Massachusetts AG Goes After Realtors Who Abuse Tenants, But Penalties Are Way Too Low

Massachusetts Attorney General Martha Coakley has announced settlements with real estate brokers that served deceptive notices threatening to remove tenants and their belongings from properties after foreclosure. As in California, real estate agents and brokers are dispatched by banks to vacate properties after foreclosure. These agents frequently mislead and harass tenants into leaving their homes long before they are required to do so.

According to the AG's press release, the settlement with RE/MAX Classic of Fairhaven and real estate broker Simone Schettino "provide[s] a broad range of relief and preventive measures to ensure their future compliance with state and federal consumer protection laws." The settlement bars RE/MAX Classic and Schettino from delivering deceptive notices, "requires RE/MAX Classic to pay a penalty of $10,000, with $7,500 suspended, including $1,000 to South Coastal Counties Legal Services and $1,500 to the Local Consumer Aid Fund. Schettino must pay $500 to the Local Consumer Aid Fund. RE/MAX is also required to provide six free seminars that are open to the public and will provide information to homeowners and tenants in buildings facing foreclosure about their rights." The settlement also requires specific contents in future notices to tenants.

It is good to see state attorneys general pursuing these violations. Such cases highlight the bad actors who are violating tenants rights after foreclosure and provide injunctive relief against particular individuals and entities.

But why are the penalties assessed are so low? A $500 penalty against the individual agent and $2500 against the company, will not deter future misconduct by these or other agents. There's a significant danger, in fact, that unscrupulous real estate agents will conclude that they make more money violating tenants' right than they will have to pay if caught.

There is a reason unscrupulous real estate agents engage in this conduct. They think that the quicker they get tenants out, the quicker they will be able to sell the properties, and the quicker they will get their commissions. The tenants, and their rights under the law, are viewed as roadblocks to their commissions. The fear of a $500 penalty if caught will not change their behavior.

The conduct of overzealous real estate agents after foreclosure is ruining the lives of hundreds of thousands of tenants, prematurely forcing tenants from their homes and, in some cases, into homelessness. These agents deserve more than a slap on the wrist.