Massachusetts licensed broker Helen lists a property and, without the seller's knowledge or consent, refers the buyer to a mortgage company in which Helen has an undisclosed ownership interest, receiving a referral fee. The buyer later discovers this arrangement. Under Massachusetts law, which of the following best describes Helen's legal exposure?
Correct Answer
B) Helen faces Board disciplinary action and potential liability under MGL Chapter 93A, and the referral fee arrangement may also implicate RESPA if the transaction involved a federally related mortgage
Helen's conduct creates multiple layers of legal exposure. First, failing to disclose a material conflict of interest (ownership interest in the referral company) violates her fiduciary duties and constitutes grounds for Board disciplinary action under MGL Chapter 112. Second, the undisclosed arrangement constitutes an unfair or deceptive act under MGL Chapter 93A, exposing Helen to civil liability including double or treble damages. Third, if the mortgage was a federally related mortgage, the undisclosed referral fee arrangement may violate RESPA's anti-kickback provisions (12 U.S.C. § 2607). All three frameworks may apply simultaneously.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The National Do Not Call Registry is a federal program administered by the FTC that allows consumers to opt out of receiving unsolicited telemarketing calls, including calls from real estate agents soliciting business.
Brokers in Florida have strict responsibilities for managing escrow accounts, including monthly reconciliation and proper handling of trust funds.
FREC has the authority to impose fines and other disciplinary actions on licensees who violate real estate laws and rules.
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