Md Law Review

8/11/2019 Md Law Review

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Maryland Real Estate Law


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~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


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#2 authority of the Commission...



after holding a hearing on the matter they may~impose a fine up to $5,000 per violation

~take actions against unlicensed individuals


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#3 members are appointed...



by the governor for 4 year terms


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#4 is comprised of 9 members.



5 licensed professional members4 unlicensed consumer members

Licensed members have been licensed for at least 10

years and live in the area they represent at least 5 years


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#5 employees of the Commission:



~include an Executive Director~an Educational director~and an investigation staff


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#6 additional responsibilities are:



~Code of Ethics provided on the website~changes to regulations are posted in

the Maryland Register for 45 days


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Requirements for a salesperson

~18 yrs or older

~60 classroom hours~pass state exam

~affiliate with a broker~pay appropriate fees


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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


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provided by a

nonresident licenseeto assure that

legal actions can bebrought against them

Irrevocable consent


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a waiver of requirementsthat assists in

getting additionallicenses

Reciprocity


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fees and finesare placed in

the General Fund

amount of feesare established by

General Assembly


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what you should know aboutContinuing Education

#1at time of renewallicensees must have15 hours of

continuing education


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what you should know about

Continuing Education

#2anyone licensed for at least10 years only must completethe mandatory classes


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Continuing Education

#3

mandatory topics include:Fair housingLegislative updateEthics with predatory lending


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renew

license

from dateof issue


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~allowed to be on

inactive status~to reinstate an

expired license


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~days notice givento a licensee

prior to a hearing~days given to

respond in writingto claim against

Guaranty Fund


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~days given to

respond in writing

to a written inquiry

or complaint

to the Real EstateCommission


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~days notice given tolicensee that license

is going to expire~days given to licensee to

request a hearing for a

special disposition claim

against the Guaranty Fund


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to keep your license while awaiting an appealpost a bond not to exceed

$50,000

appeal to circuit court


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The Guaranty Fund

#1administered by the Real Estate Commission to

compensate people for actual cash loss

(often earnest money) due to licensees


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The Guaranty Fund

#2each licensee contributes

$20 to the Fund when they get

their original license


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The Guaranty Fund

#3

the Fund must be maintained

at a minimum of $250,000


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The Guaranty Fund

#4sales contracts should have a

disclosure to buyers that maximum

recovery from the Fund is $25,000


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The Guaranty Fund

#5Fund is for residential buyers and

doesnt allow a claim to filed against a spouse.

Claims must be filed within 3 yrs of discovery


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Fraud is the intentional mishandlingof material facts including:

misrepresentation intentional concealment

negligent misrepresentation

We are required to gather facts and accurately disclose facts


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Future profits

not allowed

to guaranteeany future profits


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Supervision

Broker and branch managers

must supervise employeesand independent contractorsincluding sales meetings,

contract reviewing andpolicies for earnest money


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Blockbusting inducing panic sellingRepresenting to homeowners that a protected category

has moved into the neighborhood and will cause adecline in property value, increase in crime

or decline in quality of the schools


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violating the

Code of ethics

standards of conduct

Relations to the publicRelations to the client

Relations to fellow licensees


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AdvertisingMust have brokers name shown

conspicuously with a phonenumber that allows contact with

broker or manager.

Licensee must use name as

shown on license in all advertising


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net listing

illegal in MDlisting must have

stated commission

automatic extensionillegal in MDnot considered a true

expiration date

netlisting

automaticextension


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Copies

must give copiesto each party

must keep copy

for your records


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Written agreements

All agreements

should be put in

writing.


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CMA

must containdisclosure

on 1st page:

This is not an appraisal


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Required disclosures

two required priorto sales contract

(1) agency

(2) seller condition disclosure/disclaimer


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Presumed agency

means they haventhired you and they

havent refusedyour services


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What you shouldknow about

presumed agency

#1 agency representation

is required 1st scheduledface-to-face meeting


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presumed agency

#2 you owe them

client-level service,they owe you nothing


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presumed agency#3 presumed agency ends upon~a signed buyer agency agreement~rejecting representation~an offer being written~showing a property listed withthe licensees own company


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presumed agency#4 keep confidential informationAgency relationships require alicensee to keep confidentialinformation even after the agencyrelationship ends this includespresumed agency.


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Dual agencyOnly the broker can be a

dual agent in MD

Broker cannot work directly

for either party must appointa designated representative

or ICA for each party


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Dual Agency Consent

Present during 1st scheduled

face-to-face meeting.

Gives permission to show own company listings

and affirmation to sell own company listings


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Understanding Whom We RepresentPresent during 1st scheduled

face-to-face meeting.

Does not create an agency, it explains agency options


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what

you shouldknow about

the seller condition disclosure/disclaimer

#2 there should be no blanks/missed items


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what



#3 seller must note any latent defects known tothem even if they use the disclaimer


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what



#4 buyer has the right to void a sale if they did notsign off on the form prior to the sales contract


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what

you should

know about


#5 lender must disclose to borrower loss of right atloan application to void contract if disclosure/disclaimer

isnt received


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Stigmatized propertiescannot discuss AIDS/HIV

other stigmas are

considered confidential

such as homicides, suicides,drug and gang related activities


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requirements

for a broker

#1 must be

an actual placeof business


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requirements

for a broker

#2 must have a

real estate signvisible to the public


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requirements

for a broker

#3 must display

all licenses ina visible manner


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requirements

for a broker

#4 must keep all

earnest $ recordson-site for inspection


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requirements

for a broker

#5 must designate

a broker of recordwith the Commission


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50% interest

maximum any

salesperson or

associate broker

can hold includingfamily holdings


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Supervision

Broker and branch managersmust supervise employeesand independent contractorsincluding sales meetings,contract reviewing and

policies for earnest money


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Assistants

unlicensed assistants

cannot advertise

without supervision,show property,

explain documents,

give advice,answer client questions

or share in commissions


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Commission

~always negotiable

~representing otherwise is

a violation of anti-trust laws


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Arbitration

Disputes between

licensees concerning

commissions.

Procuring cause (starting

a chain of events withoutbreak that results in a sale)

will be examined


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Notice10 days noticerequired by Commission

if broker changes

location or trust

account location


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Offers (written)

must be presented

Once a contract is ratified

a broker no longer needs tomarket the property but if an

additional offer comes in it must be presented.


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Owners consent

must have

owners consent

for a sign

and for a lockbox


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listing agreements

#1 they belong to the broker

~same can be said for buyers brokerage agreement


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listing agreements

#2 copy must be given to the sellerprior to marketing the property

~same can be said for buyers brokerage agreement


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listing agreements

#3 they better have.brokers name, expiration date, stated commission

~these should all be in a buyers brokerage agreement also


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Legal life estate

dower

curtesy

homestead

None are recognized in the state of Maryland


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Tenants by entirety

Do nothave the

right of partition


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what you

should know about..

Condominiums

#1Declaration record if creating condoHorizontal Property Act condo lawsCC&Rs deed restrictions for a condo


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what you

should know about..

Condominiums

#2Conversion buildings give180 days notice to tenants


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what you

should know about..

Condominiums

#3right of cancellation uponreceiving Public Offering Statementis 15 days for new 7 days for resale

Right of cancellation cannot be waived


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what you

should know about-timeshares

#1timeshare estate purchase of fractional interest freehold

timeshare license/use rental for specified period - leasehold


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what you


#2

conversion building gives 120 days notice to tenants


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what you


#3developer must register w/ Real Estate Commission

and either be a broker or appoint a project broker


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what you


#4developer must provide a surety bond sincepurchasers arent eligible for Guaranty Fund


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what you


#5

have Public Offering Statement (POS) approved bythe Secretary of State


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what you


#6

right of cancellation is 10 days for new timeshare and7 days for resale. Right of cancellation cannot be waived


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Government rectangularsurvey method

not used in MD

Legal description


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Lot and block system

Plat of subdivision

must be approved and

recorded by subdivider

before any lots can be sold.


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What you should

know about

real estate taxes

#1estate is assessed every 3 years


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What you should

know about

real estate taxes

#2tax bill comes from the county


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What you should

know about

real estate taxes

#3taxes due 1/1 and 7/1 Delinquent at 10/1


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What you should

know about

real estate taxes

#4unpaid taxes in excess of 3 years - no longer collectable


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What you should

know about

real estate taxes

#5statutory redemption for taxes is 6 months


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Mechanics lien

is a statutory lienif it is authorized

in writing and recordedwithin 6 months ofcompleting the job.

Can be enforced in courtwithin 1 year of filing


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Option

must state

this is not a

contract to buy

no promise has been made


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Earnest money deposit

Purchaser isowner andseller isbeneficial owner.

Broker has 7 days to deposit into trust account


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Earnest money deposit records

If not on-site, brokerslicense isautomatically suspended(summary suspension)until records made available.

Salespeople cannot sell while brokers l icense is suspended


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Statute of Frauds

to be enforceable,

agreements need tobe in writing

one exception leases for 1 year or less


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Statute of Limitations

for seeking legal remedy

concerning a breachof a sales contract.

3 year time period


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Ground lease

You own

the buildingnot the land.

must be disclosed in ad/sign in equal lettering


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Ground lease

normally 50-99 years

Failure to pay reverts

entire property with

improvements and terminates lease.


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Attorneys

Parties can have

attorney review

contracts first.

We can only use

preprinted forms,cant create original contract $5,000 fine for practicing law


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two required prior

to sales contract

(1) agency(2) seller condition disclosure/disclaimer


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within a Marylandresidential sales contract

~deferred tap fees ~50/50 split~25K Guaranty maximum ~Chesapeake Bay critical~ground rent ~1st time homebuyer

~non interest bearing ~buyers right of selection~existing lease ~HOA or condo~licensee as party ~agriculture tax


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Transfer and recordation taxes

Unless otherwise stated

in contract will be a50/50 split between parties

1st time homebuyers in MD

has state transfer taxes waived seller still pays


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Adverse possession

Open, continuous and notorious possession

for the prescriptive period (20 yrs in MD)

MD does not support squatters rightswhich is considered trespassing.


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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


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Deeds

must be recorded

otherwise only

binding to parties.


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Heirsis someone who receives property through the

law of descent and distribution.

Deviseeis someone receiving real property by a will.

Legateeis someone receiving personal property by a will


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Evidence of titlealso called proof of ownership

In MD, a buyer is responsiblefor securing evidence of title, normally

by an abstract of title & title insurance.Torrens certificate is not used in MD


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Deed of trust

Security instrumentpreferred by MD lenders.Creates a voluntary lien.

contains apower-of-sale clauseallows for a nonjudicial foreclosure


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Usury lenders charging a higher rate

than allowed by law.Maximum for 2nd trust is 24%


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Defeasance clausemortgage has been paid in full.

borrower should make suresatisfaction is recorded by lender.

Otherwise amount could be held in

escrow up to 12 years.


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Foreclosure

legal procedure selling property to satisfy a debt

Judicial court process needed

Nonjudicial preferred by lenders

power-of-sale clause

Strict - not done in Maryland


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Right of redemption

Equitable before tax saleStatutory after tax sale

statutory redemption for taxes is 6 months

statutory redemption for mortgages is 0


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Balloon mortgage

on a

second mortgage

will have a

6 month extension


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Leases

1 year or lessis the one exception

to Statute of Frauds.

7 years or more

must be in writing,acknowledged and recorded


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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


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what you

should know about.security deposits

#1maximum

is 2 months rent


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what you

should know about.security deposits

#2place in financial

institution within30 days to earn interest


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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 propertiesas of 7/90 and new townhouses as of 7/92


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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.


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Conservation area

prohibits solicitation for aperiod of time.

Baltimore City

does not allow solicitation.

No flyers, door-to-door or

phone calls no exceptions


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Statute of l imitationsfor claims concerningdiscrimination to HUD-

1 year time period.

for claims concerning

discrimination brought to court-2 year time period

Wh t


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What you

should know about.

Lead based paint#1 homes built

before 1978 couldHave lead based paint

Wh t


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What you

should know about.

Lead based paint#2 federal disclosuregives the buyer an

option to use a 10-day

risk assessment period


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What you


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What you

should know about.

Lead based paint#4 licensee shouldalso provide a pamphlet

Protect Your Family

from Lead in Your Home

What you


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What you

should know about.

Lead based paint#5 disclosure for atenant different than a

buyer- $10K fine for using

the wrong disclosure

What you


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What you

should know about.

Lead based paint#6 MD Lead PoisonProgram is for property

to be used as a rental

and built before 1950


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is issued in two policies. Lenderscoverage is required and ownerscoverage is optional.

Both must be explained

Non MD Resident Seller


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Non MD Resident Seller

Out-of-state owner has4.75% withheld for

Non Resident tax.

Out-of-state Corporation

has 7% withheld

Settlement Attorney


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Settlement Attorney

Owes loyalty to no one

Must give care to buyerwhen reviewing abstract and

care to seller in paying offliens and recording new deed

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