Maryland Laws Update for Financial Services

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Maryland Laws Update 2018

We are pleased to provide our clients and friends this review of 2018 Maryland laws affecting financial services providers.  The new laws present challenges and opportunities for financial institutions.  As always, Gordon Feinblatt's Financial Services Team is able to assist you with any questions.  Please email or call using the contact information found below.

The full text of each of the bills listed below can be found on the Maryland General Assembly’s website at:  If you need assistance obtaining copies of bills or other legislative materials, please contact us. 

If you are interested in legislation affecting the real estate industry, please see Relating to Real Estate Special Edition: 2018 Maryland Real Property Legislation, published by Gordon Feinblatt's Real Estate Team.

Table of Topics


Please call or email us if you would like more information about these new laws and their impact on your business.

Charles R. Bacharach (410) 576-4169
Andrew D. Bulgin (410) 576-4280
Douglas T. Coats (410) 576-4002
Lawrence D. Coppel (410) 576-4238
D. Robert Enten (410) 576-4114
Robert A. Gaumont (410) 576-4007
Edward J. Levin (410) 576-1900
Christopher T. Magette (410) 576-4191
Bryan M. Mull (410) 576-4227
David S. Musgrave (410) 576-4194
Christopher R. Rahl (410) 576-4222
Peter B. Rosenwald, II (410) 576-4193

Maryland Laws Update


Transfer of Assets and Exchange of Shares of Stock
SB659 (Chapter 720)
(effective October 1, 2018)

The Maryland General Corporation Law currently provides that a Maryland corporation’s sale of all or substantially all of its assets must be approved by its stockholders and must be accomplished through the filing of articles of transfer with the Maryland Department of Assessments and Taxation.  The new law eliminates the need to file articles of transfer in connection with an asset sale and provides instead that the terms of the sale and any assumption of the seller’s liabilities can be addressed exclusively in an agreement between the buyer and seller, such as an asset purchase agreement.  In addition, the new law dispenses with the need for stockholder approval where the selling corporation is dissolved.    

Conversion of Foreign Nonstock Corporation into Maryland Nonstock Corporation
SB41 (Chapter 100)
(effective July 1, 2018)

This law amends § 5-207 of the Corporations and Associations Article to permit a foreign nonstock corporation to convert into a Maryland nonstock corporation.  Previously, the statute was silent as to whether a foreign nonstock corporation was able to convert into a Maryland nonstock corporation.  The law also provides that a foreign nonstock corporation may not convert into a Maryland stock corporation.

Resident Agent – Quantity and Resignation
SB82 (Chapter 101)
(effective October 1, 2018)

This law eliminates the requirement that a Maryland corporation have “at least” one resident agent in favor of a requirement that a Maryland corporation have a single resident agent.  The law provides that if the resident agent resigns, such resignation will become effective when it is filed with the Maryland Department of Assessments and Taxation (SDAT) if the corporation has appointed a successor resident agent or, if no successor has been appointed, ten days after the resignation is filed with SDAT.  The changes also are applicable to a resident agent of a foreign corporation, and to limited liability partnerships, limited partnerships, and statutory trusts.

Community Development Program
HB109/SB821 (Chapters 801 and 802)
(effective July 1, 2018)

This new law establishes a Community Development Program in the Department of Housing and Community Development.  The program will provide financial assistance, including capital and operating grants, for community development projects and community development organizations in Maryland to support affordable housing, neighborhood revitalization (residential and commercial), housing counseling, financial counseling, foreclosure prevention, community organizing, small business development, community services, and other community development purposes.

Practice Point: Financial services providers may be interested in obtaining a better understanding of this program to assist customers in these endeavors.


Consumer Debt Collection Actions – Statute of Limitations
SB42 (Chapter 549)
(effective October 1, 2018)

This new law clarifies the existing Maryland law prohibition on reviving or extending the statute of limitations applicable to a consumer debt collection action.  Under existing law, a payment toward, written or oral affirmation of, or any other activity on a consumer debt that takes place after the expiration of the applicable statute of limitations does not revive the limitations period.  The new law clarifies that the existing prohibition does not affect the statute of limitations applicable to a consumer debt collection action that arises from a separate written agreement or written payment plan between the debtor and the creditor that was entered into before the applicable statute of limitations expires.

Caller ID Spoofing Ban
HB1090 (Chapter 515)
(effective October 1, 2018)

This new law prohibits masking caller identification information (caller ID spoofing) when contacting an individual in Maryland with the intent to defraud, harass, cause harm to, or wrongfully obtain something of value from another.  The new law defines “caller ID spoofing” as “the practice of using an application or other technology in connection with a communications service, including a telecommunications, broadband, or interconnected Voice over Internet Protocol service, to knowingly cause a caller identification service to transmit false or misleading caller identification information to an individual receiving a call.”  The new law creates a private right of action for violations, and violations are unfair or deceptive trade practices under Maryland’s Consumer Protection Act (MCPA), subject to the MCPA’s civil and criminal penalty provisions.

Practice Point:  Beginning October 1, 2018, the Financial Consumer Protection Act makes “abusive” as well as “unfair” or “deceptive” practices a violation of the MCPA.  Some caller ID spoofing may be “abusive”.

Financial Consumer Protection Act – Consumer Protections and Penalties
HB1634/SB1068 (Chapters 731 and 732)
(effective October 1, 2018)

This law is the result of work by the Maryland Financial Consumer Protection Commission, created by the 2017 Maryland General Assembly to monitor changes in Washington and on Wall Street and to make recommendations to safeguard Maryland consumers.  It is expansive and covers numerous consumer protection topics.  These topics include significantly increased statutory penalties (for example, an increase from not more than $1,000 to up to $10,000 for a statutory violation) for businesses that interface with consumers, including: collection agencies; mortgage lenders and originators; check cashers; money transmitters; and debt management services.  Increased penalties also may be imposed against persons subject to the jurisdiction of the Maryland Commissioner of Financial Regulation and against persons subject to Maryland’s Consumer Protection Act.  In addition to increased penalties, this new law adds “abusive” to “unfair” or “deceptive” making all such activities a violation of Maryland’s Consumer Protection Act.  There is no statutory definition of “abusive.”  This law adds to the list of what is “unfair, abusive, or deceptive trade practices” any violation of the federal Military Lending Act or of the federal Servicemembers Civil Relief Act.  The law also expands the list of prohibited debt collection activities to include engaging in unlicensed debt collection activity in violation of the Maryland Collection Agency Licensing Act and engaging in any conduct that violates §§ 804 through 812 of the federal Fair Debt Collection Practices Act.  The law adds a new subtitle to Maryland’s Commercial Law Article entitled “Financial Consumer Protection” and has as its stated purpose the supporting of vigorous enforcement by and funding of the Attorney General’s Office of Consumer Protection and the Commissioner of Financial Regulation to protect Maryland residents when conducting financial transactions and receiving financial services.

Practice Point:  Because of the larger potential penalties and anticipated increased regulatory attention, businesses that interface with Maryland consumers should ensure their activities comply with all Maryland laws that may be deemed to provide consumer financial protection.

Student Loan Ombudsman and Student Loan Servicing
HB1634/SB1068 (Chapters 731 and 732)
(effective October 1, 2018)

This law is the result of work by the Maryland Financial Consumer Protection Commission and is intended to safeguard Maryland consumers.  It mandates that the Maryland Commissioner of Financial Regulation designate an individual to be a Student Loan Ombudsman, who will serve as a liaison between student loan borrowers and student loan servicers.  The law requires all student loan servicers to identify (name, phone number, and e-mail address) for the Ombudsman an individual to represent the servicer in communications with the Ombudsman.  The Ombudsman will, among other activities, receive and review complaints from student loan borrowers and attempt to resolve those complaints.  The Ombudsman may refer any matter that is abusive, unfair, deceptive, or fraudulent to the Maryland Attorney General for civil enforcement or criminal prosecution.

Practice Point:  The definition of “servicing” for purposes of student loan servicing means, as would be expected, receiving payments, applying payments, and performing other administrative services in connection with student education loans.  Due to very last minute drafting, however, the definition of “student education loan” is broader than that term is defined under federal law, which may cause confusion as to who needs to identify a representative (contact person) for the Ombudsman.  Clarification of what is a “student education loan” for purposes of this new law is needed.


Credit Report Security Freezes – Notice and Fees
HB710/SB202 (Chapters 676 and 677), HB848 (Chapter 480), SB1068 (Chapter 732)
(effective October 1, 2018)

This topic is addressed in a number of new laws.  These new laws, when combined, prohibit a consumer reporting agency (CRA) from charging an individual or a “protected consumer’s” representative a fee for any service relating to a freeze on a consumer report, including a service relating to placement, removal, or lifting a freeze.  A “protected consumer” is (a) an individual younger than age 16 at the time a security freeze request is made, (b) an incapacitated or protected person for whom a guardian or conservator has been appointed, (c) consumers aged 85 or older, (d) specified members of the military, (e) certain incarcerated persons, and (f) individuals in foster care settings.  The new laws also require a specific disclosure describing the right to place a security freeze without imposition of any fee.  They also require CRAs to develop secure connections on their websites to receive and process electronic requests in an expedited manner for the placement, removal, or lifting of a security freeze.

Consumer Reporting Agency Registration Requirements
HB848 (Chapter 480)
(effective October 1, 2018)

This law adds a new registration requirement for all consumer reporting agencies (CRAs).  Registration is with the Maryland Commissioner of Financial Regulation (Commissioner).  The registration process will be described in regulations to be issued by the Commissioner but, based on the new law, will include a requirement that a CRA post a surety bond or provide the Commissioner with an irrevocable letter of credit issued by an institution insured by the Federal Deposit Insurance Corporation.  The amount of the surety bond or irrevocable letter of credit will be determined by the Commissioner by regulation.  The new law provides that consumers who believe that any law applicable to consumer credit reporting has been violated may file a written complaint with the Commissioner.  In addition the Commissioner may initiate an investigation without having first received a complaint if the Commissioner has reason to believe that such a law has been violated.


Maryland Uniform Transfers to Minors – Award of Reasonable and Necessary Expenses
HB769 (Chapter 298)
(effective October 1, 2018)

This new law authorizes a court adjudicating a claim under Maryland’s version of the Uniform Transfers to Minors Act, at any point during a proceeding and under certain circumstances, to: (a) order a party to the proceeding to reimburse or pay to the other party an amount for the reasonable and necessary expense of prosecuting or defending the proceeding; (b) order that attorneys’ fees awarded be paid directly to the attorney; and (c) enter judgment in favor of the attorney.  Before ordering payment, the court must consider the financial resources and financial needs of both parties and, if the court finds that a party lacked substantial justification for prosecuting or defending a proceeding, the court may order payment as specified under the new law.

Health Savings Accounts
HB135/SB137 (Chapters 64 and 65)
(effective April 10, 2018 but see discussion below)

Some depository financial institutions make health savings accounts (HSAs) available to customers who participate in high-deductible health plans (HDHPs).  A Maryland law enacted in 2016 (Chapters 436 and 437 of the 2016 Laws of Maryland), known as the Contraceptive Equity Act (CEA), prohibits health insurance plans from applying a deductible to male sterilization.  The CEA became effective January 1, 2018.  In 2017, concerns were raised that the CEA may violate the Internal Revenue Service (IRS) rules for tax-advantaged HSAs maintained in connection with HDHPs because the IRS allows only “preventive care benefits” to be provided without a deductible.  It was unclear what a depository institution offering HSAs to Maryland customers should do in light of this concern.  On March 5, 2018, the IRS issued guidance stating that a health plan that provides benefits for male sterilization before satisfying the minimum deductible does not constitute a tax-advantaged HDHP, regardless of whether such coverage is required by state law.  However, the IRS is providing a transitional relief period until 2020 to give plans time to comply with IRS requirements.  Maryland’s new law is an emergency measure that, contrary to the terms in the CEA, authorizes an HDHP to apply a deductible to coverage for male sterilization.  This new Maryland law remains in effect until the U.S. Secretary of the Treasury or other U.S. Treasury official determines that an HDHP meeting the male sterilization coverage requirements under the CEA also meets the qualifications for tax-advantaged HDHPs under the IRS safe harbor provisions for “preventive care”.

Practice Point:  With the March 2018 IRS guidance, Maryland individuals who maintain HSAs should be able to make qualified contributions to their accounts for 2018 and 2019.  A depository institution that makes HSAs available to customers should monitor the progress of health insurance carriers in adjusting their plans to meet the IRS requirements.


Disclosing Sexual Harassment in the Workplace
HB1596/SB1010 (Chapters 738 and 739)
(effective October 1, 2018)

This new law is part of the Maryland General Assembly’s response to the “Me Too” movement.  The new law, meant to shine light on the problem of sexual harassment in the workplace, prohibits employers from including any provision in an employment contract, policy, or agreement that prospectively waives any substantive or procedural right or remedy to future claims based on sexual harassment, or retaliation for reporting or asserting a claim of sexual harassment.  The law applies to any employment contract, policy, or agreement that is executed, extended, or renewed on or after October 1, 2018.  The law states that an employer who enforces or attempts to enforce a provision that violates the law shall be liable for the employee’s reasonable attorneys’ fees.  In addition, on or before July 1, 2020, and on or before July 1, 2022, employers with 50 or more employees must submit a Sexual Harassment Survey to the Maryland Commission on Civil Rights (MCCR).  These employers must disclose: (a) the number of settlements the employer has made after an allegation of sexual harassment by an employee; (b) the number of times the employer has paid to settle allegations of sexual harassment against the same employee over the past ten years; and (c) the number of settlements of sexual harassment complaints that includes mutual non-disclosure provisions.  The survey will also provide space for the employer to indicate whether a personnel action was taken against the employee who was the “subject” of the settlement.  The survey requirement is only in effect until June 30, 2023, unless extended by subsequent legislation.  MCCR will make the aggregate survey data public, without revealing the identities of the victims and the alleged harassers.  MCCR will, however, retain for public inspection employer responses regarding the total number of times the employer has paid a settlement to resolve sexual harassment allegations against the same employee.

Practice Point: The importance of the “Me Too” movement should not be lost on any employer.  Employers should take this time to review their policies, agreements, and other standards for compliance with the new law.  Human resource personnel should become aware of the new reporting requirements and ensure that timely survey responses are filed with MCCR.

Employers Offering High-Deductible Health Plans – Coverage for Male Sterilization
HB135/SB137 (Chapters 64 and 65)
(effective April 10, 2018 but see discussion below)

Employers that make high-deductible health plans (HDHPs) available to employees benefit from this emergency legislation.  Without this new law, it was unclear what an employer that offers HDHPs to its employees should do in light of concerns raised by the Contraceptive Equity Act passed in 2016.

Practice Point:  See the detailed description of this law in the Deposit Account section of this publication.  With the March 2018 IRS guidance, Maryland employers that make available high-deductible health care plans to employees should be in communication with their health insurance carriers to understand what plans the carriers have to meet IRS requirements.


Contesting Validity of Revocable Trust – Limitation
HB444/SB348 (Chapters 256 and 257)
(effective October 1, 2018)

Prior to this new law, the period of time for contesting a deceased settlor’s revocable trust agreement was the general three-year limitations period for filing civil actions under Maryland law.  In contrast, the period of time for contesting a decedent’s last will and testament is within six months of the appointment of a personal representative.  Because a revocable trust is frequently used as a substitute for a last will and testament, it did not make sense for the two limitations periods to be so different.  Also, the longer limitations period for actions against revocable trusts made it difficult for trustees to distribute assets to the beneficiaries in a timely manner if there were concerns that someone might bring a claim against the assets at a later date.

This new law shortens the timeframe for bringing an action to challenge a deceased settlor’s revocable trust.  Such an action must be brought by a person within the earlier of: (a) one year after the date of the deceased settlor’s death; or (b) six months after the trustee sends to the person a copy of the trust agreement and a notice stating the existence of the trust, the name and address of the trustee, and the time period in which an action may be brought.

Practice Point:  Whether the trustee should send out notices to start the running of the shorter six-month limitations period, rather than just waiting out the one-year limitations period, will depend on factors such as the relationships between the parties and the perceived likelihood of litigation.

Breach of Trust Action – Limitations Period
HB474/SB1014 (Chapters 260 and 261)
(effective October 1, 2018)

This new law provides a mechanism for shortening the three-year limitations period during which a beneficiary may bring a judicial action against a trustee for breach of trust in cases in which the trustee has not acted in bad faith or with reckless indifference with respect to the purposes of the trust or the beneficiaries’ interests.  If the trustee sends a report to the beneficiary or the beneficiary’s representative that adequately discloses that a potential claim exists and states the time allowed for bringing a judicial action, then the action must be brought within one year after the date on which the report was sent.  In order to comply with the adequate disclosure requirement, the report must provide sufficient information so that the beneficiary or his or her representative knows the potential claim exists or should have inquired about the potential claim.

Practice Point:  After providing the report required under this new law, the trustee should consider seeking releases from the beneficiaries, if appropriate, in order to bring the matter to a close more quickly.

Maryland Trust Act – Governing Law of Trust Provisions
HB491/SB267 (Chapters 258 and 259)
(effective October 1, 2018)

This new law provides that the governing law of a trust will be the law of the jurisdiction designated in the trust agreement, provided that such jurisdiction’s law does not violate any strong public policy of the jurisdiction having the most significant relationship to the matter at issue.  If the trust agreement does not contain a governing law provision, then the laws of the jurisdiction having the most significant relationship to the matter at issue will control.  In most cases, this will be the jurisdiction in which the trust has its principal place of administration.

Practice Point:  This new law only applies for purposes of determining which law governs the interpretation of the trust agreement.  It does not apply to the determination of a trust’s situs for income tax purposes.

Administration of Estates – Waiver of Fees
HB556 (Chapter 233)
(effective October 1, 2018)

During the administration of a decedent’s estate, a probate fee must be paid to the Register of Wills for the jurisdiction in which the estate is being probated.  The probate fee is based on the total value of the decedent’s probate estate and ranges from $50 to over $2,500.  This Act provides that the Register of Wills may waive the probate fee for an estate if the decedent’s real property located in Maryland will be transferred to an heir of the decedent who resides on the property or the real property is encumbered by a lien and subject to tax sale, and if the estate is unable to pay the probate fee due to poverty.  The poverty criteria will be satisfied if (a) at the time of the decedent’s death, his or her family household income was less than 50% of the Maryland median family income or (b) the personal representative is represented by an attorney obtained through the Maryland Legal Services Corporation.


Educational and Promotional Materials and Articles of Merchandise
HB1083/SB673 (Chapters 485 and 486)
(effective October 1, 2018)

In Maryland, insurers are generally prohibited from paying, allowing, or giving out valuable consideration for the purpose of inducing an applicant to purchase an insurance policy or an annuity.  Insurers may, however, offer, promise, and provide educational materials, promotional materials, and merchandise if the cost of those materials and merchandise does not exceed $25.  This new law increases the value threshold of these materials and merchandise to $50, but makes it clear that an insurer may not condition the receipt of such materials or merchandise on the sale or purchase of insurance.

Insurance Producers – Commissions
HB1078 (Chapter 513)
(effective October 1, 2018)

Maryland law prohibits property and casualty insurers from paying, offering, or giving, directly or indirectly, as an inducement to the purchase of insurance or after the insurance has been placed, a rebate, discount, abatement, credit, or reduction of the premium stated in the insurance policy, and from willfully collecting a premium that is higher or lower than the premium applicable to the insurer under the classifications and rates approved by the Maryland Insurance Administration.  Likewise, these insurers are prohibited from discriminating against similarly-situated insureds with respect to the premium or other rates charged for insurance.  The laws of some other states permit an insurer and an insurance producer to agree to a variable rate commission structure under certain circumstances.  These agreements, referred to as “commission expense reduction plans,” are intended to give an insurance producer the discretion to accept a reduced premium for a particular customer if doing so would reduce that customer’s premium payments.  Currently, expense reduction plans are prohibited under Maryland law.  This new law eliminates the prohibition with respect to policies issued to “qualified exempt commercial policyholders” if the payment of a commission on a variable rate basis will result in a lower total cost of the policy and the insurance producer has agreed to the specific level of commission to be paid.


Consumer Loans and Credit in Maryland – Coverage
HB1634/SB1068 (Chapters 731 and 732), HB1297 (Chapter 790)
(effective January 1, 2019)

This law is part of the Financial Consumer Protection Act and arises from work by the Maryland Financial Consumer Protection Commission, created by the 2017 Maryland General Assembly to monitor changes in Washington and on Wall Street and to make recommendations to safeguard Maryland consumers.  This portion of the law amends two of Maryland’s seven credit law subtitles and adds new limitations and requirements on somewhat smaller dollar amount consumer lending under those two subtitles.  The credit law subtitles primarily impacted are Interest and Usury (Subtitle 1) and Consumer Loan Law – Credit Provisions (Subtitle 3).  The changes are complicated and, candidly, difficult to understand.  To simplify, the changes have the effect of making lenders who extend credit in the amount of $25,000 or less for personal, family, or household purposes subject to certain Maryland law provisions that require licensing, impose interest rate restrictions, and prohibit violation of the federal Military Lending Act.  Failure to comply with these certain Maryland law provisions has the effect of the loan being void and unenforceable.  These certain Maryland law provisions do not apply to a revolving credit plan that expressly elects to be governed by Maryland’s Credit Grantor Revolving Credit Provisions (Subtitle 9), to closed end credit that expressly elects to be governed by Maryland’s Credit Grantor Closed End Credit Provisions (Subtitle 10), or to an installment sale agreement as defined in Maryland’s Retail Installment Sales Act (Subtitle 6).  These certain Maryland law provisions also do not apply to first lien residential mortgage loans or to commercial loans in excess of $75,000 (or commercial loans in excess of $15,000 as long as the loans are not secured by owner-occupied residential real property).  In addition to substantive changes to consumer lending provisions, this new law gives lenders the ability to expressly elect as governing credit law Interest and Usury (Subtitle 1), Consumer Loan Law – Credit Provisions (Subtitle 3), and Secondary Mortgage Loan Law (Subtitle 4).  To date, this type of election of governing credit law was only included in the Maryland Credit Grantor Provisions (Subtitles 9 and 10).

Practice Point:  We strongly encourage persons extending credit in Maryland for personal, family, or household purposes to elect the appropriate Credit Grantor Provisions (Title 12, Subtitle 9 or Subtitle 10) as governing law.  It also is recommended – whether this is a new election or whether you have been making this election for many years – to reevaluate your lending activities under the Credit Grantor Provisions to ensure compliance with its requirements.  For lenders that currently make loans under Maryland’s Consumer Loan Law – Credit Provisions, we recommend a careful review of the changes made to that lending subtitle by this new law to determine if it makes sense to continue to extend credit under that subtitle.  Any lender making loans to Maryland residents for personal, family, or household purposes that has been doing so without considering Maryland law (e.g., out of state lenders) should now consider how Maryland law might affect lending operations.  Finally, with the new opportunity to elect governing Maryland credit law, even commercial lenders might want to expressly state which of Maryland’s alternative credit laws governs the transaction.

Retail Installment Sales Act – Expanded Coverage
HB1634/SB1068 (Chapters 731 and 732), HB1297 (Chapter 790)
(effective January 1, 2019)

Unless a different Maryland credit law is elected, Maryland’s Retail Installment Sales Act (RISA) governs closed end financing of the retail sale of consumer goods.  RISA applies to financed sales of motor vehicles of any value.  Currently, RISA applies to financed sales of tangible personal property other than motor vehicles if the property has a cash value of $25,000 or less.  This new law changes RISA’s coverage so that it applies to financed sales of tangible personal property other than motor vehicles if that property has a cash value of $100,000 or less.

Practice Point:  As discussed above, most Maryland creditors expressly elect to have their closed end consumer financing transactions governed by the Maryland Credit Grantor Closed End Credit Provisions (Subtitle 10).   Assuming an effective election of the Credit Grantor Provisions, RISA will not apply.

Licensing for Consumer Loans – Coverage
HB1634/SB1068 (Chapters 731 and 732)
(effective October 1, 2018)

Licensing provisions for lenders and related businesses are found in Maryland’s Financial Institutions Article.  The Consumer Loan Law – Licensing Provisions require licensing of a person who wants to make a “loan” or otherwise take advantage of Maryland’s Consumer Loan Law – Credit Provisions.  Under existing law, a “loan” for purposes of these licensing provisions means a loan made under the Consumer Loan Law – Credit Provisions.  This new law expands the definition of “loan” and, thus, who needs to be licensed under the Consumer Loan Law – Licensing Provisions, to a loan “subject to” the Consumer Loan Law – Credit Provisions “regardless of whether the loan or advance of money or credit is or purports to be made under” the Consumer Loan Law – Credit Provisions.

Practice Point: Lenders, particularly out-of-state lenders, making loans to Maryland residents for personal, family, or household purposes that have been doing so without considering Maryland law should now focus on how Maryland law, including licensing, may affect lending operations.


Vehicle Title Service Agents
HB1065 (Chapter 512)
(effective October 1, 2018)

A title service agent is a person who, based on a license issued by the Motor Vehicle Administration (MVA), engages in the business of transporting to and from the MVA certificates of title, registrations, driver’s licenses, certified copies of records, and other related documents.  The new law authorizes a title service agent that collects and remits vehicle excise taxes on behalf of the MVA to keep the lesser of $12 per vehicle or 0.6% of the gross excise tax collected.  In addition, the new law establishes documentation and recordkeeping requirements and requires title service agents to permit MVA representatives to inspect those records during regular business hours.  Finally, the new law increases the amount of a title service agent’s surety bond from $25,000 to $50,000.

Estates Administration Exemption – Transfers of Motor Vehicle and Boat Titles
SB292 (Chapter 551)
(effective October 1, 2018)

This new law authorizes a decedent’s property consisting of up to two motor vehicles, or a boat or vessel with an appraised value that does not exceed $5,000, to be transferred to a surviving spouse without the requirement to administer the decedent’s estate, if the surviving spouse is the decedent’s only heir or legatee.  In qualifying situations, a surviving spouse must provide: (a) certifications concerning the payment of all debts and taxes owed by the decedent; (b) evidence of the value of the property (for boats); (c) a copy of the decedent’s death certificate; and (d) suitable proof of marriage (between the decedent and the surviving spouse).

Practice Point:Questions remain concerning how a financial institution will receive notice of a transfer and whether transfers will be processed for motor vehicles or boats or vessels in which a lender maintains a security interest.  Financial institutions will need to update their policies and procedures concerning transfers of motor vehicle and boat loan collateral after the death of a borrower.

Exemption from Motor Vehicle Registration Fees – Surviving Spouses of Veterans
HB1162/SB626 (Chapters 157 and 158)
(effective October 1, 2018)

Existing Maryland law exempts from registration fees motor vehicles owned and personally used by an individual who is the surviving spouse of a deceased disabled veteran if the surviving spouse is at least 65 years old.  This new law eliminates the age requirement.

Peer-to-Peer Car Sharing Programs
SB743 (Chapter 852)
(effective July 1, 2018, except for certain program requirements as to safety recalls and state inspections which are effective January 1, 2019)

A peer-to-peer car sharing program is a business that connects vehicle owners with drivers to enable the sharing of motor vehicles (think “airbnb” for cars).  This new law establishes a regulatory framework for peer-to-peer car sharing in Maryland. A program offering this business model needs to comply with the new law’s many requirements.  Of importance to financial services providers that offer credit secured by motor vehicles, the new law requires that at the time someone registers with a peer-to-peer program as a shared vehicle owner, the program must notify the shared vehicle owner that, if the vehicle has a lien against it, the use of the vehicle through a peer-to-peer car sharing program, including use without physical damage coverage, may violate the terms of the contract with the lienholder.

Practice Point: For those extending credit secured by motor vehicles, this is another reminder to consider contract terms that clarify whether the borrower’s use of the collateral in business endeavors, including using the vehicle to provide rides for hire and, now, sharing the vehicle with others for compensation, is prohibited or, if permitted, is subject to limitations or specific requirements (including unique insurance requirements).


Address Confidentiality Program – Prohibition on Obtaining and Disclosing Identifying Information
HB633/SB578 (Chapters 423 and 424)
(effective January 1, 2019)

The Maryland Secretary of State administers address confidentiality programs for victims of domestic violence and human trafficking.  The programs, among other benefits, provide a substitute address for victims who move to a new location unknown to their abusers.  This new law provides program participants greater ability to require third parties, including financial institutions, to keep the participant’s location and other personally identifying information confidential.  Under this new law, if a program participant requests that a person (e.g., financial institution) use the program’s substitute address as the participant’s address, the person must comply and may not require the participant to submit any different address unless the service or benefit the participant is seeking would be impossible to provide without knowledge of the participant’s physical location.  In addition, and among other prohibitions, a person may not knowingly and intentionally seek and obtain a participant’s actual address or telephone number from any other person if, at the time of obtaining the information, the person knows that the actual address or telephone number belongs to a program participant.  If the participant has given a specific notice that she or he is a program participant, a person may not disclose the participant’s contact information (including name and home, work, or school address) except under limited circumstances.  Further, the law addresses how service of process must be handled with respect to a program participant.  The new law expressly provides that a bank, credit union, or other financial institution as defined in the Financial Institutions Article may require a participant who requests the use of a substitute address to make that request in writing on a form prescribed by the Secretary of State that identifies the individual as a program participant.  A violation of this law is a misdemeanor subject to a fine of $2,500.  See also the item under the Residential Mortgage Lending section of this publication for the provisions in this new law that establish a process through which a participant’s address contained in Maryland’s land records – normally public – will be shielded and kept confidential.

Practice Point:  The disclosure prohibitions in this law apply broadly and include both deposit and lending relationships.  Financial institutions must be ready to comply with the non-disclosure or use of protected information if an individual gives notice that she or he is a participant in one of the Secretary of State’s address confidentiality programs.  Financial institution employees should be made aware of this new law and a contact person at the institution – particularly in the area of residential mortgage lending – should be well versed in what is permitted and prohibited.  The Secretary of State must issue regulations to implement various requirements in this law before those requirements become effective.  In addition, the Secretary of State must prescribe a written form that program participants need to use to request that a financial institution use the Secretary of State designated substitute address.


Maryland Uniform Real Property Electronic Recording Act
HB1093 (Chapter 516)
(effective October 1, 2018)

This new law establishes uniform procedures for the electronic recording of real property records in the State of Maryland.  The new law defines terms, establishes requirements for electronic documents and signatures, and authorizes the Maryland Department of Assessments and Taxation or a county to accept specified electronic payments.  The new law also authorizes the Administrative Office of the Courts to establish standards for processing and recording documents.  Of note, the new law authorizes the use of electronic signatures, including for notary and acknowledgment purposes, on instruments that are electronically recorded in land records.  The new law will apply retroactively when it goes into effect on October 1, 2018.

Practice Point:  While certain pilot programs for electronically recording instruments in land records have been in effect at various times over the past decade, it wasn’t until the beginning of 2016 that the Court of Appeals of Maryland authorized Land Record E-Recording Programs to expand to every circuit court in the State.  At the beginning of 2018, 13 counties were reportedly participating in e-recording, with the remaining counties and Baltimore City expected to join by the end of the year. While still in its infancy, the move towards e-recording should help reduce the cost and time associated with hand recording instruments in land records.  As more title companies transition and adapt to e-recording, lenders and their counsel should be particularly attentive to instruments that are electronically recorded to ensure a properly perfected lien against the underlying collateral.

Deletion of Ownership Restrictions Based on Race, Religious Belief, or National Origin
SB621 (Chapter 636)
(effective October 1, 2018)

A number of documents recorded in the Maryland land records contain provisions that restrict ownership of property based on race, religious belief, or national origin.  These provisions are defined as “unlawfully restrictive covenants”.  This new law adds § 3-112 to the Real Property Article (RP), and provides that a person who owns property subject to an unlawfully restrictive covenant, or a non-profit that is required to enforce neighborhood covenants including an unlawfully restrictive covenant, may record a “restrictive covenant modification”.  Subject to a specific review process, after a restrictive covenant modification is recorded and indexed, the only restrictions that apply to the property based on the original document are those in the restrictive covenant modification and those recorded after the recording of the original instrument.  This new law also amends RP § 11B-113.3 to provide that by September 30, 2019, the governing body of a homeowners association shall delete any unlawfully restrictive covenant that is part of a uniform general scheme or plan of development from the common area deeds or other declarations of property in the development.  Further, beginning on October 1, 2019, any lot owner may request the governing body of a homeowners association to delete an unlawfully restrictive covenant from common area deeds or other declarations affecting property in the development, and the governing body of a homeowners association must do so within 180 days.  A restrictive covenant modification may be recorded in the land records without charge by the clerk until September 30, 2019.

Condominiums – Suspension of Use of Common Elements
HB575 (Chapter 345)
(effective October 1, 2018)

This new law revises condominium law to permit the suspension of the use of parking or recreational facility common elements by a unit owner that is more than 60 days in arrears in the payment of any assessment, provided that the council of unit owners provides ten days’ notice to the delinquent unit owner to either pay the assessment or request a hearing to contest the suspension.  Further, the unit owners holding at least 60% of the total eligible votes may repeal a suspension provision set forth in the declaration.

Homeowners Associations Definition of Lot

HB669 (Chapter 332)
(effective July 1, 2018)

This new law provides that until the time that all lots in a homeowners association (HOA) have been subdivided and recorded in the land records of the county in which the homeowners association is located, the declarant (person creating the HOA), when voting on HOA matters, shall have the number of votes that is equal to the number of lots that have been subdivided and recorded in the land records and that have not been sold to members of the public.

Practice Point: This new law clarifies how many votes the declarant of a homeowners association has when voting on homeowners association matters.

Water and Sewer Service
HB923/SB709 (Chapters 182 and 183)
(effective October 1, 2018)

The general purpose of this new law is to express the Maryland General Assembly’s intent that Maryland homeowners and tenants should have access to programs that will help them afford water and sewer services.  Local political subdivisions, sanitary commissions, and water and sewer authorities are given explicit authorization to implement payment plan and assistance programs, although the law does not mandate such assistance opportunities.  The General Assembly acknowledged a report from the U.S. Environmental Protection Agency (EPA), which details water and sewer assistance programs across the country.  The General Assembly suggests Maryland locales can use the EPA’s report as a guide to programs that can be used or tailored for the specific Maryland locale to implement as its own.  The new law further authorizes water and sewer authorities to disconnect services to vacant lots or uninhabitable properties.  This is to prevent unnecessary water loss, avoid accumulating costs, and make systems better for neighboring properties.  Water and sewer authorities are further required to restore services upon completion of certain requirements by the delinquent consumer or vacant lot owners.

Practice Point:  This law balances options for consumer assistance underscoring the importance of affordable access to water and sewer utilities while supporting the need for water and sewer authorities to maintain efficient systems and recover costs.

New Home Sales  Information on Energy-Efficient Options
HB1481/SB648 (Chapters 680 and 681)
(effective October 1, 2018)

This new law implements a requirement for new home builders to provide purchasers with written information about energy-efficient options for their new homes prior to completion of the buildings.  This information should include that certain tax credits may be available to purchasers for having energy efficient mechanisms installed in the homes.  This requirement only applies to developments that will contain 11 or more new buildings by the same registrant.

Practice Point:  The contract for the initial sale of the home must include an acknowledgement that such information was provided.


Foreclosed Property Registry – Updated Information – Notice to Local Governments
HB78/SB222 (Chapters 348 and 349)
(effective January 1, 2019)

A purchaser of foreclosed residential real property is required to register with the Foreclosed Property Registry of the Department of Labor, Licensing, and Regulation (DLLR) after the foreclosure auction and again after closing on the sale. In the registration, the purchaser must disclose the date of sale, the purchaser’s contact information, and other information concerning the subject property and the purchaser.  The new law expands on the existing reporting obligations, requiring that DLLR establish procedures for a purchaser to submit to the registry changes to certain information set forth in the purchaser’s initial registration within 21 business days after the change is known to the purchaser.   The purchaser’s additional reporting obligation under the new law is only triggered by changes to the name and address of a person authorized to accept service for the purchaser, whether the property is vacant, and whether the purchaser has possession of the property.  The new law also requires DLLR to notify the county and, if applicable, municipal corporation, in which the property is located upon receipt of an initial registration or change to registration information.

Practice Point:  The additional reporting burden imposed by this new law is slight and is further mitigated by the narrow categories of changes that will trigger additional reporting, so this new requirement should not impose a significant burden on foreclosure purchasers.

Real Estate Appraisal Management Companies – Payment of Real Estate Appraisers
HB64 (Chapter 759)
(effective October 1, 2018)

Under existing Maryland law, appraisal management companies (AMCs) are required to pay appraisers for an appraisal or valuation within 60 days after the completed appraisal or valuation study is provided to the AMC.  This new law shortens the time by which the AMC must pay an appraiser to 45 days after the appraiser provides the initial completed appraisal or valuation.  The Commission of Real Estate Appraisers, Appraisal Management Companies, and Home Inspectors is given authority to discipline AMCs for violating this law.

Residential Mortgage Broker Fees – Brokering Again within 24 Months
HB1511/SB566 (Chapters 844 and 845)
(effective October 1, 2018)

Under existing Maryland law, a residential mortgage broker normally is permitted to charge a fee (called finder’s fee) of up to 8% of the loan amount.  However, the same broker obtaining a mortgage loan with respect to the same property more than once within a 24-month period may charge a finder’s fee on the subsequent loan based only on the amount the subsequent loan exceeds the initial loan amount (that is, the broker may charge a finder’s fee based only on the “new money”).  The new law retains a 24-month restriction on finder's fees, but allows a finder’s fee on the subsequent loan based on combining the finder’s fee collected in the initial loan transaction plus the finder’s fee collected in the subsequent loan transaction.  Based on this determination, the total permitted finder's fee on all loans on the same property within 24-months may be up to 8% of the initial loan amount.

Escrow Accounts – Water and Sewer Facilities Assessments
SB755 (Chapter 340)
(effective October 1, 2018)

This new law authorizes, on request of a borrower, a lending institution that makes a loan secured by a first mortgage or first deed of trust on the borrower’s residential real property to create an escrow account in connection with that loan solely for the payment of water and sewer facilities assessments (including front foot assessments).  In addition, loan servicers must make timely payment of water and sewer facilities assessments if the borrower has paid an amount sufficient to pay the assessment due and the servicer is in possession of the assessment bill.  Failure to make the required timely payment is an unfair or deceptive trade practice under Maryland's Consumer Protection Act (MCPA), subject to the MCPA’s civil and criminal penalty provisions.

Practice Point: Banks doing business in Maryland should consider updating their policies and procedures concerning the establishment of escrow accounts to account for the possibility of borrower requests to establish escrow accounts for the payment of water and sewer charges.

Shielding Real Property Records for Address Confidentiality
HB633/SB578 (Chapters 423 and 424)
(effective January 1, 2019)

The Maryland Secretary of State administers address confidentiality programs for victims of domestic violence and human trafficking.  This new law provides that a program participant who acquires an ownership interest in real property while he or she is a participant in the program may require the shielding of recorded real property records concerning the property.  To request the shielding of real property records, the participant, or an agent of the participant, must submit to the clerk of the court along with the documents to be recorded a specific notice that contains, among other information, the unique identification number assigned to the participant by the Secretary of State.  This notice applies to the instruments submitted for recordation at the same time the notice is submitted, as well as to any other instrument concerning the property identified in the notice that is subsequently presented for recording during the time the participant owns the property.  The clerk of the court will provide a copy of the notice to the Maryland Department of Assessments and Taxation and to the State Archives so that there is consistency among the various Maryland records regarding the shielding of the participant’s address.  There is an exception to address disclosure prohibition for purposes of performing a bona fide title examination, subject to specific requirements.

Practice Point:  The clerks of the circuit courts, along with the Administrative Office of the Courts, must establish uniform statewide procedures for recording instruments in compliance with this new law.  Residential mortgage lending operations should become familiar with the process for shielding real property records to be prepared to comply if the circumstances arise.

Housing and Community Development Homebuyer Education Requirements
HB279 (Chapter 104)
(effective October 1, 2018)

Currently, Maryland’s Department of Housing and Community Development (DHCD) administers the Downpayment and Settlement Expense Loan Program (DSELP), which provides financing assistance to eligible homebuyers for qualifying home downpayment and settlement expenses.  Program participants must complete homebuyer education in order to receive financing.  Prior to this  new law, if the political subdivision where the loan would be used also had education requirements, DSELP participants were required to complete whichever requirements were more stringent between the State and the locale.  This new law now allows participants to complete only DHCD’s education requirements.  This law standardizes the education requirements and avoids complicating such requirements to access State assistance.  Additionally, the law allows education requirement certificates from one political subdivision to be used in another and does not affect requirements a county may implement for a homebuyer to access available county funds. Lastly, counseling funded through the Housing Counseling and Foreclosure Mediation Fund is no longer only available to homeowners or homebuyers, but it is now available to low- and moderate-income Maryland residents to receive home buying advice or financial counseling.

Practice Point:  Maryland lenders may want to inform potential borrowers of the standardized education requirements to receive State financing assistance for downpayments and settlement expenses and the broadened access to financial counseling. This information may streamline the buying process and make home buying more feasible for potential borrowers.


Liability for Payment of Tax on Leased Property
HB1178/SB925 (Chapters 313 and 314)
(effective October 1, 2018)

Under § 6-102(e) of the Tax-Property Article (TP), the leasehold interest (or other interest that gives a person a right to use property) of a person in business property that is owned by the federal, state, or local government or agency is subject to property tax.  However, under current TP § 10-403(a), the owner of that property is not liable for the property tax.  If the tax is not paid, no lien attaches to the property or the interest of the fee owner in the property, but the leasehold owner is personally liable. This new law adds an exception to this rule.  The exception is that if property taxes are not paid, a lien does attach to the leasehold (or other) interest in property that is within (a) a specified development property, (b) a special taxing district, or (c) a community development authority in Frederick County.

Recordation Tax – Exemptions
SB999 (Chapter 594)
(effective July 1, 2018)

This new law alters the refinance exemption in Maryland’s recordation tax by expanding the definition of original mortgagor to include a person who has received property from the original mortgagor under a deed that was exempt from the recordation tax under specified circumstances.  The circumstances are the transfer of the property to a related business entity or to a new limited liability company that succeeds the transferor and whose membership mirrors that of the transferor.  The new law alters the definition of business entity to include a limited partnership or statutory trust so that these entities will be exempt from the recordation tax for transfers between specified related business entities.  The definitions of owner and ownership interest are also altered to include limited partner or beneficial owner and limited partnership interest or beneficial interest, respectively.  The new law also alters an exemption from recordation tax for specified transfers of a controlling interest in certain entities that own real property.

Practice Point:  This new law expands existing exemptions from recordation tax to cover certain property transfers between related business entities and successor limited liability companies, while also extending the exemptions to certain types of entities that were not previously able to take advantage of any existing exemption.  The change will create new opportunities for lenders to structure deals in a way that allows borrowers to avoid paying recordation tax on certain security instruments recorded in land records, thus reducing a borrower’s closing costs.

Heritage Structure Rehabilitation Tax Credit for Commercial Affordable Housing
HB1454/SB967 (Chapters 842 and 843)
(effective July 1, 2018)

The new law alters the heritage structure rehabilitation commercial tax credit program by (a) providing an additional 5% credit if the rehabilitation qualifies as affordable housing, (b) eliminating the existing requirement that the rehabilitations of multiple structures that are functionally related to serve an overall purpose are treated as a single commercial rehabilitation, and (c) requiring that an initial credit certificate that expires or is otherwise unclaimed remains in the program reserve fund and can be reissued in the following fiscal year.  In order to obtain the additional credit for affordable housing, the project must have received an allocation of federal low-income housing tax credits by the Department of Housing and Community Development.  The new law takes effect on July 1, 2018, and applies to the 2018 tax year and beyond.

Practice Point:  The effect of this new law is to provide additional opportunities to take advantage of the tax credits under the heritage structure rehabilitation commercial tax credit program. The additional 5% credit, on top of the base 20%, is currently only available to commercial rehabilitations that, along with being certified historic structures, are high performance buildings (i.e., LEED gold or its equivalent).  This additional credit will now be expanded to include commercial rehabilitations that, along with being certified historic structures, qualify as affordable housing.  It is important to note the prerequisite of having already received an allocation of federal low-income housing tax credits by the Department of Housing and Community Development. Currently, the rehabilitation of multiple structures that are functionally related to serve an overall purpose is treated as a single commercial rehabilitation for the purposes of the tax credit and thus subject to the relevant cap; however, the deletion of this restriction will provide the opportunity to obtain additional tax credits for this type of rehabilitation.  The new law also includes the added benefit of, essentially, rolling-over expired or unclaimed tax credits to the next fiscal year, thereby potentially increasing the total pool of tax credits available for the following year.

Exemption from Taxes and Fees for Transfer from Revocable Trust
SB372/HB948 (Chapters 315 and 316)
(effective July 1, 2018)

This new law provides an exemption from transfer and recordation taxes for transfers of real property from a revocable trust to a beneficiary of the trust upon the settlor’s death.  In addition, the new law provides that the transfer of a motor vehicle to a beneficiary of a revocable trust following the settlor’s death is exempt from excise taxes.  Both exemptions apply regardless of whether transfers to such persons during the settlor’s lifetime would have qualified for exemptions.  The effect of these provisions is to equalize the tax treatment of post-death transfers of such assets by revocable trusts and estates.

Practice Point:  If a client has not yet retitled real property in the name of his or her revocable trust because, under prior law, transfer and recordation taxes would have been imposed upon the post-death transfer to the beneficiary, the client should consider retitling the property after July 1, 2018.


Corporation Single Sales Factor
SB1090/HB1794 (Chapters 341 and 342)
(effective for all taxable years beginning after December 31, 2017)

Prior to the 2018 tax year, non-manufacturing corporate taxpayers used a three-factor apportionment formula (sales, property, and payroll, with a double-weighted sales factor) to determine its taxable income in Maryland.  Beginning in 2018, however, a single-sales factor will be phased in for such taxpayers.  Thus, for tax years from 2018 until 2021, non-manufacturing corporate taxpayers will still use a three-factor formula, but the sales factor will receive increasingly more weight.  For the tax year 2022 and after, Maryland income will be apportioned using a one-hundred percent sales factor.  Currently, manufacturing corporate taxpayers use a single-sales factor.  On the one hand, the new law should be beneficial for Maryland-based companies that have significant numbers of employees and large amounts of property in the State.  On the other hand, the new law may increase the Maryland tax burden for companies that sell goods and services in the State but do not have a large number of employees and or significant property in the State.

Small Business Relief Tax Credit
SB134 (Chapter 571)
(effective July 1, 2018)

This new law will provide a credit for certain small businesses that provide paid sick leave to their employees.  The credit will be refundable, meaning that if the credit allowed under the new law exceeds the state income tax for a particular year, the business may claim a refund in the amount of the excess.  The credit, which can be as much as $500 per qualified employee, is available for businesses with 14 or fewer employees.  The new law is designed to benefit business owners and is a response to a law enacted in 2017 which requires certain businesses to provide paid sick leave.  The new law is applicable to all taxable years beginning after December 31, 2017.

Maryland Estate Tax – Unified Credit
SB646/HB308 (Chapters 15 and 21)
(effective July 1, 2018)

In 2014, when Maryland’s estate tax exemption was only $1 million, legislation was passed that would ultimately “recouple” its exemption with the federal estate tax exemption, which was then over $5 million.  The 2014 legislation provided for Maryland’s estate tax exemption to be $1.5 million in 2015, $2 million in 2016, $3 million in 2017, and $4 million in 2018.  Then, in 2019 and future years, the Maryland exemption would equal the federal exemption.  At the time when the 2014 legislation was passed, the federal exemption for 2019 was projected to be approximately $5.7 million.  However, as a result of the federal Tax Cuts and Jobs Act of 2017, the federal exemption amount for 2018 nearly doubled to $11.18 million and will increase further in 2019 due to inflation adjustments.

This new law was passed to cap the Maryland estate tax exemption amount at $5 million for 2019 and future years.  In addition, the new law provides for portability of Maryland estate tax exemption between spouses beginning in 2019.  This means that if the first spouse does not use all of his or her $5 million exemption upon his or her death, the surviving spouse can use the predeceased spouse’s unused exemption, in addition to his or her own exemption.  In order to claim portability, an election must be made on a timely filed Maryland estate tax return for the first spouse to die.

Practice Point:  A surviving spouse who dies after January 1, 2019 can use the predeceased spouse’s unused Maryland exemption for the year of his or her death, even if the predeceased spouse died prior to January 1, 2019, provided that the personal representatives of the first spouse’s estate timely filed a federal estate tax return and elected portability.  


Homeowner Protections
HB1465/SB 952 (Chapters 58 and 59)
(effective date October 1, 2018)

This new law provides that tax collectors (except in Baltimore City) have the option to withhold from tax sale any residential property when the total taxes on the property, including interest and penalties, amount to less than $750.  The new law also requires that the tax collectors provide information regarding housing counseling resources in addition to the existing notices of tax sale sent by the collector to property owners.

Practice Point:  This new law is primarily designed to afford the tax collector greater flexibility as to which properties it may pursue for tax sale.  Though this may result in fewer properties being made available at tax sale, the new law should not have a significant impact on tax sale purchasers.

Vacant and Abandoned Property
SB951 (Chapter 568)
(effective date October 1, 2018)

This new law expands several tax sale provisions that were previously only applicable in Baltimore City to all other counties and municipal corporations in the State.  The new law provides that a tax collector may release liens for unpaid taxes to facilitate the transfer of certain vacant property, provided that the purchaser can demonstrate an ability to return the property to productive use and that it is paying fair market value for the property.  The new law also authorizes tax collectors to sell abandoned property for less than the total taxes due on the property and for tax sale purchasers of such abandoned property to pursue expedited foreclosure of the right of redemption.  The new law further provides that tax collectors may hold back from tax sale properties that have been designated for redevelopment purposes.

Practice Point:  As a result of this new law, those willing to pursue tax sales of abandoned properties may see greater investment opportunities since the new law provides tax collectors with authority to sell such properties at a discount.

Baltimore City – Moratorium on Tax Sales for Unpaid Water and Sewer Charges
SB1098 (Chapter 714)
(effective October 1, 2018)

Under existing law owner-occupied residential properties in Baltimore City may be sold at tax sale solely to enforce a lien for unpaid water and sewer charges if the charges are at least $750.  This new law prohibits the sale of a residential property (as opposed to an owner-occupied residential property) in Baltimore City if the taxes consist only of a lien for unpaid water and sewer charges.  However, the residential property may be sold to enforce a lien for unpaid water and sewer charges if the property is being sold to enforce another lien.  The new law expires at the end of December 31, 2019.