MD Laws Impacting Real Estate Brokerages and Contracts

Every two years, our MD Agents are required to take 15 hours continuing education. Below are some of the bullet points from that education that affect Real Estate Brokerages and Contracts:

Failure to disclose agency relationships is a violation of real estate law.

The MREC website, a subsite of the Department of Labor’s site, offers information for both consumers and licensees.

The Maryland Real Estate Commission (MREC) aims to protect the public’s health, welfare, and safety by enforcing the Broker’s Act through the education, licensing, oversight, and regulation of real estate licensees and their activities.

Encouraging a seller to break a listing agreement is contractual interference and it’s illegal.

Demonstrating untrustworthiness or incompetency to act as a real estate salesperson is a common violation.

MREC investigates complaints, holds hearings, takes depositions, issues subpoenas, and may seek injunctions against individuals and firms.

Licensees must not practice outside the scope of their license nor perform services that would qualify as the practice of law.

If a licensee is convicted of a controlled substance offense, MREC has the authority to impose sanctions.

MREC doesn’t have the authority to impose prison sentences, but it can refer criminal matters to the authorities for prosecution, and may suspend and revoke licenses.

MREC is charged with several duties, including adopting and distributing a code of ethics to licensees and firms at least every two years, investigating and resolving complaints against licensees and unlicensed individuals, and setting standards for education courses.

Licensees may not work for another broker without their current broker’s permission and knowledge.

Licensees who are overdue in child support payments may have their licenses suspended or renewals denied.

MREC maintains and administers a Guaranty Fund for the purpose of compensating consumers for losses caused by licensees and their employees.

License law violators may incur penalties of $5,000 for the first violation, $15,000 for the second violation, and up to $25,000 per violation after three or more violations.

Licensees may not offer property for sale without the owner’s permission.

The authority of the Real Estate Commission has been extended for an additional 10 years—until July 1, 2032.

Competence means in part practicing in the area of one’s ability and knowledge and expertise. This includes property type, value, and transaction type.

You must have the experience and be competent enough to work in specialized fields before you advertise them as a service you provide.

All real estate licensees in Maryland are bound by the Maryland Code of Ethics.

The Maryland Code of Ethics is divided into relations to the public, relations to clients, and relations to other licensees.

The Maryland Real Estate Commission enforces the Code of Ethics and may penalize licensees who violate it.

The combined limitation on Home Builder Guaranty Fund payouts per registered home builder is $500,000. Individual payouts are capped at $50,000.

If a registered home builder reaches the $500,000 limit of the Home Builder Guaranty Fund, but then reimburses the fund, the limit is reinstated for that builder.

HB 314 requires a mortgagor to obtain permission from a junior lien holder to refinance a first mortgage when there is a junior lien on the property secured by a loan made by the state or local government with a 0% interest rate (as with the MMP program).

For service members, veterans, and military spouses who meet the requirements for licensure, which includes holding a license in good standing in another state for more than one year, a Maryland licensing unit must issue the license within 60 days after receiving a completed application.

A temporary license may be granted to an otherwise qualified applicant who has held a license in another state for less than a year, provided that license is in good standing.

An applicant seeking multiple licenses must show good standing for all the licenses.

In Maryland, some homeowners are required to pay ground rent to either an individual or a company who is the ground rent holder.

Even though homeowners whose property is subject to a ground lease have to pay a small sum—generally $50 to $100 annually—to the ground lease holder, the homeowners still own the entire property as described in the deed.

Ground lease holders have no rights or obligations to the property at all; they only have the right to collect the ground rent.

When homeowners don’t pay the ground rent, the ground lease holder can obtain a judgment against them and also file a lien against the property for up to three years of past due ground rent, not to mention other legal fees and attorney fees.

Ground lease holders can file to evict homeowners who are more than six months late on paying their ground rent.

Recent legislation prohibits ground lease holders from bringing legal action against either a former or current tenant for any past due ground rent that a tenant owed before the
current tenant acquired the residential ground lease, but only when the ground lease wasn’t registered with SDAT before the current tenant acquired title to the leasehold interest in the property.

HB 149 permits a ground lease tenant to send documentation of a ground lease redemption to SDAT when the redemption was a private transaction between the ground lease holder and the tenant. This documentation is required to include a certified copy of the ground lease redemption deed that was filed in the county land records.

House Bill 172 repealed the fee for registering a ground lease with SDAT. Prior to October 1, 2020, ground lease holders paid $10 for the first ground lease and $5 for each additional one.

A party named in an instrument transferring interest in real property may record that instrument without assistance from an attorney. With the passage of HB 1084/SB 154, this now specifically includes the recordation of assignment of leases.

A lender or credit grantor of a mobile home must serve written notice of intent to repossess at least 10 days before such repossession, and this requirement is increased to 30 days’ notice if the home is used primarily for personal, family, or household use.

A lender repossessing a mobile home may provide the possessor of record with fewer than 30 days’ notice if the home is vacant or abandoned and the lender can certify those circumstances.

In Maryland law, discrimination based on race may include discrimination based on traits associated with race, including hair texture, Afro hairstyles, and protective hairstyles. Protective hairstyles include braids, twists, and locks.

Mobile home dealers are required to deal in good faith when providing financial information, not steer prospective consumer/borrowers to financing products that offer less favorable terms; and provide certain disclosures to prospective consumer/borrowers at the time of introducing financing options.

Disclosures required by mobile home dealers must be provided at the time the mobile home retailer provides information to the consumer/ borrower regarding financing, posted in a prominent location at all of the mobile home retailer’s places of business, and posted on the mobile home retailer’s website, if any.

Maryland requires three hours of Ethics; this is unchanged from years past, but now Ethics courses must include a discussion of professionalism, conflict resolution, a licensee’s duty to respect the public, peers, and property, flipping, and fraudulent real estate practice.

Effective October 1, 2021, real estate contracts for property located within Baltimore, Carroll, Frederick, and Washington counties must include a buyer notice about the potential for the property to be located in a zone of dewatering influence (e.g., sink holes).

Effective July 1, 2022, inspectors who perform an On-Site Wastewater Property Transfer Inspection must hold a license issued by the Maryland Department of the Environment.

Source: The CE Shop