Maryland Legislative Update 2022 UPDATED FOR 2023.docx

Maryland Real Estate Legislative Update 2021-22 Purpose of Maryland Real Estate Legislation The purpose of Maryland real estate legislation laws is to regulate and govern the real estate industry in Maryland. These laws establish the legal framework for real estate transactions, licensing requirements for real estate professionals, and consumer protections for buyers and sellers. The laws also promote fair and ethical business practices in the industry. Maryland real estate legislation laws cover a wide range of topics, including but not limited to: licensing and education requirements for real estate professionals requirements for real estate transactions and contracts regulations regarding the handling of client funds fair housing laws and anti-discrimination measures property management laws environmental regulations disclosure requirements for real estate transactions. Maryland has specific laws and regulations pertaining to real estate and property management, which are intended to ensure fair and ethical practices in the industry and protect the rights of landlords and tenants. These laws cover a wide range of areas, including rental agreements, security deposits, lease termination, landlord and tenant obligations, record-keeping, property transfer, and zoning requirements. One important aspect of Maryland real estate legislation laws is the requirement that certain real estate documents, such as deeds, mortgages, and deeds of trust, must be accompanied by a certificate of preparation signed by either an attorney or a party to the instrument. The purpose of this requirement is to ensure that these documents are legally valid and properly executed. In addition, the Maryland General Assembly regularly updates its real estate laws to keep pace with changing trends and priorities. For example, in 2020, Senate Bill 618 was passed to delay the requirement that certain annual tests on an elevator in a privately owned building be performed in the physical presence of a licensed third-party qualified elevator inspector. Overall, the purpose of Maryland real estate legislation laws is to establish clear standards and procedures for the buying, selling, and management of real estate, while protecting the interests of all parties involved. By establishing a clear legal framework for the real estate industry in Maryland, these laws help to protect consumers and promote the integrity of the real estate market. Real estate professionals must be knowledgeable and compliant with these laws in order to operate legally and ethically in the state of Maryland. Maryland real estate legislation laws provide better disclosures, market rate appraisals of the property, and the opportunity to purchase the property. They also allow title companies to pay compensation to real estate licensees on behalf of the real estate. These laws include other measures such as "Pay At The Table" and Continuing Education Affidavit Bills. Maryland State Bar Association advocates for third-party financing of legal services in real property law. Restrictions are enforceable with respect to servient land both at law and in equity if they are not granted for the benefit of any dominant tract of land. What is the Difference Between HB and SB? HB stands for House Bill, while SB stands for Senate Bill. These are both types of legislation that can be introduced in a state legislative body such as the Maryland General Assembly. A House Bill (HB) is a proposal for a law introduced by a member of the House of Delegates, which is the lower house of the Maryland General Assembly. A Senate Bill (SB) is a proposal for a law introduced by a member of the Maryland Senate, which is the upper house of the Maryland General Assembly. Both types of bills must be passed by both the House of Delegates and the Maryland Senate, and then signed by the governor, in order to become law. Summary 2021 Real Estate Legislation AFFORDABLE HOUSING AND TAXES HB 90/SB 687 – State and Local Housing Programs – Affirmatively Furthering Fair Housing STATUS: PASSED – Effective October 1, 2021 with reports due no later than December 1, 2023 Directs DHCD and local governments to report every 5 years on their efforts to promote fair housing choice and racial and economic integration, as required by the United States Housing and Urban Development (HUD) Agency under the Affirmatively Furthering Fair Housing Rule (AFFH). Directs DHCD to assess their programs under the AFFH. Directs local government to include a local assessment of fair housing efforts in the housing element of their comprehensive plans starting on January 1, 2023. HB 90/SB 687 is a new law that passed and went into effect on October 1, 2021. The law requires the Maryland Department of Housing and Community Development (DHCD) and local governments to report every 5 years on their efforts to promote fair housing choice and racial and economic integration. This is in accordance with the Affirmatively Furthering Fair Housing Rule (AFFH) set by the United States Housing and Urban Development (HUD) Agency. DHCD is responsible for assessing their own programs under AFFH, while local governments are required to include a local assessment of fair housing efforts in the housing element of their comprehensive plans starting on January 1, 2023. The reports are due no later than December 1, 2023. HB 97/SB 66 – Department of Housing and Community Development – Office of Statewide Broadband – Established (Digital Connectivity Act of 2021) STATUS: PASSED – Effective April 13th, 2021 Creates a statewide office with the goal of having 98% of Maryland households connected to fast internet by January1, 2026. The Department will work to put together a plan by July 1, 2022, monitor implementation and establish a fund to assist in expanding broadband by offering a capacity building grant program to local government and nonprofits. Finally, $300 million of federal CARES Act has been designated for broadband expansion in Maryland. HB 97/SB 66 is a new law that passed and went into effect on April 13th, 2021. The law creates a new office, the Office of Statewide Broadband, whose goal is to connect 98% of households in Maryland to fast internet by January 1, 2026. The Department of Housing and Community Development (DHCD) is responsible for establishing this office and putting together a plan by July 1, 2022. The DHCD will also monitor the implementation of this plan and establish a fund to help expand broadband. This fund will offer a capacity building grant program to local governments and nonprofits. In addition, $300 million of federal CARES Act funding has been designated for broadband expansion in Maryland. Overall, the law aims to improve digital connectivity across the state and bridge the digital divide. HB 252 – Tax Sales – Owner-Occupied Residential Property STATUS: PASSED – Effective June 1, 2021 for a period of 2 years and 1 month. At the end of June 30, 2023, the law would expire. Authorizes local governments to withhold owner-occupied residential property from a tax sale.HB 252 is a new law that passed and went into effect on June 1, 2021. It allows local governments to hold off on selling residential property if it is owned and occupied by the homeowner. This means that if a homeowner falls behind on their property taxes, the local government can choose not to sell their home in a tax sale. This new law will be in effect for two years and one month, until June 30, 2023, when it will expire. The goal of this law is to protect homeowners from losing their homes due to unpaid property taxes. HB 815 – State Agricultural Land Transfer Tax – Application of Nonagricultural Use Reduction and Exemption STATUS: PASSED – Effective June 1, 2021 Clarifies that agricultural transfer tax rate changes passed in 2019 (increasing the tax), are not applied to agriculture real estate transactions in which the contract was signed prior to the effective date of the bill but the settlement took place after the effective date. The bill applies the prior tax rates in those cases. Transactions that occurred during this time may apply for a tax refund. In simple terms, HB 815 is a bill that clarifies a change in the agricultural transfer tax rates that were passed in 2019. The bill makes it clear that the new tax rates (which increased the tax) will not be applied to real estate transactions involving agriculture if the contract was signed before the effective date of the bill but the settlement took place after. Instead, the old tax rates will be applied in those cases. People who paid the new tax rates during this time can apply for a tax refund. HB 852 – Property Tax – Tax Sales – Homeowner Protection Program STATUS: PASSED – Effective July 1, 2022 Local tax collector must withhold from tax sale a homeowner registered for the Homeowner Protection Program. A homeowner with a primary residence valued at $300,000 or less and a combined household income of $60,000 or less may be eligible to apply for the protection program. An approved applicant may participate in the program for up to 3 years during which time an ombudsman will work with the homeowner to place him/her on a more sustainable path. In simple terms, HB 852 means that starting July 1, 2022, if a homeowner has registered for the Homeowner Protection Program and meets certain eligibility requirements, the local tax collector cannot include their property in a tax sale. To be eligible for the program, the homeowner must have a primary residence valued at $300,000 or less and a combined household income of $60,000 or less. If the homeowner is approved for the program, they can participate for up to 3 years during which time an ombudsman will work with them to help them manage their finances and stay in their home. HB 1178 – Income Tax – Subtraction Modification – First-Time Homebuyer Savings Accounts STATUS: PASSED – Effective July 1, 2021 for tax years starting after December 31, 2020. Bestows upon first-time homebuyers (who have not owned a home in Maryland in the last 7 years) the ability to contribute up to $5,000 per year tax-free (state taxes) a year, up to 50,000 total. The money can be used for any down payment or closing costs listed on the settlement sheet. The accounts may only be created by the first-time buyer (does not allow a third-party like a parent to create an account for a child). HB 1178 is a new law that allows first-time homebuyers in Maryland (who haven't owned a home in the state in the last 7 years) to open a savings account specifically for buying their first home. They can contribute up to $5,000 per year, tax-free, and up to a total of $50,000. The money saved in the account can be used for down payments or closing costs when buying a home. Only the first-time buyer can open the account, and not a third-party like a parent. HB 1239/SB 859 – Department of Housing and Community Development – Appraisal Gap from Historic Redlining Financial Assistance Program – Establishment STATUS: PASSED – Effective July 1, 2021 Directs the Department of Housing and Community Development (DHCD) to study whether there is discrimination in real estate financing, appraisals and community investments and report back to the Legislature. The bill also creates a grant program for builders who build or remodel property in lowincome areas where the sales price of the home is unlikely to cover the cost of construction or rehabilitation. Qualified property (residential property: in a low-income census track; in a state designated sustainable community; or with an affordable sales price) may qualify for financial assistance (most likely a grant – it prohibits loans) that does not exceed the lesser of 35% of the total cost of eligible construction expenses or 80% of the national median sale price for new homes. HB 1239/SB 859 is a law that creates a program to help builders who want to build or improve homes in low-income areas where it may be hard to make a profit. The program provides financial assistance (likely in the form of a grant, not a loan) to help cover construction costs. To qualify for this assistance, the property must be in a low-income area, a state designated sustainable community, or have an affordable sales price. Additionally, the law requires the Department of Housing and Community Development to study whether there is discrimination in real estate financing, appraisals, and community investments and report back to the Legislature. HB 1328/SB 824 – Economic Development – Broadband Providers – Joint Trenching and Fee (Building Out Broadband Act of 2021) STATUS: PASSED – Effective July 1, 2021 Authorizes local counties to expedite infrastructure projects extending broadband, waive fees and engage in region wide efforts. (Does not apply to local governments in the Washington Suburban Sanitary Commission District). Requires state highway projects to permit joint trenching of broadband infrastructure when a road is opened up for unrelated construction. This section of the bill takes effect on January 1, 2022. This law allows counties to make it easier and cheaper for companies to build broadband internet infrastructure by sharing trenches and waiving fees. It also requires state highway projects to allow broadband infrastructure to be installed when roads are being built or repaired. This law will come into effect from July 1, 2021, except for the part about state highway projects, which will come into effect on January 1, 2022. SB 787 – Digital Advertising Gross Revenues, Income, Sales and Use, and Tobacco Taxes – Alterations and Implementation STATUS: PASSED – Effective Upon Signature of the Governor Clarifies that certain professional instruction (like “Zoom” continuing education classes) are not subject to the Maryland sales tax imposed on digital products. Also, clarifies other provisions of tax law, including that the digital advertising tax may not be passed down onto customer through a separate fee. SB 787 is a bill that clarifies certain tax laws related to digital products and advertising. The bill specifies that certain professional instruction services like online continuing education classes are not subject to sales tax in Maryland. It also clarifies that the digital advertising tax cannot be passed down to customers through a separate fee. The bill is effective as soon as the Governor signs it. REAL ESTATE BROKERAGE AND CONTRACTS HB 19 – Residential Real Estate Transactions – Escrow Agents and Trust Money STATUS: PASSED – Effective October 1, 2021 Clarifies the definition of trust money under the law to ensure that only the earnest money held by escrow agent for the down payment is subject to the required disclosure and not other possible escrows (e.g. holding money to repair a window). The law further clarifies that the disclosure applies to residential property (including unimproved property zoned residential) and not commercial property. HB 19 is a new law that became effective on October 1, 2021. The law clarifies that when a buyer puts down money to buy a house, only that money needs to be disclosed as "trust money" by the escrow agent. This law also makes it clear that this disclosure rule only applies to residential properties, not commercial ones. The law is intended to prevent confusion and make real estate transactions clearer for all parties involved. HB 384/SB 474/ – Real Property – Sale of Mobile Home Parks – Notice Requirements STATUS: PASSED – Effective October 1, 2021 A mobile home park owner must notify the park residents of an impending sale of the entire mobile home park at least 30 days before the sale. This new law says that if the owner of a mobile home park is going to sell the whole park, they must let the people who live in the park know about the sale at least 30 days before it happens. HB 399 – Real Property – Required Notice for Contracts of Sale- Zones of Dewatering Influence STATUS: PASSED – Effective October 1, 2021 Requires a notice to purchasers in Maryland real estate contracts that the property they are considering is located is a zone of dewatering influence. State zones of dewatering influence cover Baltimore, Carroll, Frederick, and Washington Counties. Zones of dewatering influence are susceptible to the formation of sinkholes and an owner of property in these areas is eligible for certain remedies under law. Additionally, a buyer may add additional insurance on the property to protect against potential damage. If the information is not provided in the contract, the buyer will have a 5- day period to rescind the contract and have the deposit money returned. Does not exempt commercial real estate contracts. HB 399 requires that buyers of real estate property in certain areas of Maryland (Baltimore, Carroll, Frederick, and Washington Counties) be informed in the contract that the property is located in a zone of dewatering influence. These zones are susceptible to sinkholes, and the law provides remedies for property owners in these areas. Buyers will have a 5-day period to rescind the contract and have the deposit money returned if this information is not provided in the contract. The law does not exempt commercial real estate contracts. HB 610 – Homeowner’s Property Tax Credit – Eligibility of Surviving Family Member STATUS: PASSED – Effective July 1, 2021 Requires a residential real estate contract to include a paragraph informing the buyer about the Homestead Tax Credit and a web address to information about it. The contract must state “If you plan to live in this home as your principal residence, you may qualify for the homestead property tax credit. The homestead property tax credit may significantly reduce the amount of property taxes you owe.” The bill also requires an information brochure for the credit to be presented at the real estate settlement. Also clarifies for purposes of the Homeowner’s Tax Credit (different than the Homestead Tax Credit) that an eligible homeowner can include a surviving family member (related by blood, adoption, or marriage) as dictated by the terms of a will, trust, non-probate instrument of writing, or the laws of intestate succession. The Homeowner’s Tax Credit is only available for homeowners if their property is valued at $300,000 or less and the homeowner’s combined net worth is no more than $200,000 and their income is no more than $60,000. This bill has two parts. First, it requires that when you buy a home, the contract you sign must tell you about a tax credit called the Homestead Tax Credit, which can lower your property taxes if you live in the home as your main residence. It also requires that you receive an information brochure about this credit at the time you buy the home. Second, the bill clarifies that for the Homeowner's Tax Credit, a family member can be eligible if the homeowner passes away and has specified in their will or other legal document that the family member should receive the tax credit. This tax credit is only available for homeowners whose property is valued at $300,000 or less, and their combined net worth is no more than $200,000, and their income is no more than $60,000. HB 1213 – Financial Institutions – Determination of Creditworthiness – Evaluation Rules and Alternative Methods “STATUS: PASSED – Effective October 1, 2021 Directs lenders when considering whether to accept an application for a primary residential mortgage loan to include consideration of verifiable indications of creditworthiness, such as: history of rent or mortgage payments; history of utility payments; school attendance; work attendance; and other verifiable indications requested by the applicant. The bill would subject all loans to the federal requirements prohibiting discrimination in lending as well.” This new law, HB 1213, requires lenders to consider additional factors when deciding whether to approve someone's application for a home loan. In addition to the traditional creditworthiness factors like credit score and income, lenders must now also consider other verifiable indications of creditworthiness. These can include things like the applicant's history of rent or mortgage payments, utility payments, school attendance, work attendance, and any other verifiable indications requested by the applicant. The law also ensures that all loans are subject to federal requirements that prohibit discrimination in lending. This means that lenders cannot discriminate against applicants based on factors such as race, gender, or religion. The law aims to provide a fair and inclusive process for evaluating creditworthiness in mortgage loan applications. COMMON OWNERSHIP COMMUNITIES HB 110/SB 144 – Electric Vehicle Recharging Equipment for Multifamily Units Act “STATUS: PASSED – Effective October 1, 2021 A Homeowner’s Association or Condominium bylaw that unreasonably prohibits the installation or use of vehicle recharging equipment in a parking space designated for an owner is void and unenforceable. The unit owner bears the cost of installing and maintaining the equipment as well as the cost of the power.” This new law, HB 110/SB 144, allows residents of multifamily units (such as condos or apartments) to install and use electric vehicle recharging equipment in their designated parking spaces. If a Homeowner's Association or Condominium bylaw unreasonably prohibits the installation or use of this equipment, the bylaw is considered invalid and cannot be enforced. The unit owner is responsible for the cost of installing and maintaining the recharging equipment, as well as the cost of the electricity used. This law aims to promote the adoption of electric vehicles and provide residents of multifamily units with the ability to conveniently charge their electric vehicles at home. HB 248 – Condominiums and Homeowners Associations – Rights and Restrictions – Composting “STATUS: PASSED – Effective October 1, 2021 Clarifies that a recorded covenant or restriction (typical in a homeowner’s association or condominium regime) may not unreasonably restrict a dwelling unit owner from contracting with a private entity to collect organic waste materials for composting.” This new law, HB 248, clarifies that certain restrictions or rules imposed by homeowner's associations or condominiums cannot unreasonably limit a homeowner's ability to hire a private company to collect organic waste materials for composting. In other words, if there is a recorded covenant or restriction in place that restricts or prohibits composting, it cannot be enforced if it is deemed unreasonable. This law ensures that homeowners have the freedom to make environmentally friendly choices and engage in composting practices without unnecessary restrictions imposed by their associations or condominiums. It promotes sustainable practices and allows homeowners to take part in composting to reduce waste and benefit the environment. HB 593/SB 535 – Condominiums and Homeowners Associations – Meeting Requirements “STATUS: PASSED – Effective October 1, 2021 Sets forth a specific process when a Board of Directors meeting is called by an HOA or Condominium and a quorum is not present. The bill permits another meeting to be called within 15 days of that meeting as long as proper notice is provided.” This new law, HB 593/SB 535, outlines a process for situations where a Board of Directors meeting is scheduled by a homeowner's association (HOA) or condominium, but the required number of members (quorum) is not present. In such cases, the law allows for another meeting to be called within 15 days of the original meeting date, as long as proper notice is given to all members. This provision ensures that important decisions or discussions that require a quorum can still take place by providing an opportunity for a subsequent meeting to be scheduled promptly. It helps ensure the efficient functioning and decision-making of HOAs and condominiums while allowing for necessary flexibility in cases where a quorum is not initially met. HB 1023/SB 686 – Real Property – Condominiums, Homeowners Associations, and Cooperative Housing Corporations – Virtual Meetings “STATUS: PASSED – Effective June 1, 2021 Notwithstanding the language in a Common Ownership Community’s governing documents, a board of directors may permit certain technology to be used for virtual meetings as long as all residents may participate” This new law, HB 1023/SB 686, allows condominiums, homeowners associations (HOAs), and cooperative housing corporations to conduct virtual meetings using technology, regardless of what is stated in their governing documents. The board of directors now has the authority to permit the use of specific technology platforms to facilitate virtual meetings. This means that residents can participate in meetings remotely, using tools like video conferencing, to attend and contribute to discussions and decision-making processes. The law ensures that all community members have the opportunity to participate in important meetings, even if they are unable to attend in person. It promotes inclusivity and flexibility in the operation of common ownership communities. LAND-USE, PROPERTY RIGHTS, AND THE ENVIRONMENT HB 322 – Real Property – Restrictions on Use – Low-impact Landscaping “STATUS: PASSED – Effective October 1, 2021 Prohibits the unreasonable restriction of low-impact landscaping such as rain gardens, habitat for wildlife and bees. Even a deed restriction, covenant, or other restriction (whether in a Common Ownership Community or not) may not prohibit such landscaping. The community may still set reasonable design and aesthetic guidelines, and an owner must maintain the property” This new law, HB 322, prevents the unreasonable restriction of low-impact landscaping practices on residential properties. Low-impact landscaping refers to environmentally friendly methods such as rain gardens, wildlife habitats, and spaces for bees. The law ensures that even if there are deed restrictions, covenants, or other restrictions in place, they cannot prohibit homeowners from implementing these types of landscaping features. However, communities can still establish reasonable guidelines for the design and aesthetics of the landscaping. It is also the responsibility of the property owner to properly maintain their landscaped areas. This law promotes sustainable and nature-friendly practices within residential communities while allowing for reasonable community standards. HB 407/SB 22 – On-Site Sewage Disposal Systems – Inspection – Licensing “STATUS: PASSED – Effective October 1, 2021 to establish the license Requires a state license for a Wastewater Property Transfer Inspection. The license is required for inspections after July 1, 2022. The Maryland Department of the Environment will develop the program requirements and cost for the license.” This new law, HB 407/SB 22, requires a state license for a Wastewater Property Transfer Inspection. The purpose of this license is to ensure that inspections of on-site sewage disposal systems (such as septic systems) are conducted properly and meet certain standards. The law specifies that the license will be required for inspections conducted after July 1, 2022. The Maryland Department of the Environment will be responsible for developing the requirements and cost associated with obtaining this license. By implementing this licensing system, the law aims to improve the quality and reliability of inspections for on-site sewage disposal systems during property transfers. PROPERTY MANAGEMENT HB 18/SB 154 – Landlord and Tenant – Residential Tenants – Right to Counsel “STATUS: PASSED – Effective October 1, 2021 Provides access to counsel for tenants who earn not more than 50% of the median income. Tenants may seek counsel in three situations: eviction for nonpayment of rent; eviction for holding over; and eviction for breach of lease. The bill also requires a 10-day notice to be provided to a tenant before a landlord may file an eviction in court (prior law required 5 days to pass before a landlord could file). The notice will be developed by the Courts and may be delivered by mail, posting, or electronically (if the tenant agrees to electronic communication).” This new law, HB 18/SB 154, grants residential tenants who earn up to 50% of the median income the right to access legal counsel. It ensures that tenants facing eviction for nonpayment of rent, holding over, or breach of lease can seek assistance from an attorney. Additionally, the law extends the notice period for eviction filings. Landlords are now required to provide tenants with a 10-day notice before initiating an eviction in court, whereas the previous law mandated a 5-day notice. The specific format of the notice will be developed by the Courts and can be delivered through various methods such as mail, posting, or electronically (if the tenant agrees to electronic communication). This law aims to protect tenants' rights and provide them with legal support during eviction proceedings. HB 104/SB 401 – Landlord-Tenant – Nonrenewal of Lease – Notice Requirements “STATUS: PASSED – Effective October 1, 2021 Extends from 30 days to 60 days the notice that must be given to a tenant when a landlord chooses not to renew a residential lease if the lease was for less than a year. The bill does not change the notice of 90 days for leases of a year or more and exempts small landlords (less than 5 units) from the extended 60-day period if the landlord is being foreclosed upon (the foreclosure exemption does not apply in Montgomery or Baltimore City where the local law already provided for a 60-day notice).” This new law, HB 104/SB 401, brings changes to the notice requirements for nonrenewal of residential leases. If a lease is for less than a year, landlords are now required to provide tenants with a 60-day notice instead of the previous 30-day notice period. However, for leases of one year or longer, the notice period remains at 90 days. It's important to note that small landlords with fewer than five units are exempt from the extended 60-day notice requirement if they are facing foreclosure. This exemption does not apply in Montgomery or Baltimore City, as the local laws in those areas already mandated a 60-day notice period for all landlords. The purpose of this law is to ensure that tenants have sufficient time to make alternative housing arrangements when their leases are not being renewed, while also considering the circumstances of small landlords. HB 861/SB 691 – Real Property – Landlord and Tenant – Reusable Tenant Screening Reports “STATUS: PASSED – Effective October 1, 2021 Provides that tenants may use “reusable” tenant screening reports if accepted by a landlord. If a landlord chooses to accept a “reusable” tenant screening report, the landlord may not charge a rental application fee. If a landlord chooses NOT to accept “reusable” tenant screening reports, the landlord must notify tenants that such reports are not accepted.” This new law, HB 861/SB 691, allows tenants to use "reusable" tenant screening reports when applying for a rental property, if the landlord agrees to accept them. A reusable tenant screening report is a comprehensive report that includes information about a tenant's rental history, creditworthiness, and background checks. If a landlord agrees to accept a reusable tenant screening report, they are not allowed to charge a rental application fee. However, if a landlord decides not to accept reusable reports, they must inform tenants in advance that such reports will not be accepted. The purpose of this law is to streamline the rental application process and make it easier for tenants to provide their screening information without incurring additional fees. It gives tenants the option to use a reusable report, which can save them time and money when applying for multiple rental properties. HB 1069 – Water Supply – Private Well Safety Program “STATUS: PASSED Provides that residential rental property that uses well water must test the well water every three years. If a well is contaminated, the landlord is given three choices: providing a potable water source; remediating the contamination; or providing the tenant with the ability to terminate the lease. Landlords who fail to test their well are subject to a fine up to $1,000. The original bill would have established point-of-sale requirements for well testing, and a transfer tax increase to fund it.” This new law, HB 1069, focuses on the safety of private wells in residential rental properties. It requires landlords whose rental properties use well water to test the well water every three years. The purpose of this testing is to ensure that the well water is safe for tenants to use and consume. If the well water is found to be contaminated, the landlord has three options. They can either provide a different source of safe drinking water for the tenants, take steps to remediate the contamination and make the well water safe, or allow the tenant to terminate the lease if they prefer not to live in a property with contaminated water. Landlords who fail to comply with the testing requirement may face a fine of up to $1,000. It's important for landlords to fulfill their responsibility in regularly testing the well water to maintain a safe living environment for their tenants. It's worth noting that the original version of the bill included additional provisions such as point-of-sale requirements for well testing and an increase in transfer taxes to fund the program. However, those provisions were not included in the final version of the law. COMMERCIAL HB 719/SB 582 – Commercial Tenants – Personal Liability Clauses – Enforceability “STATUS: PASSED Specifies that a personal liability clause in a commercial lease (nonresidential) is unenforceable if the default occurred between March 23, 2020 and September 30, 2020, inclusive. The unenforceability extends only during the State of Emergency and for 180 days after the declared end of the emergency. Additionally, the tenant may stay the unenforceability only if the tenant was ordered to cease operations during that time or the business was not designated essential. Once the state of emergency is over along with the 180 extension, a commercial landlord may once again seek enforcement of the personal liability clause.” This new law, HB 719/SB 582, focuses on personal liability clauses in commercial leases. A personal liability clause is a provision that holds a tenant personally responsible for any lease obligations, such as rent payments or property damages. Under this law, if a default on lease obligations occurred between March 23, 2020, and September 30, 2020, inclusive, the personal liability clause in a commercial lease is unenforceable. This period coincides with the State of Emergency declared during the COVID-19 pandemic. The unenforceability of the personal liability clause continues throughout the State of Emergency and for an additional 180 days after the State of Emergency is officially declared over. However, there are certain conditions for the tenant to qualify for the unenforceability of the personal liability clause. The tenant must have been ordered to cease operations during the State of Emergency, or their business must not have been designated as essential. Once the State of Emergency and the 180-day extension have ended, a commercial landlord has the right to seek enforcement of the personal liability clause once again. This means that the tenant can be held personally liable for lease obligations as stated in the lease agreement. It's important to note that this law specifically applies to commercial leases (nonresidential) and the specified timeframe during the COVID-19 State of Emergency. Summary 2022 Real Estate Legislation AFFORDABLE HOUSING AND TAXES HB 69/SB 247 – State Department of Assessments and Taxation – Real Property “STATUS: PASSED -- Effective October 1, 2022 Requires the State Department of Assessments and Taxation (SDAT) to publish on its website a plain language description of the methodology used to determine property values. The bill also clarifies the type of information that an Appeals Authority may use when reviewing a property’s value including depreciation factors.” To better explain; HB 69/SB 247 is a law that passed in Maryland and becomes effective on October 1, 2022. It requires the State Department of Assessments and Taxation (SDAT) to put a clear and easy-to-understand explanation of how they calculate property values on their website. This law also makes it clear that when the Appeals Authority reviews a property's value, they can use certain information like depreciation factors. HB 108/SB 524 – Public Utilities – Energy Efficiency and Conservation Programs – Energy Performance Targets and Low-Income Housing “STATUS: PASSED – Effective July 1, 2022 Establishes a reduction target of 0.4% of gross energy savings per year for certain lower income individuals in Maryland. The bill charges the Department of Housing and Community Development (DHCD) to work with other agencies to plan and implement assistance programs to achieve these goals. There is also a task force created to help create the energy plan.” In simple terms, the law (HB 108/SB 524) requires the government to help people with low income in Maryland to save energy. The law sets a goal to reduce energy use by 0.4% each year for these individuals. The Department of Housing and Community Development will work with other government agencies to make programs that will help these individuals reach this goal. The law also creates a task force to make a plan to save energy. This law was passed and went into effect on July 1, 2022. Here's an example of how the HB 108/SB 524 legislation could impact a family: The Johnson family is a low-income family that lives in Maryland. They currently struggle to pay their energy bills each month, and often have to make sacrifices in order to keep their home warm in the winter and cool in the summer. However, with the passage of HB 108/SB 524, the state has established a reduction target of 0.4% of gross energy savings per year for certain lower-income individuals like the Johnsons. As a result of this legislation, the Department of Housing and Community Development (DHCD) has begun working with other agencies to plan and implement assistance programs to help families like the Johnsons reduce their energy consumption and lower their bills. For example, the DHCD may provide financial assistance to help the Johnsons replace their old, inefficient appliances with newer, more energy-efficient models. Additionally, a task force has been created to help create an energy plan that will further support the Johnsons and other low-income families in Maryland. The task force may recommend additional assistance programs, such as weatherization efforts or education on energy-efficient habits, that can help families save money on their energy bills and reduce their environmental impact. Overall, the passage of HB 108/SB 524 will have a positive impact on the Johnson family by helping them reduce their energy consumption and lower their bills, allowing them to allocate their limited resources to other essential expenses like food and healthcare. HB 203/SB 197—Homestead Property Tax Credit Program – Retroactive Qualification and Calculation of the Credit “STATUS: PASSED – Effective June 30, 2022 Would permit the State Department of Assessments and Taxation (SDAT) to apply the Homestead Property Tax Credit retroactively in situations where a homeowner failed to apply for the credit in the previous year.” Simply put, The Homestead Property Tax Credit Program is a program that gives tax relief to homeowners in Maryland. This law allows the State Department of Assessments and Taxation to apply the tax credit even if the homeowner didn't apply for it in the previous year. In other words, if a homeowner forgot to apply for the tax credit last year, they can still get the credit for that year with the help of this law. This law is effective from June 30, 2022. HB 204/SB 181 – Homeowners’ Property Tax Credit – Application Filing Deadline – Extension “STATUS: PASSED – Effective June 30, 2022 Similar to the previous bill, this would allow a homeowner to apply for the Homeowner Property Tax Credit (different than the Homestead tax credit) within 1 year after April 15th of the taxable year in which the credit was sought. Would apply to first-time applicants or applicants who have filed in each of the 3 taxable years immediately preceding the current year.” This bill extends the deadline for homeowners to apply for the Homeowner Property Tax Credit by one year. The new deadline is within one year after April 15th of the year for which the credit is being sought. This applies to first-time applicants or applicants who have filed for the credit in each of the three years before the current year. The Homeowner Property Tax Credit is different from the Homestead Property Tax Credit, which is covered by a separate bill. HB 449 – Property Tax- Renters’ Property Tax Relief Program – Application Period “STATUS: PASSED – Effective June 1, 2023 Permits renters who are over age 70 to apply retroactively for the Renters Tax Credit within 3 years of eligibility.” The Renters' Property Tax Relief Program helps people who rent their homes get some money back on their property taxes. A new law called HB 449 has been passed, which means that renters who are over 70 years old can now apply for this tax credit even if they missed the deadline. They can apply for this tax credit up to 3 years after they became eligible. HB 483 – Homeowners’ Property Tax Credit – Identification of Eligible Homeowners “STATUS: PASSED – Effective October 1, 2022 Requires the Comptroller to identify property owners who failed to file an income tax return in the last three years and may have been eligible for the Homestead Tax Credit. Once identified, the Comptroller shall inform the homeowner and help in applying for the credit.” HB 483 is a new law in Maryland that helps identify property owners who may be eligible for the Homestead Tax Credit. If a homeowner has not filed an income tax return for the last three years, the Comptroller is required to identify the homeowner as a potential candidate for the Homestead Tax Credit. After identifying the homeowner, the Comptroller will inform the homeowner and help them apply for the credit. This law will be effective starting October 1, 2022. HB 809/SB 976 – Property Tax Exemption – Disabled Veteran, Active Duty, and Surviving Spouse “STATUS: PASSED – Effective October 1, 2022 Establishes a process for eligible individuals to apply for the disabled veteran property tax exemption prior to purchase. This would allow a purchaser to have the benefit of the tax credit calculated in their loan payments and closing costs. The state is required to process the application within 15 days. The tax exemption applies only to 100% disabled veterans and their surviving spouses and applies to 100% of the state and local property tax.” This law allows disabled veterans, active duty military personnel, and their surviving spouses to apply for a property tax exemption before purchasing a home. This means that when they apply for a mortgage to buy a home, they can have the tax exemption factored into their loan payments and closing costs. The state has to process their application within 15 days. This tax exemption only applies to veterans who are 100% disabled and their surviving spouses, and it covers 100% of state and local property tax. HB 927/SB 744 – Housing and Community Development – Affordable Housing – Listing and Disposal of Excess Real Property “STATUS: PASSED – Effective June and October 2022 (different provisions have different effective dates) Allocates up to $30 million from the administrative income tax refund account controlled by the Comptroller to the Maryland Rental Housing Fund overseen by the Department of Housing and Community Development (DHCD). The bill also creates a process for reviewing excess or surplus state-owned property that may be suitable for conversion to workforce or affordable housing. The process allows the sale or donation of the property to either a nonprofit organization or developer.” This bill does a few things. Firstly, it takes up to $30 million from an account controlled by the Comptroller and gives it to the Maryland Rental Housing Fund overseen by the Department of Housing and Community Development. This money is meant to help make more affordable rental housing available. Secondly, the bill sets up a way to review state-owned property that isn't being used and might be good for affordable housing. If the property is suitable, it can be sold or given to either a nonprofit organization or a developer who wants to create affordable housing there. There are additional provisions in the bill. In addition to allocating funds to the Maryland Rental Housing Fund and creating a process for reviewing surplus state-owned property for affordable housing conversion, the bill also requires the DHCD to develop a plan for the use of the funds and to provide annual reports to the General Assembly. The bill also requires the DHCD to prioritize projects that serve households with incomes at or below 30% of the area median income, and to consult with local governments on the use of surplus property within their jurisdictions. HB 1186 – Property Tax Credit – Elderly Individuals, Veterans, and Surviving Spouses– Alterations “STATUS: PASSED – Effective June 1, 2022 Enables county governments to greatly expand a property tax credit to elderly, veterans and surviving spouses. The bill eliminates caps on how long the credit may be granted and how much the credit may exceed a property owner’s current tax liability.” HB 1186 is a bill that allows county governments to increase a property tax credit for elderly individuals, veterans, and surviving spouses. The bill removes limitations on how long the credit can be granted and how much it can exceed the property owner's current tax liability. This means that eligible individuals may receive a greater tax credit for a longer period of time, potentially resulting in significant savings on property taxes. The bill became effective on June 1, 2022. REAL ESTATE BROKERAGE AND CONTRACTS HB 268/SB 274 – Property Tax – Exemptions for Business Personal Property – Alterations “STATUS: PASSED – Effective June 1, 2022 for tax years starting after June 30, 2022 Increases the state tax exemption for personal business property from $10,000 to $20,000 and clarifies that the state may not collect personal property information from the taxpayer or require the taxpayer to submit a personal property tax return when using the exemption. Previous rules required the filing of a personal property tax return for any property over $2,500.” This new law will change the amount of personal business property tax exemption in the state. It means that businesses won't have to pay taxes on the first $20,000 worth of equipment and other business property they own, instead of the previous $10,000 limit. The law also states that the state cannot ask businesses to provide information on their personal property or ask them to file a tax return if they are claiming this exemption. So, let's say you own a small business and have equipment and machinery that you use to run your operations. Under the previous rules, you would have had to file a personal property tax return with the state for any individual piece of equipment that was valued at $2,500 or more. This could have been a time-consuming and potentially costly process for small business owners. With the new rules, the state tax exemption for personal business property has been increased to $20,000. This means that you would not have to file a personal property tax return for any equipment or machinery that is valued at less than $20,000. For example, if you have a piece of equipment that is valued at $15,000, you would not have to file a personal property tax return for that item. This could save you time and money in the long run. HB 568/SB 425 – Real Estate Associate Brokers and Salespersons – Compensation – Payment from Title Insurance Producer “STATUS: PASSED – Effective October 1, 2022 Clarifies that title companies may pay compensation to a real estate licensee on behalf of the real estate broker according to a written disbursement authorization provided by the real estate broker. The clarification seeks to continue “pay at the table” options provided by some real estate and title companies. Previously, the Real Estate Commission expressed concern over the statutory authority for such transactions which had been common for over 30 years.” This bill allows title companies to pay a commission to a real estate agent on behalf of a real estate broker as long as the broker gives written permission. This clarification is intended to continue the practice of some companies that allow for "pay at the table" options. The Real Estate Commission had previously expressed concerns over the legality of these transactions, which had been common for over 30 years. Let's say that you're a real estate agent and you have a client who is buying a house. As part of the homebuying process, your client needs to obtain title insurance, which is designed to protect them against any potential title issues that could arise with the property they're purchasing. In some cases, the title company providing the insurance may offer to pay a portion of your commission on behalf of the real estate broker you work for. This is known as "pay at the table" compensation, and it can help streamline the transaction process for everyone involved. With the passing of HB 568/SB 425, it's now clarified that title companies are allowed to offer this type of compensation, as long as the real estate broker has provided written authorization for the disbursement. This helps ensure that all parties involved are operating within the legal bounds of their respective industries. HB 663/SB 317 – State Government – Notarial Acts – Fees and Use of Communication Technology “STATUS: PASSED – Effective October 1, 2022 Increases the fees that notaries may charge based on whether the notarization was in person (maximum of $25) or remote (maximum of $50). The bill also clarifies that any remote notarization conducted during the Pandemic emergency order was valid. Finally, the bill clarifies certain procedures regarding remote notarizations including its application to wills and trusts and clarifying the process for remote ink notarizations.” HB 663/SB 317 increases the fees that notaries can charge for in-person and remote notarizations. In-person notarizations can now charge a maximum fee of $25, while remote notarizations can charge a maximum fee of $50. The bill also confirms that remote notarizations conducted during the pandemic emergency order were valid, and outlines procedures for remote notarizations for wills and trusts, as well as the process for remote ink notarizations. HB 777/SB 92 – Real Property – Partition of Property “STATUS: PASSED – Effective October 1, 2022 Provides additional protections to joint tenants whose property is being sold through a partition sale. The bill provides better disclosures, a market rate appraisal of the property, the opportunity to purchase the property and a requirement that if a partition sale is ordered, the sale would be a market sale using a real estate broker.” HB 777/SB 92 is a law that provides additional protections to joint tenants who own a property together that is being sold through a partition sale. A partition sale is when the court orders the sale of the property and the proceeds are divided among the joint tenants. Under this law, joint tenants will have better disclosures and a market rate appraisal of the property. They will also have the opportunity to purchase the property themselves. If a partition sale is ordered, the sale must be done at market value and through a real estate broker. These additional protections aim to ensure that joint tenants are treated fairly and receive the full value of their property in a partition sale. HB 807 – Real Estate Brokers, Salespersons, and Associate Brokers – Continuing Education Courses – Verification of Identity “STATUS – PASSED – Effective October 1, 2022 Establishes that Zoom-type continuing education classes may use a written affidavit to verify the identity of class participants rather than showing a picture I.D.” HB 807 is a law that affects continuing education courses for real estate brokers, salespersons, and associate brokers in Maryland. The law allows Zoom-type classes to use a written affidavit to verify the identity of class participants instead of requiring them to show a picture ID on video at the beginning the course. Tristar Academy has an easy upload system that has been shown and approved by the Maryland commission members. This proprietary system created by Tristar Academy allows class participants to upload their ID without needing to go through the trouble of filling out an affidavit. HB 1097 – Task Force on Property Appraisal and Valuation Equity “STATUS: PASSED – Effective June 1, 2022 Requires the Department of Housing and Community Development (DHCD) to oversee a Task Force on Property Appraisal and Valuation Equity. The Task Force would be required to include representatives from various real estate related businesses including REALTORS®. The Task Force must report its findings to the Governor and the General Assembly on or before October 31, 2023.” HB 1097 is a law that requires the Department of Housing and Community Development (DHCD) to create a Task Force on Property Appraisal and Valuation Equity. The task force will include representatives from various real estate-related businesses, including REALTORS®, and will examine issues related to property appraisal and valuation equity. The task force will report its findings to the Governor and the General Assembly by October 31, 2023. COMMON OWNERSHIP COMMUNITIES HB 107 – Cooperative Housing Corporations, Condominiums, and Homeowners Associations – Reserve Studies – Statewide “STATUS: PASSED -- Effective October 1, 2022 Expands the requirement for reserve studies to housing cooperatives, condominiums and homeowners associations outside of Montgomery and Prince George’s County. The first reserve study would need to be completed by October 1, 2023 and updated every 5 years.” The HB 107 bill passed and it will now require housing cooperatives, condominiums, and homeowners associations outside of Montgomery and Prince George's County to conduct reserve studies. The first reserve study is required to be completed by October 1, 2023, and then updated every 5 years thereafter. This is to ensure that these organizations have enough funds set aside to cover the cost of major repairs or replacements of shared property or infrastructure. HB 615 – Real Property -- Condominium and Homeowners Associations – Dispute Settlement “STATUS: PASSED – Effective October 1, 2022 Establishes a dispute resolution process for HOAs that is similar to the process for condos. It applies to complaints initiated after October 1, 2022 unless the bylaws state an alternative process. In general, the dispute settlement procedures establish that a violator of the bylaws must be given notice and time to correct the violation before fines may be imposed.” HB 615 is a new law that sets up a process for resolving disputes in homeowners associations (HOAs). This process is similar to the one that already exists for resolving disputes in condominiums. The law applies to any complaints made after October 1, 2022, unless the HOA's bylaws say they will use a different process. Under the new process, if someone violates the bylaws, they must be given notice and time to fix the problem before they can be fined. LAND-USE, PROPERTY RIGHTS, AND THE ENVIRONMENT HB 318 – Environment – On-Site Wastewater Services – Regulation “STATUS: PASSED – Effective July 1, 2022 Establishes the Board of On-Site Wastewater Professionals within the Maryland Department of Environment. The Board will regulate individuals engaged in most on-site wastewater services except for inspectors engaged during a property transfer. Property transfer inspectors are already regulated by MDE and must have a license to conduct inspections starting July 1, 2022.” HB 318 creates a board to regulate people who provide on-site wastewater services (like septic system installers and pumpers) in Maryland. This board will oversee most on-site wastewater services except for property transfer inspectors, who are already regulated by the Maryland Department of Environment (MDE) and will require a license to conduct inspections starting from July 1, 2022. The purpose of this regulation is to ensure that on-site wastewater services are done safely and correctly. HB 1200/SB 818 – Environment – Permit Applications – Environmental Justice Screening “STATUS: PASSED – Effective October 1, 2022 Creates an Environmental Justice (EJ) Score for projects seeking certain state permits. As introduced, the bill would have applied to all state permits. As passed, the bill applies to a limited number of state permits, including: air quality; landfills; incinerators; hazardous substances; water discharge permits; storage of sewage sludge; and storage of nuclear waste.” HB 1200/SB 818 is a new law that creates an Environmental Justice (EJ) Score for projects that apply for certain state permits. The EJ Score will help to identify and address any potential environmental impacts that may disproportionately affect low-income communities and communities of color. This law applies to a limited number of state permits, including those related to air quality, landfills, hazardous substances, and water discharge. SB 528 – Climate Solutions Now Act of 2022 “STATUS: PASSED – Effective Different sections have different effective dates but generally June 1, 2022 Establishes broad goals for Maryland to reach net-zero greenhouse gas emissions by 2045, including net-zero gas emissions for specified buildings by 2040. The bill also requires owners of affected buildings to measure and report emissions to the Maryland Department of Environment (MDE) beginning in 2025. The building requirements in the bill apply to commercial or multi-family residential buildings and state buildings that have a gross floor area of 35,000 square feet or more. The legislation permits buildings having trouble meeting the goals to pay a fee in lieu of meeting those requirements.” SB 528, also known as the Climate Solutions Now Act of 2022, is a law that sets broad goals for Maryland to achieve net-zero greenhouse gas emissions by 2045. It also requires buildings, including commercial and multi-family residential buildings, to report their greenhouse gas emissions to the Maryland Department of Environment starting in 2025. The bill sets a goal for certain buildings to reach net-zero greenhouse gas emissions by 2040. If a building has difficulty meeting the requirements, it may pay a fee instead of meeting the requirements. The law became effective on different dates, but generally on June 1, 2022. PROPERTY MANAGEMENT HB 86/SB 6 – Landlord and Tenant – Residential L

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