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DLLR's Division of Occupational and Professional Licensing

 

A Consumer's Guide for Buyers and Sellers of Real Estate in MD - Maryland Real Estate Commission

 

MREC MISSION
The Maryland Real Estate Commission's (MREC) mission is to protect the health, safety and welfare of the public through its examination, licensing, and regulatory activities regarding real estate brokerage services.

We hope the following information is helpful.

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Understanding Whom Real Estate Agents Represent

DEALING WITH QUALIFIED REAL ESTATE PROFESSIONALS

Buyers and sellers of property should make certain that real estate professionals with whom they deal are both qualified to offer brokerage services and are licensed by the Maryland Real Estate Commission. If someone is asking you to pay them a fee of any kind for assisting you in selling your home, or buying a new one, he or she must be licensed by the Maryland Real Estate Commission. You can find licensees under "Find Who Is Licensed." If a person's name is not listed, he or she is not licensed to provide real estate brokerage services in the State of Maryland. A person must hold a Maryland real estate license to provide brokerage services.

Under provisions of the Maryland Real Estate Brokers Act, MREC's jurisdiction extends to real estate brokers, associate brokers and salespersons and unlicensed persons engaging in real estate brokerage activities.

If you have a problem with a licensee, you should contact his or her branch office manager or the licensed broker of the company for assistance.

TIPS FOR CONSUMERS

All contracts to list, buy or sell a property must be in writing, have a beginning and an ending date, and be signed by all parties to the contract. You must receive a signed copy.

Many real estate transactions involve real estate agents representing the seller and the buyer. The roles and responsibilities of the agents are described in a form prepared by the Commission entitled Understanding Whom Real Estate Agents Represent. A completed copy of this form must be furnished to you by one or both of the agents. Read the document carefully and ask for clarification of any parts you do not understand.

Ask questions and be sure that all terms that you agree to are in writing before you sign any documents. Do not sign any blank documents. If you do not understand the documents, contact an attorney for assistance. If English is your second language and you are unclear about the terms of the contract, contact an interpreter to assist you prior to signing.

Be aware that it is illegal for an unlicensed contractor/handyman to do any home improvement work for a fee without holding a license through the Maryland Home Improvement Commission. This may affect work that you have completed as a seller or as part of a home inspection addendum in your contract. Ask for a MHIC license number and verify its owner, status and complaint history prior to signing any contracts.

There are no rules governing when a seller must accept any offer to purchase, nor are there requirements as to which offer or counter-offer a seller must accept, if any, for his or her property. You have the right not to sell your property if you so choose as long as your intent is not to promote discriminatory practices. However, a commission may be payable to the licensee if an owner decides not to sell in the face of a ready, willing and able buyer, depending on the terms of your listing agreement.

As a potential buyer, if you give an earnest money deposit to be held by the Broker, it must be held in a separate trust account and cannot be commingled with other business and/or personal accounts. Your check and/or money order should be made payable to the brokerage company, not the agent or employees.

Real estate agents and brokers are prohibited from engaging in the practice of law and may not give legal advice to buyers or sellers.

Effective 1/1/2008, all home inspectors in Maryland must be licensed. Ask to see their license before using their services.

FILING A COMPLAINT

Out of some 48,000 real estate licensees in Maryland, the vast majority receive no complaints. On occasion, however, problems arise during a transaction. A formal complaint can be filed. The complaint must be in writing, made under oath, state the amount of the loss claimed, if any, state the facts on which the claim is based, and include any documentation or evidence that supports the claim against a licensee.

Complaints that include a claim against the Guaranty Fund must be based on an act or omission that occurs in the provision of real estate brokerage services by the broker, associate broker or salesperson or an unlicensed employee of a licensed real estate broker. It must involve a transaction that relates to real estate that is located in the state of Maryland and be based on an act or omission in which money or property is obtained by theft, embezzlement, false pretenses, forgery or constitutes fraud or misrepresentation. The maximum amount of a claim is $25,000. This must be the actual out-of-pocket loss, not the anticipated loss or expense. Punitive damages are not awarded (i.e., pain and suffering). Commissions (paid or received) are not eligible for a Guaranty Fund claim.

The complaint form to be submitted can be downloaded.

You may check "Disciplinary Actions" to see if there is a record of disciplinary actions against the licensee from previous business dealings.

Other Agencies: Questions and concerns that are related to the sale of property sometimes fall within the legal jurisdiction of agencies other than the MREC.

MD Division of Financial Regulation
410-230-6100
Information concerning mortgage broker regulations and licensing requirements

MD Real Estate Appraisers & Home Inspectors
410-230- 6165
Information concerning home inspector and real estate appraiser regulations and licensing requirements

MD Insurance Administration
410-468-2000
Answers to questions regarding homeowners insurance, title insurance and related services

MD Home Improvement Commission
410-230-6309
Inquiries about license status and advice on filing complaints

MD Division of Occupational and Professional Licensing
410-230-.6220
Assists you in accessing the various Maryland State agencies we mention in this brochure.

Dept. of Housing & Urban Development

Attorney General's Office
Consumer Protection Division
1-888-743-0023

National Links

The Maryland Real Estate Commission is a member of the Association of Real Estate License Law Officials

Maryland Links

Maryland State Department of Assessments and Taxation

Maryland Higher Education Commission

Maryland Attorney General - Homebuilder Registration

Maryland Attorney General - Landlord/Tenant Laws

Maryland Commissioner of Financial Regulation

Maryland Insurance Administration
For complaints against title companies.

WET SETTLEMENT PROCEDURE ACT

The Commissioner of Financial Regulation is becoming aware of a growing trend among mortgage lenders to delay funding of purchase money mortgages beyond the loan closing.

Licensees are reminded that Maryland law requires lenders to disburse the proceeds of purchase money loans on or before the closing date in accordance with the loan documents, to the agent responsible for settlement. This is the basis of a "wet settlement." The practice of requiring a borrower to sign closing documents and actually delay funding the loan is not permitted.

The Annotated Code of Maryland, Real Property Article §7-109(b) specifically states:

"In any consumer loan transaction in which the loan is secured by a purchase money mortgage or deed of trust on real property located in this State, on or before the day of settlement, the lender shall disburse the loan proceeds in accordance with the loan documents to the agent responsible for settlement…"

Loan proceeds must be disbursed in the form of cash, wired funds, certified check, teller's check, cashier's check or a check issued by a political subdivision or on behalf of a governmental entity (refer to the law for permitted forms).

The Office strongly encourages lenders to consult with their legal counsel to confirm that the appropriate departments comply with this law. Any lender failing to comply with the disbursement requirement under the statute may not charge interest on the loan for the first 30 days after the settlement date.

A LICENSEE MAY NOT REQUIRE A BUYER TO USE A SPECIFIC LENDER OR SETTLEMENT COMPANY AS A CONDITION OF SETTLEMENT

The Real Estate Commission has received several complaints recently about salespersons who attempted to require a buyer to use a specific lender or settlement company. These complaints involved the sale of new homes as well as the sale of existing homes. Section 17-607 of the Maryland Real Estate Brokers Act states that, in a real estate transaction involving a single-family dwelling, a licensee may not require a buyer, as a condition of settlement, to employ a particular title insurance company, settlement company, escrow company, mortgage lender, or title lawyer. The only exception is that a seller may not be prohibited from offering owner financing as a condition of settlement. Violation of this provision of the law is a misdemeanor crime, and could lead to a fine not exceeding $5,000, imprisonment not exceeding one year, or both. Under Section 17-322(b)(29), these actions could also be the basis of a disciplinary action before the Commission which could result in the suspension or revocation of the license and/or a fine of up to $5,000.

Maryland Real Estate Commission
500 North Calvert Street, Room 300
Baltimore, MD 21202-3651
Phone: (410) 230-6230
Maryland toll-free: 1-888-218-5925
mrec@dllr.state.md.us