Maryland Real Estate Law

~issue, deny, suspend and revoke licenses

~adopt, amend and repeal rules and regulations
~hold monthly meetings ~administer Guaranty Fund
~hold hearings ~provides a Code of Ethics
#1 duties of the Commission.
What you should know about
the Real Estate Commission
#2 authority of the Commission...
What you should know about
the Real Estate Commission
after holding a hearing on the matter they may
~impose a fine up to $5,000 per violation
~take actions against unlicensed individuals
#3 members are appointed...
What you should know about
the Real Estate Commission
by the governor for 4 year terms
#4 is comprised of 9 members.
What you should know about
the Real Estate Commission
5 licensed professional members
4 unlicensed consumer members
Licensed members have been licensed for at least 10
years and live in the area they represent at least 5 years
#5 employees of the Commission:
What you should know about
the Real Estate Commission
~include an Executive Director
~an Educational director
~and an investigation staff
#6 additional responsibilities are:
What you should know about
the Real Estate Commission
~Code of Ethics provided on the website
~changes to regulations are posted in
the Maryland Register for 45 days
Requirements for a salesperson
~18 yrs or older
~60 classroom hours
~pass state exam
~affiliate with a broker
~pay appropriate fees
Requirements for an associate broker/broker
~3 years actively licensed as salesperson
~135 classroom hours
~pass state exam
additional criteria for principal broker only
~credit report ~set up trust account
provided by a
nonresident licensee
to assure that
legal actions can be
brought against them
Irrevocable consent
a waiver of requirements
that assists in
getting additional
licenses
Reciprocity
fees and fines
are placed in
the General Fund
amount of fees
are established by
General Assembly
what you should know about
Continuing Education
#1
at time of renewal
licensees must have
15 hours of
continuing education
what you should know about
Continuing Education
#2
anyone licensed for at least
10 years only must complete
the mandatory classes
what you should know about
Continuing Education
#3
mandatory topics include:
Fair housing
Legislative update
Ethics with predatory lending
renew
license
from date
of issue
~allowed to be on
inactive status
~to reinstate an
expired license
~days notice given
to a licensee
prior to a hearing
~days given to
respond in writing
to claim against
Guaranty Fund
~days given to
respond in writing
to a written inquiry
or complaint
to the Real Estate
Commission
~days notice given to
licensee that license
is going to expire
~days given to licensee to
request a hearing for a
special disposition claim
against the Guaranty Fund
to keep your license while awaiting an appeal
post a bond not to exceed
$50,000
appeal to circuit court
What you should know about
The Guaranty Fund
#1
administered by the Real Estate Commission to
compensate people for actual cash loss
(often earnest money) due to licensees
What you should know about
The Guaranty Fund
#2
each licensee contributes
$20 to the Fund when they get
their original license
What you should know about
The Guaranty Fund
#3
the Fund must be maintained
at a minimum of $250,000
What you should know about
The Guaranty Fund
#4
sales contracts should have a
disclosure to buyers that maximum
recovery from the Fund is $25,000
What you should know about
The Guaranty Fund
#5
Fund is for residential buyers and
doesnt allow a claim to filed against a spouse.
Claims must be filed within 3 yrs of discovery
Fraud is the intentional mishandling
of material facts including:
misrepresentation intentional concealment
negligent misrepresentation
We are required to gather facts and accurately disclose facts
Future profits
not allowed
to guarantee
any future profits
Supervision
Broker and branch managers
must supervise employees
and independent contractors
including sales meetings,
contract reviewing and
policies for earnest money
Blockbusting inducing panic selling
Representing to homeowners that a protected category
has moved into the neighborhood and will cause a
decline in property value, increase in crime
or decline in quality of the schools
violating the
Code of ethics
standards of conduct
Relations to the public
Relations to the client
Relations to fellow licensees
Advertising
Must have brokers name shown
conspicuously with a phone
number that allows contact with
broker or manager.
Licensee must use name as
shown on license in all advertising
net listing
illegal in MD
listing must have
stated commission
automatic extension
illegal in MD
not considered a true
expiration date
net
listing
automatic
extension
Copies
must give copies
to each party
must keep copy
for your records
Written agreements
All agreements
should be put in
writing.
CMA
must contain
disclosure
on 1
st
page:
This is not an appraisal
Required disclosures
two required prior
to sales contract
(1) agency
(2) seller condition disclosure/disclaimer
Buyers right of selection
to choose own settlement attorney,
title insurance and escrow agent.
(1) must be disclosed
within the sales contract
(2) licensee can not
interfere with buyers right of selection
Presumed agency
means they havent
hired you and they
havent refused
your services
What you should
know about
presumed agency
#1 agency representation
is required 1st scheduled
face-to-face meeting
What you should
know about
presumed agency
#2 you owe them
client-level service,
they owe you nothing
What you should
know about
presumed agency
#3 presumed agency ends upon
~a signed buyer agency agreement
~rejecting representation
~an offer being written
~showing a property listed with
the licensees own company
What you should
know about
presumed agency
#4 keep confidential information
Agency relationships require a
licensee to keep confidential
information even after the agency
relationship ends this includes
presumed agency.
Dual agency
Only the broker can be a
dual agent in MD
Broker cannot work directly
for either party must appoint
a designated representative
or ICA for each party
Dual Agency Consent
Present during 1
st
scheduled
face-to-face meeting.
Gives permission to show own company listings
and affirmation to sell own company listings
Understanding Whom We Represent
Present during 1
st
scheduled
face-to-face meeting.
Does not create an agency, it explains agency options
Material facts
Licensee must gather
material facts by checking
public records, inspecting
the property, reviewing the
survey and other paperwork and
having seller complete required disclosures
what
you should
know about
the seller condition disclosure/disclaimer
#1 seller should complete at time of listing
what
you should
know about
the seller condition disclosure/disclaimer
#2 there should be no blanks/missed items
what
you should
know about
the seller condition disclosure/disclaimer
#3 seller must note any latent defects known to
them even if they use the disclaimer
what
you should
know about
the seller condition disclosure/disclaimer
#4 buyer has the right to void a sale if they did not
sign off on the form prior to the sales contract
what
you should
know about
the seller condition disclosure/disclaimer
#5 lender must disclose to borrower loss of right at
loan application to void contract if disclosure/disclaimer
isnt received
Stigmatized properties
cannot discuss AIDS/HIV
other stigmas are
considered confidential
such as homicides, suicides,
drug and gang related activities
requirements
for a broker
#1 must be
an actual place
of business
requirements
for a broker
#2 must have a
real estate sign
visible to the public
requirements
for a broker
#3 must display
all licenses in
a visible manner
requirements
for a broker
#4 must keep all
earnest $ records
on-site for inspection
requirements
for a broker
#5 must designate
a broker of record
with the Commission
50% interest
maximum any
salesperson or
associate broker
can hold including
family holdings
Supervision
Broker and branch managers
must supervise employees
and independent contractors
including sales meetings,
contract reviewing and
policies for earnest money
Assistants
unlicensed assistants
cannot advertise
without supervision,
show property,
explain documents,
give advice,
answer client questions
or share in commissions
Commission
~always negotiable
~representing otherwise is
a violation of anti-trust laws
Arbitration
Disputes between
licensees concerning
commissions.
Procuring cause (starting
a chain of events without
break that results in a sale)
will be examined
Notice
10 days notice
required by Commission
if broker changes
location or trust
account location
Offers (written)
must be presented
Once a contract is ratified
a broker no longer needs to
market the property but if an
additional offer comes in it must be presented.
Owners consent
must have
owners consent
for a sign
and for a lockbox
what you should know about
listing agreements
#1 they belong to the broker
~same can be said for buyers brokerage agreement
what you should know about
listing agreements
#2 copy must be given to the seller
prior to marketing the property
~same can be said for buyers brokerage agreement
what you should know about
listing agreements
#3 they better have.
brokers name, expiration date, stated commission
~these should all be in a buyers brokerage agreement also
Legal life estate
dower
curtesy
homestead
None are recognized in the state of Maryland
Tenants by entirety
Do not
have the
right of partition
what you
should know about..
Condominiums
#1
Declaration record if creating condo
Horizontal Property Act condo laws
CC&Rs deed restrictions for a condo
what you
should know about..
Condominiums
#2
Conversion buildings give
180 days notice to tenants
what you
should know about..
Condominiums
#3
right of cancellation upon
receiving Public Offering Statement
is 15 days for new 7 days for resale
Right of cancellation cannot be waived
what you
should know about..
Condominiums
#4
1 year liability to seller
for false information in POS
Can rescind 1 year if never received POS
what you
should know about-
timeshares
#1
timeshare estate purchase of fractional interest freehold
timeshare license/use rental for specified period - leasehold
what you
should know about-
timeshares
#2
conversion building gives 120 days notice to tenants
what you
should know about-
timeshares
#3
developer must register w/ Real Estate Commission
and either be a broker or appoint a project broker
what you
should know about-
timeshares
#4
developer must provide a surety bond since
purchasers arent eligible for Guaranty Fund
what you
should know about-
timeshares
#5
have Public Offering Statement (POS) approved by
the Secretary of State
what you
should know about-
timeshares
#6
right of cancellation is 10 days for new timeshare and
7 days for resale. Right of cancellation cannot be waived
Government rectangular
survey method
not used in MD
Legal description
Lot and block system
Plat of subdivision
must be approved and
recorded by subdivider
before any lots can be sold.
What you should
know about
real estate taxes
#1
estate is assessed every 3 years
What you should
know about
real estate taxes
#2
tax bill comes from the county
What you should
know about
real estate taxes
#3
taxes due 1/1 and 7/1 Delinquent at 10/1
What you should
know about
real estate taxes
#4
unpaid taxes in excess of 3 years - no longer collectable
What you should
know about
real estate taxes
#5
statutory redemption for taxes is 6 months
Mechanics lien
is a statutory lien
if it is authorized
in writing and recorded
within 6 months of
completing the job.
Can be enforced in court
within 1 year of filing
Option
must state
this is not a
contract to buy
no promise has been made
Earnest money deposit
Purchaser is
owner and
seller is
beneficial owner.
Broker has 7 days to deposit into trust account
Earnest money deposit records
If not on-site, brokers
license is
automatically suspended
(summary suspension)
until records made available.
Salespeople cannot sell while brokers license is suspended
Statute of Frauds
to be enforceable,
agreements need to
be in writing
one exception leases for 1 year or less
Statute of Limitations
for seeking legal remedy
concerning a breach
of a sales contract.
3 year time period
Ground lease
You own
the building
not the land.
must be disclosed in ad/sign in equal lettering
Ground lease
normally 50-99 years
Failure to pay reverts
entire property with
improvements and terminates lease.
Attorneys
Parties can have
attorney review
contracts first.
We can only use
preprinted forms,
cant create original contract $5,000 fine for practicing law
Required disclosures
two required prior
to sales contract
(1) agency
(2) seller condition disclosure/disclaimer
Required disclosures
within a Maryland
residential sales contract
~deferred tap fees ~50/50 split
~25K Guaranty maximum ~Chesapeake Bay critical
~ground rent ~1
st
time homebuyer
~non interest bearing ~buyers right of selection
~existing lease ~HOA or condo
~licensee as party ~agriculture tax
Transfer and recordation taxes
Unless otherwise stated
in contract will be a
50/50 split between parties
1
st
time homebuyers in MD
has state transfer taxes waived seller still pays
Adverse possession
Open, continuous and notorious possession
for the prescriptive period (20 yrs in MD)
MD does not support squatters rights
which is considered trespassing.
transfer by will
~legally when someone dies their property transfers immediately
~will must have following elements: legal age/sound mind/proper
wording/no duress/witnesses (not receiving anything from will)
~nuncupative or holographic (if no witnesses) are invalid
Deeds
must be recorded
otherwise only
binding to parties.
Heirs
is someone who receives property through the
law of descent and distribution.
Devisee
is someone receiving real property by a will.
Legatee
is someone receiving personal property by a will
Evidence of title
also called proof of ownership
In MD, a buyer is responsible
for securing evidence of title, normally
by an abstract of title & title insurance.
Torrens certificate is not used in MD
Deed of trust
Security instrument
preferred by MD lenders.
Creates a voluntary lien.
contains a
power-of-saleclause
allows for a nonjudicial foreclosure
Usury lenders charging a higher rate
than allowed by law.
Maximum for 2
nd
trust is 24%
Defeasance clause
mortgage has been paid in full.
borrower should make sure
satisfaction is recorded by lender.
Otherwise amount could be held in
escrow up to 12 years.
Foreclosure
legal procedure selling property to satisfy a debt
J udicial court process needed
Nonjudicial preferred by lenders
power-of-saleclause
Strict - not done in Maryland
Right of redemption
Equitable before tax sale
Statutory after tax sale
statutory redemption for taxes is 6 months
statutory redemption for mortgages is 0
Balloon mortgage
on a
second mortgage
will have a
6 month extension
Leases
1 year or less
is the one exception
to Statute of Frauds.
7 years or more
must be in writing,
acknowledged and recorded
Prohibited clauses
of a lease
~max late fee is 5%
~landlord not having
liability insurance hold harmless
~tenant waiving right to remedy
~proper notice not being equal for both parties
~automatic renewal without tenants consent
what you
should know about.
security deposits
#1
maximum
is 2 months rent
what you
should know about.
security deposits
#2
place in financial
institution within
30 days to earn interest
what you
should know about.
security deposits
#3
if no damages.
return with interest
within 45 days
what you
should know about.
security deposits
#4
if there are damages
itemized list provided
what you
should know about.
security deposits
#5
tenant may request
a walk thru with landlord within
first 15 days of occupancy
Police power
public land-use controls
that provide for public safety
such as zoning ordinances
and building codes
~each level of house must have smoke detector
including the basement but not the attic.
~sprinklers required in new multifamily properties
as of 7/90 and new townhouses as of 7/92
Chesapeake Bay Critical Area
Can not disturb area within
1,000 ft of Bay or tributaries
Needs to be noted in contract
Fair Housing
along with the Federally protected categories
of race, color, religion, national origin, gender,
disability and familial status
MD named marital status and sexual
orientation as statutory protected categories.
Conservation area
prohibits solicitation for a
period of time.
Baltimore City
does not allow solicitation.
No flyers, door-to-door or
phone calls no exceptions
Statute of limitations
for claims concerning
discrimination to HUD-
1 year time period.
for claims concerning
discrimination brought to court-
2 year time period
What you
should know about.
Lead based paint
#1 homes built
before 1978 could
Have lead based paint
What you
should know about.
Lead based paint
#2 federal disclosure
gives the buyer an
option to use a 10-day
risk assessment period
What you
should know about.
Lead based paint
#3 federal disclosure
must be completed
by seller with no blanks
What you
should know about.
Lead based paint
#4 licensee should
also provide a pamphlet
Protect Your Family
from Lead in Your Home
What you
should know about.
Lead based paint
#5 disclosure for a
tenant different than a
buyer- $10K fine for using
the wrong disclosure
What you
should know about.
Lead based paint
#6 MD Lead Poison
Program is for property
to be used as a rental
and built before 1950
is issued in two policies. Lenders
coverage is required and owners
coverage is optional.
Both must be explained
Non MD Resident Seller
Out-of-state owner has
4.75% withheld for
Non Resident tax.
Out-of-state Corporation
has 7% withheld
Settlement Attorney
Owes loyalty to no one
Must give care to buyer
when reviewing abstract and
care to seller in paying off
liens and recording new deed