Bulletin: MD2016003

Dear Associates:

This Bulletin is a summary of relevant legislative changes made at the state and county levels that may affect your business.

I. MARYLAND COUNTIES

MONTGOMERTY COUNTY RECORDATION TAX:

• Expedited Bill No. 15-16, Effective 9/1/2016:
  • The tax rate is $4.45 for each $500 of consideration payable on the secured debt, ($8.90 per $1,000) including mortgages or deeds of trust assumed by the grantee;
  • If the consideration payable or principal amount of the debt is over $500,000, the tax rate increases to $6.75 for each $500 over $500,000 ($13.50 per $1,000).
  • The first $100,000 of consideration payable on any owner-occupied property is exempt from recordation tax if the buyer is an individual and intends to use the property as his/her principal residence for at least 7 out of the first 12 months after the property is conveyed.

CHARLES COUNTY TRANSFER TAX:

• Bill 2016-03, Effective 7/1/2016:
  This changes who collects the county tax on transfers of real property from the Clerk of the Circuit Court to the Treasurer of Charles County.

II. MARYLAND LEGISLATURE

This was a relatively quiet year at the Maryland legislature, with one major change that affects the title insurance industry: SB 509/HB 920: REAL PROPERTY – ACTIONS TO QUIET TITLE was passed and signed by the Governor, with an effective date of 10/1/2016. It does the following:

Authorizing a specified action to be brought to establish title against adverse claims to property; providing for venue and the application of the Maryland Rules in an action under the Act; establishing requirements for a complaint, an answer to a complaint, naming of defendants, joinder of parties, and service of process in an action under the Act; requiring the complaint and statement be sent by certified mail, return receipt requested, and by first class mail to the holder in a specified manner; etc.

Other new legislation of note includes:

PROPERTY TAX CREDITS:

• SB 552 (Chap. 558) / HB 146 (Chap. 559): PROPERTY TAX CREDIT – DISABLED OR FALLEN LAW ENFORCEMENT OFFICERS AND RESCUE WORKERS AND PUBLIC SAFETY OFFICERS
  Tax credits to certain Baltimore City and Harford County police/sheriff/fire officers who work and live in these jurisdictions. Effective 4/7/2016.

• SB 47 (Chap. 42): ANNE ARUNDEL COUNTY – PROPERTY TAX CREDIT – benefit corporations – BENEFIT LLC 
  Allows Anne Arundel County and municipal governments within the county to grant real/personal property tax credits for property owned by “Benefit Corps/LLC”. Effective 6/1/2016.

• SB 227 (Chap. 362) / HB 790 (Chap. 363): WASHINGTON COUNTY – PROPERTY TAX CREDIT – DISABLED VETERANS 
  Allows Washington County to grant disabled veterans tax credits on their dwellings. Effective 6/1/2016.

• HB 366 (Chap. 102): ANNE ARUNDEL COUNTY – PROPERTY TAX CREDIT – BLIND INDIVIDUALS
  Anne Arundel County and local county governments may grant a tax credit on the first $15,000 of property assessments. Effective June 1, 2016.

• HB 898 (Chap. 498): PROPERTY TAX CREDIT – ELDERLY INDIVIDUALS AND VETERANS
  Permits tax credits to individuals who are at least 65 years old, have occupied the same dwelling for at least the preceding 40 years, or are retired from the U S armed forces. Effective 6/1/2016.

• HB 69 (Chap. 473): PERSONAL PROPERTY TAX – CREDIT FOR NEW OR SMALL BUSINESS
  Permits local governments to grant personal property tax credit up to 50% for businesses that have been in operation for less than 2 years or have less than 15 employees. Effective 7/1/2016.

• HB 36 (Chap. 607): REBUILDING BALTIMORE CITY COMMUNITIES ACT OF 2016
  Requires Baltimore City to grant property tax credit to qualified owners of property located in any community that has a vacant dwelling rate of at least 35% for each of the prior 3 years. Effective 10/1/2016.

PROPERTY TAX DEFERRALS:

• SB 256 (Chap. 368) / HB 1017 (Chap. 369): PRINCE GEORGE’S COUNTY - PROPERTY TAX DEFERRALS – ELDERLY AND DISABLED HOMEOWNERS
  For P.G. County homeowners who are >70 years old years old and have lived in the property for 5 consecutive years. A lien shall attach for all deferred taxes and interest (up to 4%). The County shall authorize the deferral by a written agreement that shall be recorded in the land records. Effective 6/1/2016.

• SB 8 (Chap. 327) / HB 37 (Chap. 328): ANNE ARUNDEL COUNTY – PROPERTY TAX DEFERRALS – PAYMENT DUE DATES
  Changes Anne Arundel County methods for deferral of payments for real property taxes.  Effective 6/1/2016.

SPECIAL TAXING DISTRICTS:

• SB 141 (Chap. 353) / HB 602 (Chap. 354): ANNE ARUNDEL COUNTY – SPECIAL TAXING DISTRICTS – WATER OR WASTEWATER SERVICES
  Permits Anne Arundel County to establish, modify, or abolish special taxing districts to provide/expand water or wastewater services. Effective 7/1/2016.

TAX SALES:

• SB 591 (Chap. 565) / HB 970 (Chap. 566): TAX SALES – CONDOMINIUM ASSESSMENTS AND HOMEOWNERS ASSOCIATION FEES
  Requires notice of action to foreclose right of redemption to be sent to HOA and Condo associations; requires plaintiff to be liable for payment of assessments/fees incurred after date of judgment foreclosing right of redemption, and it is not a defense that the deed has not been recorded. Effective 7/1/2016.

BALTIMORE CITY TAX SALES – GROUND RENTS:

• HB 385 (Chap. 484): BALTIMORE CITY – ABANDONED PROPERTY – TAX SALES – GROUND RENT
  If an abandoned property is either a vacant lot or an improved property that is cited as vacant and unfit for human habitation and is subject to a ground rent, the property shall be sold as fee simple. Effective 7/1/2016.

TRUSTS:

• HB 541 (Chap. 270): MARYLAND TRUST ACT – REVOCABLE TRUST – PARTIAL REVOCATION BY DIVORCE OR ANNULMENT
  Specifies the effects of an absolute divorce or annulment upon the former spouses.  Effective 10/1/2016.

REAL ESTATE BROKER LICENSING FOR ATTORNEYS:

• HB 747 (Chap. 276): REAL ESTATE BROKERS – LICENSURE REQUIREMENT – EXEMPTION FOR LAWYERS
  Expands exemption from real estate broker licensure for attorneys authorized to practice law in Maryland to an attorney who provides real estate brokerage services while representing another person in the course of the lawyer’s regular practice of law.  Effective 10/1/2016.

RESIDENTIAL REAL ESTATE CONTRACTS:

• HB 989 (Chap. 638): RESIDENTIAL REAL PROPERTY – SALES CONTRACTS – NOTICE OF WATER AND SEWER CHARGES
  Amends Real Property Art. 14-117 Disclosure of Deferred Water/Sewer Fees to require disclosures to purchasers of availability of a plan to benefit the property, whether deferred charges affect the property, and seller liability for failure to disclose. Effective 10/1/2016.

CONDOMINIUM DISCLOSURES:

• HB 1192 (Chap. 735): REAL PROPERTY – CONDOMINIUM AND HOAs – RESALES – DISCLOSURES AND FEES
  Describes information to be included in condo/HOA resale certificates, and caps the allowable fee for the certificate at $250; up to $100 for inspections; expediting fees of $50 for 14 day delivery and $100 for 7 day delivery. Fees to be reviewed every 2 years. Effective 10/1/2016.

COLLECTION OF FEES:

• HB 831 (Chap. 279): WASHINGTON COUNTY – COLLECTION OF FEES – CHARGES, PENALTIES AND ASSESSMENTS
  For purpose of collection, Washington County may include unpaid allocation fees, water charges, sewer charges, penalties, and assessments on the annual tax bill of a property – these shall be collected in the same manner as ordinary taxes. Effective 0/1/2016.

AGRICULTURAL LAND TRANSFER TAX:

• SB 306 (Chap. 372) / HB 833 (Chap. 373): AGRICULTURAL LAND TRANSFER TAX – CALCULATION
  Creates a new definition for “Total Rate of Tax” under Sec.13-303(d): TOTAL RATE OF TAX IMPOSED FOR THE AGRICULTURAL LAND TRANSFER TAX UNDER SEC. 13-303(d) PLUS THE RATE OF TAX FOR A COUNTY TRANSFER TAX IMPOSED UNDER THIS SECTION.
  Note: This resulted from a Montgomery County case (Montgomery County vs. Jean K. Phillips 445 Md. 55; 124 A3rd 188) wherein the County was required to refund the local Ag. Tax surcharge it had collected on the transfer of a farm. According to the bill’s “Fiscal Note,” you can expect Ag. Taxes to rise significantly. Effective 6/1/2016.

CONSUMER PROTECTION OF THE ELDERLY:

• HB 718 (Chap. 114): CONSUMER PROTECTION – ASSET RECOVERY FOR EXPLOITED SENIORS ACT
  A person may not knowingly and willfully obtain by deception, intimidation or undue influence the property on an individual that the person knows or should reasonably know is a “vulnerable” adult with intent to deprive the individual of their property. Provides for criminal and civil penalties including restitution of the property (real and/or personal). Effective 7/1/2016.

MARYLAND FIDUCIARY ACCESS TO DIGITAL ASSETS ACT: 

• SB 239 (Chap. 364) / HB 507 (Chap. 365): MARYLAND FIDUCIARY ACCESS TO DIGITAL ASSETS ACT
  Creates Subtitle 6 of the Estates and Trust Article – MARYLAND FIDUCIARY ACCESS TO DIGITAL ASSETS ACT. This modifies/limits/supersedes the Electronic Signatures in Global and National Signatures Act. It applies to Fiduciaries/Agents/Personal Reps/Guardians/Trustees. This is a modified version of a proposed Uniform Law UFADAA – which by 2015 – had only been adopted by Delaware, but was being considered by 14 other states. Effective 10/1/2016.
  Note: The Maryland Uniform Power of Attorney form has been modified to add a paragraph incorporating this bill.

CONVERSION OF SENIOR APARTMENTS:

• SB 241 (Chap. 543): REAL PROPERTY – SENIOR APARTMENT FACILITIIES – CONVERSION
  At least 180 days before converting a senior apartment facility to an apartment facility for general population, the landlord shall notify each tenant of the conversion. Effective 10/1/2016.

STUDENT AND RESIDENTIAL MORTGAGE LOANS:

• SB 381 (Chap. 146): HOUSING & COMMUNITY DEVELOPMENT – COMMUNITY DEVELOPMENT ADMINISTRATION – STUDENT AND RESIDENTIAL MORTGAGE LOANS
  Allows CDA to originate and/or purchase loans to homeowners for purchasing a primary residence and making payments on the homeowner’s student loan debt OR making payments on homeowner’s student loan debt in conjunction with homeowner obtaining separate financial assistance from a source other than CDA for purchasing a primary residence OR purchasing a primary residence and obtaining separate financial assistance from the CDA for making payments on the homeowner’s student loan debt. In providing such loans, CDA shall give priority to selling residential property that is owned by CDA. Effective 7/1/2016.

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