••Maryland Real Estate LegislativeUpdate 2012-2013"

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Maryland Real Estate Legislative Update 2012-2013MD Course #041-2634(A)

DC Course #12413

*HB 177/SB 135 - Ground Leases - Registration - Failure to RegisterSTATUS: PASSED - Effective July 1,2012Establishes that a ground lease holder may not collect rent or enforce the ground lease through a lien ifthe ground lease holder fails to register the ground lease with the State Department of Assessments andTaxation. Clarifies that a tenant subject to a ground lease must receive a bill at least 60 days before thepayment is due in order for a ground lease holder to take action against the tenant. This legislation isintended to replace the enforcement mechanism invalidated by the Maryland Court of Appeals inMuskin v. State Department of Assessments and Taxation, 422 Md. 544 (2011).

*HB 678/SB 591 - Real Property - Manufactured Homes - Affixation to and Severance from RealPropertySTATUS: PASSED - Effective October 1, 2012Creates a statutory process for converting a mobile or manufactured home to real property. Thelegislation authorizes an Affidavit of Affixation to be recorded in the land records as long as the ownerof the property meets certain conditions. The Clerk of the Court may charge reasonable fees forrecording the property. Any fees or taxes typically levied for the sale of real property (e.g., transfertaxes) are prohibited if the owner is only recording the Affidavit of Affixation. The legislation isintended to create a simpler process to convert these properties to real property and thereby takeadvantage of better lending terms.

*HB 866/SB 724 - Title Insurance - Closing or Settlement Protection Practices - StudySTATUS: PASSED - Effective July 1, 2012Directs the Maryland Insurance Administration to conduct a study of settlement protection practices asthey relate to title insurance. As originally introduced, the legislation would have charged home buyersan additional $50 to cover title insurance against theft, misappropriation, and misuse of settlement funds.Representatives of the real estate industry and the Maryland Real Estate Commission will participate.

*HB 1373 - Real Property - Foreclosed Property RegistrySTATUS: PASSED - Effective October 1,2012Creates a statewide registry of foreclosed properties to be maintained by the Maryland Department ofLabor, Licensing and Regulation (DLLR). The registry information must contain contact informationfor the foreclosure purchaser, as well as whether the property will be vacant. Local governments mayaccess the information and may provide information to neighbors, condo associations, or HOAs. Localcounties may fine foreclosure purchasers for not registering the property, and may charge foreclosurepurchasers for abating nuisances associated with the property.

*HB 1374 - Real Property - Foreclosures and MediationSTATUS: PASSED - Effective October 1, 2012Makes changes to the current foreclosure and mediation program. Most significantly, creates amediation process that can be started before filing the foreclosure with the court. The legislation alsoexempts from state income tax any payments paid to homeowners from the foreclosure settlementnegotiated by the Attorney General.

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*SB 123 - Real Property - Foreclosure Sale of Residential Property - Notice to Local Supervisorof AssessmentsSTATUS: PASSED - Effective June 1, 2012 for taxable years after June 30, 2012Requires a foreclosure purchaser to submit a copy of the court order ratifying the sale to the Supervisorof Assessments in the county where the property is located. Certain properties that have already beenrecorded or are subject to bankruptcy stay or redemption are exempt.

*SB 134 - State Real Estate Commission - Sunset Extension and Program EvaluationSTATUS: PASSED - Effective July 1,2012Reauthorizes the State Real Estate Commission (REC) for another ten years. The REC's reauthorizationpassed with an increase in the guarantee fund cap to $50,000. MAR opposed the guarantee fund capincrease because few complaints trigger the maximum guarantee payout. However, the Legislatureincreased the cap because it had not been increased for 20 years and would not be reviewed for anotherten years.

*SB 145 - State Real Estate Commission - Continuing Education - DocumentationSTATUS: PASSED - Effective October 1, 2012Creates additional flexibility in approving legal and legislative update classes so that court cases andlegal trends may be discussed. The bill also allows electronic transmission of continuing education classcertificates.

COMMON OWNERSHIP COMMUNITIES

*HB 126 - Maryland Condominium Act - Right of Entry to Investigate Damage and MakeRepairsSTATUS: PASSED - Effective October 1, 2012Authorizes a council of unit owners or a condominium's authorized designee the right to enter a condounit to investigate any damage. This bill expands current law, which allows a council of unit owners ordesignee the right to enter a unit only to repair the unit.

*HB 884 - Electric, Gas, Sewer, and Water Service - Default Notice to Condominium UnitOwners and ResidentsSTATUS: PASSED - Effective October 1,2012Gives the providers/billing parties of certain utility services the right to enter a common area of acondominium to post notice indicating that the condominium is at least 60 days in default of payment.Applies only to condominiums where the council of unit owners or a designated party is direct billed forthe utilities of all of the tenants.

LAND-USE, PROPERTY RIGHTS, AND THE ENVIRONMENT

*HB 366/SB 602 - Public Safety - Building Performance Standards - Automatic Fire SprinklerSystemsSTATUS: PASSED - Effective October 1,2012, subject to certain grandfathering provisionsRequires automatic fire sprinklers for new townhomes and new one and two family unit residentialconstruction. Exempts new construction not connected to any electrical utility (Amish exemption), and- until 2016 - any building permits issued for properties on lots subject to existing public works utilityagreements executed before March 1, 2012 OR for building permits on lots served by existing waterservice lines that are less than one inch and installed by March 1,2012.

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*HB 402,403/SB 471,472 -- Land Records - Dormant Mineral Interests and Natural Gas and OilLeases - Court Order and Recordation RequirementsSTATUS: PASSED - Effective October 1, 2012Requires that a court order terminating a mineral interest in land include certain information and berecorded in the land records. The bill also prohibits a Clerk of Court from recording a gas or oil lease onreal property unless the lease is accompanied by a complete intake sheet which describes the lease.

*HB 445/SB 236 - Sustainable Growth and Agricultural Preservation Act of 2012STATUS: PASSED - Effective July 1, 2012 subject, to certain grandfathering provisionsRequires local governments to establish growth tiers detailing where new major subdivisions on septicsystems may be located. Grandfathers certain projects that receive preliminary plan approval before2016 if those projects were started in 2012 or 2013, depending on the local government permittingprocess. As originally introduced in 2011, this legislation would have prohibited all new subdivisions of5 or more lots from using septic systems. Although the legislation this year did not include a completeban of septic systems for major subdivisions, it initially would have required approval of septicsubdivisions by state agencies. The legislation was amended to clarify that local governments retainauthority over subdivision approval and the creation of the tier system.

*HB 1201lSB 532 - Department of Planning - State Development Plan - Use and Conflict of LawSTATUS: PASSED - Effective June 1, 2012Clarifies that PlanMaryland cannot be used to deny permits and statutorily required funding to localgovernments. The Maryland Department of Planning (MDP) submitted a statewide development plancalled PlanMaryland before the Legislature convened in January. MAR had submitted two commentletters expressing concern that PlanMaryland could override local planning decisions by allowing thestate to deny permits and funding to local development projects. Other groups, including the MarylandAssociation of Counties (MACa), shared these concerns. HB 1201lSB 532 was drafted by MACa toaddress these key concerns. There were numerous other bills introduced to repeal or limit PlanMarylandas well. None passed.

PROPERTY MANAGEMENT

*HB lISB 208 - Environment - Recycling - Apartment Buildings and CondominiumsSTATUS: PASSED - Primary Effective Date: October 1, 2012Requires local governments to submit a recycling plan that includes plans for apartment buildings andcondominiums with more than 10 units. Requires owners and managers of apartment and condominiumbuildings with more than 10 units to provide recycling for unit owners consistent with the county plansby October 1,2014. As introduced, this bill would have required building owners and managers toclassify and weigh all recyclable refuse. This provision was removed from the bill.

*HB 472/SB 873 - Workgroup on Lead Liability Protection for Rental PropertySTATUS: PASSED - Effective June 1,2012Directs the Maryland Insurance Administration to convene a workgroup examining lead liabilityprotection for owners ofpre-1978 rental property. The workgroup is directed to study the feasibility ofan insurance fund for property owners, and report back to the Legislature by December 1,2012. Asoriginally introduced, this legislation would have imposed a $100 per unit fee on all pre-I 978 residentialrental property. Certain lead free units would have been exempted.

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*HB 644 - Environment - Reducing the Incidence of Lead PoisoningSTATUS: PASSED - Effective June 1, 2012Expands the scope of the Lead Poisoning Prevention Program (LPPP) from pre-1950 rental property topre-1978 rental property (by January 1 2015). Increases the program's registration fees from $15 to $30per unit. Gives the Maryland Department of the Environment (MDE) authority to enforce lead paintabatement orders as well as require clearance dust tests for all pre-1978 owner-occupied and rentalproperty subject to the Environmental Protection Agency (EPA) Renovation, Repair and Painting (RRP)rule. Establishes that a property owner's compliance with the LPPP can be evidence that the ownerexercised reasonable care in respect to lead hazards during that period. If any owner was not incompliance, that too can be evidence that the owner did not exercise reasonable care. Requires thatplaintiffs and defendants have a good faith basis for alleging a party was injured at a particular addressor risk paying the other party's legal fees. A provision that would have required pre-1978 owner-occupied, residential units to conduct a lead dust inspection before sale was removed from the bill.

*HB 1269/SB 765 - Public Service Commission - Study on Tenant Payment of Landlord UtilityBillsSTATUS: PASSED - Effective June 1, 2012Directs the Public Service Commission to study the creation of a mechanism to allow tenants to payutility bills directly when the landlord is in default of payment. The study group will include interestedparties, including groups representing landlords.

*HB 1364/SB 1005 - Labor and Employment - Workplace Fraud Act - RevisionsSTATUS: PASSED - Effective July 1, 2012Creates a clearer exemption from presumed employer-employee relationship tests. Under thelegislation, as long as an employer has a written contract with a contractor who acknowledges thecontractor's responsibility to pay for worker's compensation and unemployment insurance, andproduces those records to the State, an employer won't be presumed to have created an employer-employee relationship. Many small businesses, including some property management companies, werecited for not paying unemployment insurance and worker's compensation for the workers of theindependent contractor that the small business hired.

*HB 777/SB 855 - Corporations and Associations - Limited Liability Act - RevisionsSTATUS: PASSED - Effective October 1, 2012Revises the limited liability company (LLC) law. Among the changes: new rules to allow abandonmentof a conversion to an LLC from a partnership; expansion of the list of items that may be included inoperating agreements, such as meeting notices and voting rights; participation in meetings throughelectronic means; lower unanimous consent needed to dispose of all property or enter into a merger;changes in rules regarding assignment of interests; changes in rules regarding a debtor member of anLLC and what interests a creditor of the debtor may claim.

HB 2911SB 383 - Real Property - Maryland Mortgage Relief Services ActSTATUS: PASSED - Effective July 1, 2013Provides state government with authority to enforce violations of federal regulations controlling theactivities of mortgage assistance relief service providers. Also gives Maryland consumers a private rightof action. The current federal regulations require clear disclosures to consumers and specific rules onhow and when payments may be collected.

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HB 785/SB 375 - Commercial Law - Maryland Credit Services Businesses Act - ScopeSTATUS: PASSED - Effective Date October 1, 2013Clarifies that licensed real estate associate brokers and salespersons are not required to obtain a creditservices license in order to provide real estate brokerage services. Only real estate brokers had beenexempted from the original law thus potentially exposing agents to regulation when assisting a homeowner who is at risk of foreclosure.

HB 1413/SB 969 - Public Safety - Fire Protection and Prevention - Residential Smoke AlarmsSTATUS: PASSED - Effective July 1,2013Requires homeowners to disclose whether the smoke detectors are over ten years old and whether theyuse a ten-year sealed battery as required under Maryland law by 2018. The notice will be added to thecurrent Seller Property Condition Disclosure Form. The legislation also requires homeowners to updatesmoke detectors to newer sealed battery systems if the smoke detectors are battery operated and are over10 years old or malfunction when tested. Smoke detectors that are hard-wired are also required to beupdated every 10 years or when those systems malfunction. Finally, the legislation requires that at leastone smoke detector be located on every floor of a residence by 2018.

COMMON OWNERSHIP COMMUNITIES

HB 286/SB 161 - Real Property - Maryland Mortgage Assistance Relief Services ActSTATUS: Effective October 1, 2013Limits certain foreclosure rights of Homeowner Associations (HaAs) and the Council of Unit Ownersfor Condominiums (Condos). An HOA or Condo may not foreclose on a property if the lien iscomprised only of fines and/or attorney fees to collect those fmes. HOAs and Condos may onlyforeclose on a lien comprised of delinquent assessments and/or attorney fees to collect thoseassessments.

LAND-USE, PROPERTY RIGHTS, AND THE ENVIRONMENT

HB 706 - Natural Resources Forest Preservation Act of 2013STATUS: PASSED - Effective October 1, 2013Establishes a 40% goal for forest canopy in Maryland but does not mandate a compliance timetable.The bill also directs the Department of Natural Resources to create a forest resource inventory, and toprovide technical assistance and guidance to local governments. The bill provides some limitedexemptions from the act for activities related to stream restorations and projects in high growth areaswith significant impervious surfaces.

HB 769/SB 750 - Public Safety - Maryland Building Performance Standards - Local Wind Designand Wind-Born Debris StandardsSTATUS: PASSED - Effective October 1,2013Prohibits local governments from enacting changes to the Maryland Building Performance Standards(MBPS) that weaken wind design and wind-borne debris standards.

HB 800/SB 524 - Wetlands and Riparian Rights - Licenses and Permits for Nonwater-DependentProjects on State or Private WetlandsSTATUS: PASSED - Effective July 1, 2013

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Establishes a permit and fee for nonwater-dependent projects located on piers over private and statewetlands. The permit allows limited commercial activity on piers in conjunction with an establishedbusiness. The fee is based on a percentage of the business's current property tax bill.

PROPERTY MANAGEMENT

HB 1090/SB 849 - Public Utilities - Consumer Relations - Tenant Payment of Landlord UtilityBillsSTATUS: PASSED - Effective January 1, 2014Gives tenants, except those receiving service from an electric cooperative, the ability to create a serviceaccount in their own name when faced with termination of service because the landlord failed to pay thebill. The bill applies only to tenants receiving service through a single meter to a single dwelling unit.If the tenant establishes an account, the tenant may not be billed for utility service by the landlord.

HB 1279/SB 902 - Statewide Building Codes - Maryland Accessibility CodeSTATUS: PASSED - Effective October 1, 2013Gives tenants a private right of action against a building owner if the building does not meetaccessibility requirements. The bill does not change a tenant's current right to sue under the Americanswith Disabilities Act or Section 504 of the Federal Rehabilitation Act of 1973. Before initiating a lawsuit, a tenant must give a building owner 30 days to propose a compliance plan.

HB 1413/SB 969 - Public Safety - Fire Protection and Prevention - Residential Smoke AlarmsSTATUS: PASSED - Effective July 1,2013Requires landlords of one and two-dwelling units to upgrade battery smoke detectors to new, ten-yearbattery, sealed units at change of occupancy or when those systems are ten years old or malfunction.For buildings with more than two units, the legislation states that it is the responsibility of the occupantto test the smoke alarms and notify the landlord, and that it is the responsibility of the landlord to replaceor repair the smoke alarm.

MISCELLANEOUS

SB 829 - Transportation Trust Fund - Financing - Use of FundsSTATUS: PASSED - Effective when approved by Maryland Voters in the 2014 ElectionProposes an amendment to the Maryland Constitution prohibiting the use of the transportation trust fundfor other purposes. The amendment requires the Governor to declare a fiscal emergency in order todivert money from the Transportation Trust Fund, and requires the diversion to be approved by a three-fifths vote of the House and Senate.

Source: Maryland Association of Realtors - Legislative Summaries 2012-2013

* Indicates a bill that has been signed by the Governor. All other bills listed have been passed by the Maryland GeneralAssembly and await the Governor's signature to take effect.

"Defeated" indicates bills opposed by MAR. ''Not Passed" indicates bills that either MAR did not oppose or bills that MARopposed but which did not receive a vote.

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