News

Realtors oppose mandatory energy reviews, claiming that owners of older homes would be at a disadvantage

By Scott Gibson | April 4, 2019

A Massachusetts lawmaker has introduced a bill that would require an energy assessment and an energy performance label for all single-family homes when they are put up for sale.

The bill, S. 1983, was introduced by Senator Eric P. Lesser and has been referred to committee, the senator’s communications director, Ryan Migeed, said.

Although several cities around the U.S. have similar requirements, Massachusetts would apparently become the first state to make a disclosure about energy performance a condition of sale. A similar requirement was included as an amendment to an energy bill the Massachusetts Senate considered last year, but it was eventually dropped as the bill moved forward. This time, Migeed said, the measure was proposed as stand-alone legislation on its own merits.

“We still think it’s a good idea,” he said, referring to the proposed label as a “Kelley Blue book for houses.”

In addition to single-family homes, the requirement also would apply to sellers of multifamily houses of fewer than five units as well as anyone selling a condominium. The real estate agent handling the listing would be required to disclose results of the assessment and energy performance label before a sales contract was signed.

There are a number of exceptions. Among them are sales to family members, houses that have had an energy assessment within the last three years through the Mass Save program, and houses built in the last three years that comply with the most recent energy codes.

The bill isn’t specific about the assessment or the performance label but would require the state’s Department of Energy Resources to design both.

The bill reads in part: “The energy assessment shall consider, but not be limited to, information regarding annual energy consumption, energy costs for electricity and thermal needs, a home’s envelope, including the foundation, roof, walls, insulation and windows, and heating, cooling, and hot water systems, and annual carbon emissions.”

The requirement would go into effect no later than June 30, 2021 or nine months after the bill enacted, whichever is later.

As written, the bill doesn’t explain who would pay for the energy assessment. However, Casey Bowers, legislative director at the Environmental League of Massachusetts, said in a telephone call the intent is to make the assessments free for homeowners.

Bowers said the work would likely take place under the umbrella of Mass Save, an existing energy efficiency program that offers energy audits to homeowners at no cost as well as a variety of rebate and incentives for home improvements and appliance upgrades.

The plan had good momentum last year, she said, adding, “Hopefully this is the year.”

Realtors’ group opposes the plan
While a proponent of Mass Save in general, the Massachusetts Association of Realtors (MAR) opposes a mandatory energy assessment, communications director Eric Berman said.

The assessment and labeling requirement would add to the time it takes to sell a home, potentially putting sellers at a disadvantage, and homeowners who could not afford to make energy upgrades on low-scoring homes could see reduced equity in their properties, he said.

In a written statement, the realtors’ group said that policies that protect the environment are important, but they “must not arbitrarily restrict or infringe upon private property rights.”

MAR said that Massachusetts has some of the oldest housing stock in the country. Older houses are not as energy-efficient as newer ones, and many of older homes are located in less affluent areas where homeowners often don’t have the resources to make upgrades.

In addition, the association said, existing state law requires home inspectors to give home buyers a document that explains the benefits of a home energy audit. Standard purchase agreements also include a provision allowing the buyer to conduct an energy audit as part of a home inspection.

“Legislative or regulatory requirements that interfere with the flow and valuation of the real estate marketplace can wreak havoc on one of Massachusetts most important economic engines — real estate transactions,” the statement said.

The American Council for an Energy-Efficient Economy says that mandatory energy ratings and disclosures are becoming more common. Policies requiring disclosures about energy use for commercial buildings are in place in nine large U.S. cities and one county, ACEEE says, while requirements for residential properties are “less common and less uniform.”

“Residential energy rating and disclosure is a promising low-cost policy option that can help increase consumer transparency about the costs associated with operating a home, promoting more sound purchasing decisions in a post-mortgage crisis environment,” ACEEE says in a guide for policy makers posted at its website.

Bowers said that concerns by realtors that mandatory energy assessments would slow sales are probably misplaced. It’s especially important for low-income buyers to know exactly how much money they would be spending on energy, she said. “People appreciate knowing what they’re getting into,” she said, “good or bad.”

Minneapolis adopts a similar plan
Earlier this year, the city of Minneapolis approved a plan that will require the energy efficiency characteristics of houses to be disclosed when sellers put their properties on the market. Starting next year, information on insulation, the heating system, and windows will be added to a Truth in Sale of Housing report that is already required.

At the same time, the City Council approved a requirement that residential building owners disclose the average energy cost per square foot to renters. That requirement takes effect in 2021.

According to the city, the new policies are designed to reduce overall housing costs and make sure than homeowners and renters have reliable information on energy costs when they decide where to live.

Real estate agents didn’t like it, particularly a provision that requires an inspector to drill a hole in an exterior wall in houses built before 1980 to check insulation levels.

Minneapolis became one of several U.S. cities to require energy disclosures, including Austin, Texas; Berkeley, California; Chicago, Illinois; and Portland, Oregon.