WHAT'S NEW

RELEVANT LEGISLATION PASSED BY
THE MARYLAND GENERAL ASSEMBLY IN 2009

1. REAL PROPERTY ARTICLE - MD. ANN. CODE, REAL PROP. ART.

    (a) Foreclosure

    (i) HB 640 – Residential Property in Foreclosure – Notification to a County or Municipal Corporation: This legislation authorizes a county or municipal corporation to enact a local law requiring that notice be given to the local government (county or municipal agency) when an order to docket or a complaint to foreclosure a mortgage or deed of trust is filed on residential property located in the jurisdiction. The local law must require the person authorized to make the sale to notify the local government within five days after filing an order. Effective July 1, 2009.

    (ii) HB 776 / SB 842 – Real Property – Foreclosure of Mortgages and Deeds of Trust on Residential Property - Notice to Occupant: This bill supplements the existing notice requirements relative to foreclosures of "residential" property, by requiring three separate forms of notification to “occupants” (whether the property is believed to be occupied or not). The notification is required: (1) when a foreclosure action is filed; (2) no earlier than 30 days and no later than 10 days before the foreclosure sale; and (3) after the entry of a judgment awarding possession of the property and before any attempt to execute the writ of possession. The bill requires that the notifications and their envelopes be in a certain form and contain certain information. This bill will supersede the May 1, 2009 revision to the Maryland Rules on foreclosures found in Section 14-210(b). Emergency bill – becomes effective upon approval by the Governor.

    (b) Condominiums and Homeowners Associations

    (i) HB 137 – Home Financial Accountability Act of 2009: This bill alters provisions dealing with the public inspection and copying of the books and records of a Common Ownership Community (“COC”). The bill requires that all books or records of a COC be made available for both inspection and copying by an authorized party, and prohibits a COC from withholding from public inspection information on individual salaries, wages, bonuses, and other compensation paid to COC employees. A written request for a copy of financial statements or minutes must be complied with within 21 days of the request if the document was prepared within three years of the request; if the document was prepared more than three years before the date of the request, the COC has a 45 day period within which to send the requested document.

    (ii) HB 287 / SB 201 – Real Property – Condominiums - Repair or Replacement of Damage or Destruction by Council of Unit Owners: This bill provides that a council of unit owners is obligated to repair or replace, and maintain property insurance coverage against damage or destruction to the condominium, including both the common elements and the condominium units, exclusive of improvements installed in the units by unit owners. Repair or replacement is required even if the damage originated from the unit owner’s unit. However, the bill also requires each unit owner to pay the deductible of the condominium’s master insurance policy, up to the statutory limit of $5,000, if the cause of the damage originates from the owner’s unit. Notice of a unit owner’s responsibility for the insurance deductible must be included in a condominium’s public offering statement and in any contract for the resale of the condominium, and must be provided annually in writing by the council of unit owners to each unit owner. The bill also specifies the intention to overturn the Court of Appeals ruling in Diane Anderson, et al. v. Council of Unit Owners of The Gables on Tuckerman Condominium, et al., 404 Md. 560 (2008). Effective June 1, 2009.

    (iii) HB 552 – Maryland Homeowners Association Act - Closed Meetings of Homeowners Association: This bill expands the category of matters that may be subjected to a closed meeting by a governing body of a homeowners association to include a meeting where an individual owner’s assessment account is discussed.

    (iv) HB 553 / SB 171 – Maryland Condominium Act - Closed Meetings of Board of Directors: This bill expands the category of matters that may be subjected to a closed meeting by a condominium board of directors to include a meeting where an individual owner’s assessment account is discussed. The bill also repeals a provision that authorized closed meetings if made pursuant to an individually recorded affirmative vote of two-thirds of the board or committee members present, “for an exceptional reason so compelling as to override the general public policy in favor of open meetings.”

    (v) HB 667 / SB 742 – Condominiums and Homeowners Associations - Transition of Control: This bill establishes the procedures for the transition of control of a condominium or homeowners association from a developer to the governing body of each COC elected by its owners. The bill requires a condominium council unit owner and the membership within a homeowners association meet to elect a board of directors or other governing body within 60 days from the date a certain percentage of the units or lots have been sold to the public. The developer must also deliver to each unit owner or lot owner a notice that the minimum number of units or lots have been sold and when the meeting will be held. Within 30 days of that meeting, the developer must deliver copies of specified records, contracts, and financial statements of the community to the newly elected governing body.

    (vi) HB 687 / SB 541 – Common Ownership Communities - Fidelity Insurance: This bill requires COC to purchase fidelity insurance no later than the time of the first conveyance of a unit or lot to a person other than the developer. The fidelity insurance must provide coverage for losses resulting from fraud, dishonesty or criminal acts by the COC’s officers, directors, managing agents, management companies or associated agents or employees. The amount of the fidelity insurance must equal the lesser of either three months’ worth of gross common charges or annual charges plus the total amount held in all investment accounts at the time the fidelity insurance is issued, or $3,000,000.

    (c) Miscellaneous

    (i) HB 79 - Mortgage Fraud – Creation of Fraudulent Documents: This bill increases the scope of the Maryland Mortgage Fraud Protection Act to expand the definition of “mortgage fraud” to include “knowingly creating or producing a document for use during the mortgage lending process that contains a deliberate misstatement, misrepresentation, or omission with the intent that the document containing the misstatement, misrepresentation, or omission be relied on by a mortgage lender, borrower, or any other party to the mortgage lending process.”

    (ii) HB 99 / SB 199 – Commercial Real Property – Action to Abate Drug Nuisance Prior Notice Requirement: This bill reduces the number of days of notice required to be given to the tenant and owner of a commercial property before an action to abate a drug nuisance may be filed. In all jurisdictions other than Baltimore City, 30 days’ notice must be provided. In Baltimore City, the prior notice period is shortened from 45 days to 15 days.

    (iii) HB 544 / SB 364 – Mechanic’s Lien – Certified Interior Design Services: This authorizes the establishment of a mechanic’s lien for interior design services that pertain to interior construction and are provided by a certified interior designer.

    (iv) HB 754 / SB 1027 – Real Property – Conservation Easements – Disclosure: This bill alters provisions concerning notice requirements and rescission rights when real property encumbered by a conservation easement is sold. Under the bill, the vendor must deliver the notice about the purchaser’s rights and responsibilities regarding a conservation easement and a copy of all conservation easements to the purchaser before entering into a contract for the sale of the property. The purchaser who receives the notice and copies of the easement on or before entering into a contract of sale may not rescind the contract based on the information received from the vendor. The purchaser who receives notice and easement copies after the sales contract is signed has the unconditional right to rescind the contract at any time before, or within five days after, receipt of the notice and easement copies. Such purchaser is also entitled to the immediate return of any deposits made in accordance with the contract. The bill also expands the definition of a conservation easement to include an easement, covenant, restriction, or condition on real property that is owned by a local government and funded by the Department of Natural Resources, the Rural Legacy Program, or a local agricultural preservation program; or is required by a permit issued by Maryland Department of the Environment.

    (v) HB 798 / SB 807 – Residential Mortgages and Deeds of Trust – Recordation and Foreclosure: This bill amends the definition of “residential property” to provide that residential property is that which is “designed principally and … intended for human habitation.” This has the effect of clarifying that the right to cure found in Section 7-105.1(h) and the requirement to make available mortgage originator and lender licensing information found in Section 3-104.1 do not apply to mortgages and deeds of trust secured by commercially utilized property (i.e., property not designed and intended principally for human habitation). Effective June 1, 2009.

    (vi) SB 657 - Real Property – New Home Sales Contracts – Financing Contingency Clauses: This enacted bill requires that a contract for the initial sale of a new home (as defined in the Maryland Homebuilder Registration Act) shall be contingent on the purchaser obtaining a written commitment for a loan secured by the property, unless the contract expressly states otherwise. If the contract is contingent on the purchaser obtaining financing, the contract must state the maximum interest rate the purchaser is obligated to accept.

2. INSURANCE ARTICLE - MD. ANN. CODE, INS. ART.

    (i) SB 86 - Title Insurance Producers – Regulation and Requirements: This bill regulates the handling of trust money in connection with a real estate closing by providing that only a licensed title insurance producer may exercise control over trust money. “Trust money” is defined as a “deposit, payment, or other money that a person entrusts to a licensed title insurance producer in connection with the provision of escrow, closing, or real estate settlement services.” Accordingly, only funds delivered to a title agent or agency are considered “trust money.” Funds relating to a real estate closing, such as a deposit paid over to a real estate agent or funding from, and payoffs to, lenders are not “trust money.” Trust moneys entrusted to law firms and title insurers are exempt from the requirement. The bill also increases from $100,000 to $150,000 the amount of the fidelity bond and the amount of the blanket surety bond or letter of credit that title insurer producers must maintain as a condition of licensure,. The increased amounts apply to title insurance producer licenses issued or renewed after October 1, 2009. The Commission to Study the Title Insurance Industry in Maryland is also required to review the adequacy of the bonding and letter of credit requirements and include its findings in its report to the Governor and the General Assembly. Effective June 1, 2009, except for the bonding increase provision, which takes effect on October 1, 2009.

3. TAX-PROPERTY ARTICLE - MD. ANN. CODE, TAX-PROP. ART.

    (i) HB 143 / SB 227 – Baltimore City – Newly Constructed Dwelling Property Tax Credit – Modification and Reauthorization: Baltimore City is authorized to grant a property tax credit against city property taxes imposed on newly constructed dwellings owned by qualified owners. This bill extends the tax credit’s termination date to June 30, 2014. In addition, the bill authorizes Baltimore City to (1) establish maximum limits on the cumulative amount of the credit that may be allowed for any year; (2) establish two application periods for the tax credit; and (3) grant a one-time amnesty period for owners who previously failed to meet the application deadline and who were denied the tax credit. Effective June 1, 2009.

    (ii) HB 169 / SB 348 – Tax Sales – Fees: This bill clarifies the types of expenses for which a holder of a tax sale certificate may be reimbursed. If an action to foreclose the right of redemption has not been filed, and the property is redeemed more than four months after the date of the tax sale, the holder of the certificate of sale may be reimbursed for costs for recording the certificate of sale, a title search fee up to $250, and reasonable attorney’s fees up to $500. Attorneys’ fees may no longer be collected solely in connection with recording a certificate of tax sale. Effective July 1, 2009.

    (iii) HB 1184 – Washington County – Property Tax Relief: This bill authorizes Washington County to provide a payment deferral of the county property tax for residential real property occupied as the principal residence of the owner, provided that at least one of the owners has lived in the dwelling for the previous five years, is at least 65 years old, and meets specified income requirements. Effective June 1, 2009 as to all tax years beginning after June 30, 2009.

    (iv) SB 87 – Property Tax – Homestead Tax Credit – Eligibility: Under current law, homeowners are required to file an application with the State Department of Assessments and Taxation (“SDAT”) to qualify for the homestead property tax credit program. When a property transfers between January 1 and July 1 and the deed is not recorded until after July 1, the new property owner has 60 days from the date of transfer to submit an application to receive the homestead property tax credit. Along with the application, the property owner must submit a copy of the deed and request that the date of the deed be used as the date of transfer rather than the recordation date. This bill extends to September 1 the deadline for filing an application for the homestead property tax credit program when a property transfers to a new owner between January 1 and July 1, but the deed is not recorded until after July 1. The bill also authorizes SDAT to reinstate the homestead property tax credit to a homeowner who fails to file the required application for the tax credit by a specified deadline. Effective June 1, 2009.

    (v) SB 538 – Property Tax Assessment – Home Improvements: Real property is currently valued and assessed once every three years. No adjustments are made in the interim, except in the case of (1) a zoning change; (2) a substantial change in property use; (3) substantially completed improvements which add at least $50,000 in value to the property; or (4) a prior erroneous assessment. This bill alters one of the property revaluation criteria by specifying that substantially completed improvements to real property that add at least $100,000 in value to a dwelling will trigger a real property revaluation. Effective July 1, 2009.

4. ECONOMIC DEVELOPMENT ARTICLE - MD. ANN. CODE, ECON. DEV. ART.

    (i) SB 39 – Municipal Corporations – Tax Increment Financing – Application of Both Proceeds: This bill expands the authority of a municipal corporation to use tax increment financing (“TIF”) to encourage redevelopment in revitalization areas; mixed use centers; blighted areas; and developed areas and growth areas, as defined in a county or municipal corporation land use plan, through the installation of specified infrastructure improvements (e.g., streets, utilities, and park facilities). TIF is a method of public project financing whereby the increase in the property tax revenue generated by new commercial development in a specific area, (the TIF district), pays for bonds issued to finance site improvements, infrastructure, and other project costs located on public property.

5. ARTICLE 23A CORPORATIONS – MUNICIPAL - MD. ANN. CODE, ART. 23A

    (i) HB 220 / SB 350 – Annexations – Small Parcels: This bill exempts proposed municipal annexations of parcels of land that are five acres or less, and that are part of a lot containing at least one other parcel that has been part of the municipal corporate area for at least three years, from the requirements that consent be obtained from a specified percentage of area residents and property owners and that the proposed annexation be subject to a referendum. A municipal corporation, however, may not annex a total of more than 25 acres under the exceptions of the bills, and the bills do not apply to land zoned for agricultural use. Provisions of the bills terminate September 30, 2011.

6. ARTICLE 66B - LAND USE - MD. ANN. CODE, ART. 66B

    (i) HB 294 / SB 273: Smart, Green, and Growing – Local Government Planning – Planning Visions: This bill implements key recommendations of the Task Force on the Future of Growth and Development in Maryland. The bill replaces the State’s 8 existing planning visions with 12 new visions. The 12 new visions address quality of life and sustainability; public participation; growth areas; community design; infrastructure; transportation; housing; economic development; environmental protection; resource conservation; stewardship; and implementation. The bill also addresses two local government planning tools: adequate public facilities ordinances (“APFOs”) and transfer of development rights (“TDR”) programs. The bills require specified local jurisdictions to report to the Maryland Department of Planning on APFO restrictions in priority funding areas (“PFAs”) every two years. The bill also authorizes local jurisdictions to establish TDR programs within PFAs to purchase land for the development and construction of public facilities. In addition, the bills prohibit development rights associated with land owned by a local jurisdiction on October 1, 2009, from being sold or transferred under the bill after the bill takes effect on October 1, 2009.

    (ii) HB 295 / SB 276 – Smart, Green, and Growing – Annual Report – Smart Growth Goals, Measures, and Indicators and Implementation of Planning Visions: This bill makes several administrative and substantive changes to State law governing the annual report that local planning commissions are required to prepare. Specifically, the bills make the annual reporting requirement applicable to charter counties and Baltimore City so that all local jurisdictions are expressly required to submit this report. The bills provide for a specific date (July 1) by when each planning commission must file the annual report with the local legislative body and require the annual report to state which ordinances or regulations have been adopted or changed to implement the planning visions. Effective June 1, 2009.

    (iii) HB 297 / SB 280 – Smart, Green, and Growing – Smart and Sustainable Growth Act of 2009: This bill expressly states the intention to overturn the Court of Appeals ruling in David Trail, et al. v. Terrapin Run, LLC et al., 403 Md. 523 (2008), which held that a special exception could be granted to a local comprehensive plan even if the special exception did not strictly conform to the comprehensive plan. The bill provides that specified actions taken by local governments, including the granting of a special exception, must be “consistent with” their local comprehensive plans, meaning to “further, and not be contrary to” specified items in the plan. The bill requires local jurisdictions to enact, adopt, amend, and execute a comprehensive plan and requires members of local government planning commissions and boards of appeal to complete an educational course on the role of the comprehensive plan, proper standards for special exceptions and variances as applicable, and the jurisdiction’s own land use ordinances and regulations. Effective July 1, 2009.

7. COMMERCIAL LAW ARTICLE - MD. ANN. CODE, COMM. LAW. ART.

    (i) HB 1535 / SB 1036 – Credit Regulation – Mortgage Loans – Proof of Ability to Repay – Exception: This enacted bill expands the exemptions from the income and asset verification requirements under Title 12 of the Commercial Law Article to include (1) refinancing mortgage loans offered under the federal Homeowner Affordability and Stability Plan and made available by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association; and (2) loans approved for government guaranty by the U.S. Department of Agriculture and the Maryland Department of Housing and Community Development. Emergency bill Approved by the Governor, April 14, 2009.

8. ARTICLE 24 - POLITICAL SUBDIVISIONS - MD. ANN. CODE, ART. 24.

    (i) HB 911 / SB 780 – Counties – Purchase of Development Rights – Carroll County: This bill adds Carroll County to the list of counties authorized to enter into agreements to purchase development rights. Anne Arundel, Baltimore, Howard, and Prince George’s counties presently have the same authority to purchase development rights.

9. ESTATES AND TRUSTS ARTICLE - MD. ANN. CODE, ESTATES & TRUST ART.

    (i) HB 582 – Estates and Trusts – Real and Leasehold Property – Valuation: This bill allows real and leasehold property in an estate to be valued at the contract sales price for the property, instead of an appraisal at fair market value, if (1) the price is set forth on a settlement statement for an arm’s length contract of sale of the property; and (2) the settlement on the contract occurs within one year after the decedent’s death. This provision does not apply to property assessed for property tax purposes on the basis of its use value.

    (ii) SB 152 – Estates and Trusts – Personal Representatives and Fiduciaries – Powers: This bill expands the ability of a personal representative to continue operating the business of the decedent by authorizing the personal representative to become a limited partner in a limited partnership or a member in a limited liability company, including a single member limited liability company.

10. FINANCIAL INSTITUTIONS ARTICLE - MD. ANN. CODE, FIN. INST. ART.

    (i) SB 269 – Financial Institutions – Mortgage Lenders and Mortgage Loan Originators: This enacted bill revises the State’s mortgage lender and mortgage loan originator laws to conform to the requirements of the federal Secure and Fair Enforcement Mortgage Licensing Act of 2008 (SAFE Act). The bill (1) alters the licensing requirements, initial license terms, and renewal license terms for mortgage lenders and mortgage loan originators; (2) requires applicants and licensees to submit certain information and fees to the Nationwide Multistate Licensing System and Registry (“NMLSR”); (3) increases civil penalties for violations of the mortgage lender and mortgage loan originator laws; and (4) authorizes the Commissioner of Financial Regulation to issue interim mortgage loan originator licenses and affiliated insurance producer-mortgage loan originator licenses. An applicant for a mortgage lender or mortgage loan originator license must provide the NMLSR with fingerprints for a criminal history background check, on an NMLSR-approved form. In addition, the bill: (1) prohibits an individual from engaging in the business of a mortgage loan originator unless the individual holds a valid license issued by the commissioner; (2) establishes exemptions from the licensing requirement; and (3) establishes conditions under which the commissioner may not issue a mortgage loan originator license. The bill also establishes pre-licensing education, pre-licensing testing, and surety bond requirements for mortgage loan originators, and requires each mortgage loan originator licensee to obtain a unique identifier number issued by the NMLSR upon obtaining an initial or renewal license on or after July 1, 2009. To comply with the SAFE Act, the initial and renewal terms of a mortgage lender license and a mortgage loan originator license are changed from two years to one year. Effective July 1, 2009.

11. ENVIRONMENT ARTICLE - MD. ANN. CODE, ENV. ART.

    (i) HB 1569 / SB 1065 – Standing – Miscellaneous Environmental Protection Proceedings and Judicial Review: This bill prohibits contested case hearings with respect to the Maryland Department of the Environment’s issuance, denial, renewal, or revision of the following permits: (1) ambient air quality control; (2) landfills/incinerators; (3) discharge pollutants; (4) sewage sludge; (5) controlled hazardous substance facilities; (6) hazardous materials facilities; (7) low-level nuclear waste facilities; (8) water appropriation and use; (9) nontidal wetlands; (10) gas and oil drilling; (11) surface mining; and (12) private wetlands. The bill also applies to decisions by the Board of Public Works (“BPW”) to issue or deny a license to dredge or fill on State wetlands. A person or an association may request judicial review of these decisions if he/she meets the requirements for standing under federal law and is the applicant or participated in an applicable public participation process through the submission of written or oral comments. Effective January 1, 2010.

12. AGRICULTURE ARTICLE - MD. ANN. CODE, AGR. ART.

    (i) HB 676 – Maryland Agricultural Land Preservation Foundation – Easements: This enacted bill exempts the Maryland Agricultural Land Preservation Foundation (“MALPF”) from provisions of law requiring independent property appraisals when it enters into corrective easements with landowners to adjust boundary lines, resolve easement violations, or accommodate a plan that will benefit agricultural operations, as determined by MALPF. Also, the bill authorizes MALPF to exchange and release land subject to an easement with other farmland that meets specified requirements. Effective July 1, 2009.

    (ii) HB 1418 – Agricultural Land Preservation – Condemnation of Land Under Easement: This bill makes condemnation of land under a MALPF easement, for economic development, residential development, or parkland purposes, subject to approval by BPW after review and recommendation by MALPF. Condemnations of easement land for roads, water lines or pipelines, sewer lines or pipelines, power transmission lines or natural gas pipelines, and stormwater or drainage facilities are not subject to BPW approval. The condemning authority, which is expanded to include any governmental authority, must demonstrate that a greater public purpose exists than that served by the MALPF easement and that there is no reasonable alternative site.

    (iii) SB 362 – Agricultural Land Preservation Easements – Residential Uses: This bill authorizes landowners to convert an existing dwelling house into a tenant house and construct one replacement dwelling house for the landowner’s use. However, MALPF must approve the construction of the replacement dwelling house as well as specified characteristics of the dwelling house. Also, landowners interested in constructing tenant housing on easement land must show a compelling need. Finally, the landowner must execute an agreement prohibiting the replacement dwelling house from being separately conveyed from the original parcel and record this agreement among the land records. Effective July 1, 2009.

13. PUBLIC SAFETY ARTICLE - MD. ANN. CODE, PUBLIC SAFETY ART.

    (i) SB 625 – Maryland Building Performance Standards – Energy Conservation and Efficiency: This bill requires the Department of Housing and Community Development (“DHCD”) to adopt the International Energy Conservation Code (“IECC”) and to consider changes to the International Building Code (“IBC”) to enhance energy conservation and efficiency before adopting a subsequent version of the Maryland Building Performance Standard (“MBPS”). DHCD may adopt energy conservation requirements that are more stringent, but not less stringent, than in the IECC. The bill also requires that local governments implement and enforce the most current MBPS and any modifications within 6 months of adoption by the State. A local jurisdiction may also adopt a local amendment to the MBPS as long as the amendment does not weaken any energy conservation and efficiency provisions in the MBPS.

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