How should I advise my clients to address the addition of “the purchase is contingent upon the execution of a mutually agreeable Purchase and Sales Agreement” in additional provisions of an offer?

There is no one size fits all or standard office policy/procedure to address this addition as any additional provisions will need to be analyzed on a transactional basis. The Contract to Purchase already provides that “time is of the essence as to each provision” and paragraph 4 addresses the subsequent signing of the Purchase and Sale Agreement:

Ultimately, the Contract to Purchase is outlined in such a way to include all the material terms for the parties to agree upon and in most instances, the material terms carry over to the Purchase and Sale Agreement and the parties move forward.

In those off-chance instances where the buyer and seller do not sign that second contract, Massachusetts courts have provided for specific performance on those agreed to terms found in the underlying Contract to Purchase absent a subsequently signed Purchase and Sale Agreement. See:  McCarthy v. Tobin, 429 Mass. 84, 706 N.E.2d 629 (Mass. 1999); Ritter v. Johnson, 616 F. Supp. 3d 158 (D. Mass. 2022.

As a practitioner it would be prudent to try and ascertain why the language is added and evaluate the particular transaction. For example, there may be a contingency that involves many more details to be negotiated between legal counsel and the parties have not come to a full meeting of the minds on the Contract to Purchase.

In general, for any added contingency, ensure that an end date is identified and be sure to have your client’s attorney review.  

How far can seller’s instructions modify a real estate professional’s legal obligation?

As an agent of the seller, the real estate professional is obligated to follow the lawful instructions of their client and must be careful not to make unilateral decisions. Generally speaking, so long as the instruction provided by the seller is not discriminatory or otherwise unlawful, the agent is bound to obey that instruction. As a best practice, the Massachusetts Association of REALTORS® recommends memorializing any seller instructions in writing.

Often, in real estate transactions, these instructions include showing times, access and presentation of offers.  While Massachusetts Regulations and the Code of Ethics require that a licensee submit all offers to the owner of the property upon receipt, this obligation is not absolute. A seller may provide instruction to their agent to only show them offers that meet certain criteria, such as a certain price or not containing certain contingencies or other clauses for example.

While there is flexibility in the seller instructions, the licensees’ obligation to follow fair housing laws is absolute. When considering seller instructions involving restrictions to access and offers in housing, it is important to refamiliarize yourself and educate your client on the obligation to follow fair housing laws, ensure that the seller instruction will not violate fair housing or have the result of doing so, and implement a system that is applied to all and not just some. If your client insists on instructions that violate fair housing, you must notify your broker, refuse to follow the instruction and potentially terminate the relationship.

My client is not a US citizen or resident and is preparing to sell their US real estate, do I have to disclose the FIRPTA withholding requirement to potential buyers? 

The Foreign Investment in Real Property Tax Act (FIRPTA) requires the buyer of real property from a foreign seller (non-US-citizen or resident; foreign-owned corporations, partnerships, trusts and estates) to withhold a portion of the sales price and remit tax to the IRS. As the responsibility to withhold this tax is on the buyer, it should be disclosed. If the buyer fails to comply with the FIRPTA withholding requirements, they may be held liable for the tax owed.

In most cases, the closing attorney assists with the FIRPTA withholding and compliance but the buyer should be made aware of this withholding obligation. Remember, however, it is prudent that you consider potential fair housing concerns and do not offer more than what is needed: for example, simply stating that the sale is subject to FIRPTA withholding should be sufficient to put the buyer on notice.

Services provided through the Massachusetts Association of REALTORS® is intended for informational purposes and does not constitute legal advice, nor does it establish an attorney-client relationship. The Massachusetts Association of REALTORS®, by providing this service, assumes no actual or implied responsibility for any improper use of responses to questions through this service. The Massachusetts Association of REALTORS® will not be legally responsible for any potential misrepresentations or errors made by providing this service. For more information regarding these topics authorized callers should contact the MAR legal hotline at 800-370-5342 or e-mail at legalhotline@marealtor.com.