In recent alerts, we discussed some of the new laws passed by the Maryland Legislature that became effective on October 1, 2016. We have reviewed the significant changes to Agency Law, and also discussed the need for sellers to disclose private Front Foot Benefit Charges prior to finalizing a contract for the sale of residential real estate. We have also explored the requirement that sellers provide a radon test for purchasers (unless they elect not to do so, but see our previous alert for an analysis of that confusing law). In addition to those three major changes in the law, there were also a number of less well known new laws that also have an impact on the real estate industry.
One of the problems addressed by the legislature was the often excessive fees charged by Homeowner and Condominium Associations for providing a Resale Package. The legislation sets the maximum fee at $250 for most Resale Packages. However, if the information is required on less than two weeks’ notice, the association may charge an additional $50 or $100 for a turnaround time less than 7 days. In addition, the associations may charge up to a $100 inspection fee. In most cases, sellers will probably pay a surcharge to expedite the needed documents.
In recent years, the Real Estate Commission required every agent to confirm the licensing status of any “service provider” which the agent recommended, give an electronic link to the licensing recording information, and indicate when the agent last confirmed the good standing of the license of the recommended “service provider”. This year, the legislature eliminated that requirement except for a Home Improvement Contractor, for whom the agent must provide current licensing information and a link to a website confirming the license information. A related new law eliminates the requirement that a home improvement SUB-contractor obtain a license, although the Maryland Home Improvement Commission “encourages” subcontractors to obtain licenses.
Prior to the new law relating to door to door sales, a consumer had 3 days to cancel a home improvement contract. The law extends that time period to 5 days within which to cancel. However, if the consumer is over the age of 65, they have 7 days within which to cancel the contract.
A change has been made to Federal law regarding the sale of property by non-resident aliens of the United States. Previously, if the sales price was under $300,000 and the purchaser was to use the property as residence, there was no withholding requirement. If not used as a residence, 10% of the sales price must be withheld and paid to the IRS for potential capital gains taxes. If the sales price is over $300,000 and less than $1 million, the withholding requirement remains at 10%, but if the price exceeds $1 million, the withholding requirement increases to 15% of the sales price. If the seller is a non-resident alien but does not have a gain on the sale of the property, a certificate of exemption should be applied for at the earliest opportunity to avoid withholding requirements.
Finally, for rental properties, a landlord has previously been required to pay interest on any security deposits at the rate of either 3 or 4 percent depending on when the deposit was made. Unfortunately, the landlords were unable to obtain an interest rate yield on the deposits and actually had to subsidize the rate paid on a deposit. Beginning January 1, 2015, the interest rate was reduced to 1.5%, or the rate paid on one year U.S. Treasury yields, whichever is greater.
We will continue to keep you informed of relevant legislation as the Maryland General Assembly starts planning for the 2017 session.
For more information regarding our Residential Real Estate Settlements Group or our general real estate transactions and litigation practice, please contact the Group Chair at 301-230-6574 or firstname.lastname@example.org.
This publication/newsletter is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer.
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