Media Contact: Eric Berman - 781-839-5507 - eberman@marealtor.com

Notes from the MAR Legal Hotline

by JUSTIN DAVIDSON, ESQ., Government Affairs Director & General Counsel and CATHERINE TAYLOR, ESQ., Associate Counsel | Nov 05, 2018

Q: Does a “new home warranty” cover anything that goes wrong with new construction?

A: It is common for new construction to come with a warranty from the builder. However, a common misconception with these warranties is that anything that goes wrong with the house will be covered by such a warranty. Unfortunately, that is not typically the case. Most warranties offered on new construction will cover only specific items, such as: foundations, flooring, siding/ shingles/clapboard, insulation, roofing, doors and windows, plumbing, electrical, heating and cooling, and septic. These warranties may lead to a false sense of security for potential buyers. Not only are these warranties limited in duration, they often do not cover defects relating to appliances, shrinkage or expansion of the house and related cracking, insect damage, and damage caused by inadequate ventilation.

Case law in Massachusetts (see Albrecht v. Clifford) establishes an implied warranty of habitability in every Purchase and Sale agreement between a builder/seller and a buyer. This is a warranty that cannot be waived. The Supreme Judicial Court stated: “To establish a breach of the implied warranty of habitability a plaintiff will have to demonstrate that (1) he purchased a new house from the defendant-builder-vendor [seller]; (2) the house contained a latent or non-obvious defect; (3) the defect became apparent only after the purchase; (4) the defect was caused by the builder’s improper design, material, or workmanship; and (5) the defect created a substantial question of safety or made the house unfit for human habitation. In addition, the claim must be brought within the three-year statute of limitations and the six-year statute of repose [i.e., within six years after completion of an improvement to property].”

While the law in Massachusetts provides additional recourse to buyers for potential defects in new construction, a buyer of new construction should always carefully review warranty paperwork with their real estate attorney prior to agreeing to any terms. This can be a significant negotiation, as the builder will seek to limit his or her liability and the buyer would be seeking to expand the builder’s liability.

Additionally, the Albrecht decision reinforces the view that a buyer’s primary complaint should be against the builder. However, to reduce risk to you as a Realtor®, you should always encourage your buyers to obtain inspections from appropriate professionals, including home inspectors, structural engineers, architects, etc., regardless of the age of the house.

Q: A residential tenant has offered to pay a full year’s worth of rent at the time the lease is signed – is this legal?

A: No, pre-paid rent is a violation of MGL Chapter 186, Section 15B. The statute states that a lessor may not require a tenant to pay any amount in excess of the following:

  1. First month’s rent;
  2. Last month’s rent at the same rate as first month’s rent;
  3. Security deposit equal to first month’s rent; and
  4. The cost to change the lock and key.

The question hinges on the word “require.” If the tenant offers to pre-pay rent, the landlord is not requiring the tenant to pay any sums in excess of what is statutorily permitted. However, you must look at why the prospective tenant is making such an offer. Generally the reason is that the tenant would not otherwise be accepted as an applicant for the unit. In this situation, although the landlord is not asking for the rent to be pre-paid, the end result is the same if the prospective tenant’s application would not be approved but for the offer of pre-paid rent.

To stay within the parameters of the law, Massachusetts landlords should never accept rent in advance, regardless of whether the tenant offers or the landlord demands it.

The information and 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.