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Buyers' Legal Issues

Consumer Protection Laws

Truth in Lending

Consumer protection laws in the Commonwealth which require that lenders not discriminate in providing loans and other financing, and that real estate agents disclose referral relationships.

Real Estate Settlement Procedures Act (RESPA)

Enacted in 1974, RESPA provides consumers with disclosure processes regarding closing costs and prohibits unearned fees (kickbacks/referral fees).


Offer to Purchase

The first step most buyers take is making an offer to purchase. By law, real estate agents are required to present all offers to a seller. Once a seller receives an offer to purchase, he or she may counter offer, by accepting the offer with additional stipulations, including but not limited to a renegotiation in price. Buyers and sellers should be careful to understand all the terms and conditions in the offer and any contingencies included therein.

Purchase and Sale Agreement

The purchase and sale agreement contains a list of inspections, services and fees agreed upon by both buyer and seller. Buyers should be intimately aware of their responsibilities, rights and obligations before signing. Buyers with specific legal questions or concerns should consult an attorney who is familiar with real estate law. At the time of the purchase and sale agreement, buyers may be expected to put down a deposit, sometimes called earnest money, to secure the property is presented. This money will be credited to the buyer at closing.


The process of closing the sale can take between 30-60 days (or longer), a length of time necessary for a number of critical legal requirements to be met, including clearing the title, recording the deed, approving loan applications, allowing the lender to make a property appraisal, and to have the plot plan surveyed. The bank's attorney is responsible for conducting the closing, and calculating the financial documents necessary.


Home Inspection

Buyers should consider making a successful home inspection a contingency of their purchase and sale agreement. Home inspections, although not legally required, give the buyer detailed information on potential problems and a means to evaluate the physical condition, structure and mechanical systems of the house.

Lead Paint

If you are purchasing a home built before 1978, the seller or REALTOR® will give you a state-approved Lead Paint notification form. You have the right to test the property for lead paint if you want as Massachusetts law requires that all homes where children under the age of six live must be lead-safe.

Title 5

Massachusetts law requires that a property that is serviced by a septic system, cesspool or other private waste disposal system be inspected within two years before the sale or within six months after the sale (if weather conditions prevent a pre-sale inspection). Only licensed inspectors and soil evaluators may conduct such inspections. Should the system fail an inspection, the buyer and seller may negotiate who will pay to repair or the system, or if the agreement for sale contains a contingency the buyer may choose to withdraw. For more details:

UREA Formaldehyde Foam Insulation (UFFI)

In 1986, the Commonwealth passed a law mandating property sellers and landlords to determine whether UFFI is in their dwelling. If UFFI is present, the seller must disclose this information to the buyer or tenant, though the statute does not mandate that the seller or landlord remove UFFI if found in the dwelling. Copyright Massachusetts Association of REALTORS®.

Reprinted with Permission.

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