:  The information contained herein is for informational purposes only. It does not constitute the rendering of legal or other professional advice or services. Your review of this post and/or use of the Lazan Glover & Puciloski, LLP website does not create an attorney-client or confidential relationship between you and Lazan Glover & Puciloski, LLP or any of its attorneys. Information provided herein or on the website should not be relied upon or used as a substitute for consultation with legal, accounting, tax, and/or other professional advisors.   Since any electronic communication between you and Lazan Glover & Puciloski, LLP through this website will not be privileged or confidential, it may be disclosed to other persons and may not be secure. Accordingly, please do not send any e-mail to the Firm that contains confidential or sensitive information without first speaking with an attorney at Lazan Glover & Puciloski, LLP and receiving permission to do so.

Beautiful winter pine trees with red barn with words what is a nominee realty trust in Massachusetts

What is a Nominee Trust in Massachusetts?

It is common for home buyers in Massachusetts to take title to property with a nominee realty trust (sometimes simply called a “realty trust” or “nominee trust”). What is a nominee realty trust? A nominee trust is an entity unique to Massachusetts, and despite its name, it’s not a true trust. It does, however, provide several benefits for property owners concerned about:

  • Privacy
  • Estate planning
  • Simplifying subsequent transfers.  
What is a nominee trust?

As opposed to a true trust, a nominee trust is really just a principal and agency relationship between the beneficiaries and the trustees. As explained by the Supreme Judicial Court of Massachusetts, a nominee trust is “an entity created for the purpose of holding legal title to property with the trustees having only perfunctory duties”. Morrison v. Lennett, 415 Mass. 857, 860 (1993).

A true trust, on the other hand, is defined as “a fiduciary relationship with respect to property, subjecting the person by whom the title to the property is held to equitable duties to deal with the property for the benefit of another person.” Restatement (Second) of Trusts § 2 (1959). The trustee of a true trust has a duty to the beneficiary to administer the trust and can exercise such powers as are necessary or appropriate to carry out the purposes of the trust and that are not forbidden by the terms of the trust. Id. at §§ 169, 186.

The common characteristics of a nominee trust are as follows:

(1) the names of the beneficiaries are filed with the trustees rather than being publicly disclosed;

(2) a trustee may serve simultaneously as a beneficiary;

(3) the trustees lack power to deal with the trust property except as directed by the beneficiaries;

(4) a third party may rely on the disposition of trust property pursuant to any instrument signed by the trustees, without having to inquire as to whether the terms of the trust have been complied with; and

(5) the beneficiaries may terminate the trust at any time, thereby receiving legal title to the trust property as tenants in common in proportion to their beneficial interests.”

Roberts v. Roberts, 419 Mass. 685, 687 n.2 (1995), quoting In Re Grand Jury Subpoena, 973 F.2d 45, 48 (1st Cir. 1992). 

Most significantly, a nominee trust provides that the trustees are to act only at the discretion of the beneficiaries. It is the beneficiaries – not the trustees – who truly own the property. While the deed to the property will contain the name of the trust and trustees, the beneficiaries are not listed on the deed or even the trust instrument. Rather, beneficiaries are normally listed in a “Schedule of Beneficiaries,” which is not recorded and can be kept confidential. Although the same person can be a trustee and a beneficiary, one cannot be the sole trustee and the sole beneficiary at any point in time.

What are the benefits of a nominee trust?
  • Privacy – The Schedule of Beneficiaries is not recorded and, as such, the true owners of the property need not be publicly disclosed.
  • Simplicity – A nominee trust can be used to simplify title where multiple people and/or entities own the property. It can also simplify the process of transferring ownership to the property.  That is, instead of recording an entirely new deed, one can transfer ownership by simply amending the Schedule of Beneficiaries (with the written consent of the current beneficiaries, of course).
  • Avoid probate – Like a true trust, a nominee trust can be used to avoid passing title through a probate estate.  

A common option for people with revocable or irrevocable trusts (a/k/a “true” trusts) is to take title to property as trustee of a nominee trust, and to name the trustee(s) of the “true” trust as the beneficiary of the nominee trust.

A recent decision issued by the Supreme Judicial Court of Massachusetts (SJC) brings to light another benefit of nominee trusts: Mass. Health cannot reach the beneficial interest of the decedent in a nominee trust.  Guilfoil v. Sec’y of Exec. Office of Health & Human Servs., No. SJC-12922 (Mass. Feb. 9, 2021).  In Guilfoil, the decedent retained a life estate in her property as a beneficiary of a nominee trust, while her five children had a remainder interest. The SJC concluded that because the trust was a nominee trust, not a true trust, the plaintiff had no ability to reclaim ownership of the property’s remainder interest and that her life estate was not a countable asset for Medicaid eligibility purposes.

Why not just take title with an LLC?

Taking title with an LLC may be an attractive option for people concerned with anonymity and multi-member companies seeking to avoid liability. However, in Massachusetts, an LLC does not protect single-member LLCs or managers of LLCs from liability for negligence or misrepresentation. So, despite popular thought, taking title with an LLC does not afford as much protection as one might hope.  While an LLC does offer some limited liability and can be used to maintain privacy of ownership, this latter benefit can also be attained with a nominee trust at less cost. It costs $500 to register an LLC in Massachusetts, and $500 every year thereafter to renew, but only $155 to record a new deed and $105 to record a trustee’s certificate, with no annual renewal fees. It is critical that you consult with an attorney to determine the best option for you.

Interested in another blog post? Read Can Text Messages Form a Binding Contract. Also, please follow us on Facebook, Instagram or LinkedIn.

Disclaimer:  The information contained herein is for informational purposes only. It does not constitute the rendering of legal or other professional advice or services. Your review of this post and/or use of the Lazan Glover & Puciloski, LLP website does not create an attorney-client or confidential relationship between you and Lazan Glover & Puciloski, LLP or any of its attorneys. Information provided herein or on the website should not be relied upon or used as a substitute for consultation with legal, accounting, tax, and/or other professional advisors.   Since any electronic communication between you and Lazan Glover & Puciloski, LLP through this website will not be privileged or confidential, it may be disclosed to other persons and may not be secure. Accordingly, please do not send any e-mail to the Firm that contains confidential or sensitive information without first speaking with an attorney at Lazan Glover & Puciloski, LLP and receiving permission to do so.

Adult using a smart phone to text about a real estate contract

Can Text Messages Form a Binding Real Estate Contract?

Adult using a smart phone to text about a real estate contract

In Massachusetts, real estate contracts or agreements must be in writing. Traditionally, this means that a real estate sale agreement must be set out in a purchase and sale agreement, signed by all parties. However, the world has gone digital; this drastically changes this rule. Can text messages form a binding real estate contract? Read on.

The changes began with email

Courts were called upon to consider whether an exchange of emails between a buyer and a seller could create a binding contract. Over time, courts have concluded that email messages exchanged between a prospective buyer and seller can, in fact, constitute a binding contract as long as the emails, taken together, show agreement on specific key points, such as the closing date, the purchase price, the deposit amount, and treatment of contingencies. Parties who may have thought they were simply exploring the possibility of a purchase or sale by email found themselves in a binding contract.

Smart phones continued the issue

The logical next question was whether parties could be bound to a real estate deal as a result of an exchange of text messages. The Land Court has answered that question in the affirmative. Of course, the context of the text messages is important and, as with emails, the essential terms of the deal must be agreed upon. However, a court will consider a string of texts together in considering whether there is a binding agreement between the parties. Thus, all of the essential terms of the deal need not be contained within a single text.

So, can text messages form a binding real estate contract?

The danger here is clear. Through a simple, informal exchange of text messages, a  property owner could inadvertently agree to bind themselves to sell their property or a prospective buyer could inadvertently agree to buy property. The moral of the story is that it is far better to seek legal assistance before you engage in any negotiation concerning real property, even an informal exchange of text messages. So can text messages form a binding real estate contract? Yes. Yes they can.

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Disclaimer:  The information contained herein is for informational purposes only. It does not constitute the rendering of legal or other professional advice or services. Your review of this post and/or use of the Lazan Glover & Puciloski, LLP website does not create an attorney-client or confidential relationship between you and Lazan Glover & Puciloski, LLP or any of its attorneys. Information provided herein or on the website should not be relied upon or used as a substitute for consultation with legal, accounting, tax, and/or other professional advisors.   Since any electronic communication between you and Lazan Glover & Puciloski, LLP through this website will not be privileged or confidential, it may be disclosed to other persons and may not be secure. Accordingly, please do not send any e-mail to the Firm that contains confidential or sensitive information without first speaking with an attorney at Lazan Glover & Puciloski, LLP and receiving permission to do so.