Summer 2006

Legislative Summary
By Theresa Burian Shea, Esq.

Below are summaries of select legislation passed by the General Assembly in its 2006 legislative session.  The legislation is organized by Code Article, primarily Property and Tax-Property, but include a few other articles as well.  You can check a bill’s status, or find its full text, at the General Assembly’s website, http://mlis.state.md.us. 

Many thanks to each member of the Real Property Section’s Legislative Liaison Committee for their dedication this past session in reviewing and commenting upon these bills and a multitude of others, and my acknowledgments to Stuart D. Kaplow and Paul Reiger for their assistance in compiling this summary.

1.         Real Property Article

  • HB1620/SB974 (Chapter 502) amend RP Section 8-203, to permit a residential tenant to purchase a surety bond instead of paying a security deposit to the landlord.  The landlord cannot refuse to accept a bond that meets the statutory requirements.  The surety bond cannot be for more than 2 months’ rent.  The bill further specifies rights and responsibilities of each of the landlord, tenant and surety.  [Effective 7/1/06.] 
     

  • HB1060 (Chapter 198) amends RP Section 9-102 to include certain professional services within the purview of work performed for which the worker may claim a mechanic’s lien.  The professional services added to the mechanic’s lien list are building and landscape architecture, engineering and land surveying.  [Effective 10/1/06.]
     

  • HB638/SB544 (Chapter 526) amend RP Section 11-102(a) to add municipal corporations to the list of governmental entities that may subject a leasehold estate to a condominium regime.  [Effective 6/1/06.]
     

  • HB123/SB10 (Chapter 451) amend RP Sections 11-102 and 11-137 to expand the class of tenants who must be offered an extended lease when a rental facility is converted to a condominium, to cover households that contain an individual with a disability, instead of the former term “handicapped citizen.”  Disability is defined to include individuals with, or with a record of, a physical or mental impairment that limits a major life activity, but excludes impairments from current illegal use or addiction to a controlled substance or a controlled dangerous substance.  If the number of tenants seeking a continued rental upon conversion exceeds 20 percent, then allocation priority shall be given to households with individuals who require wheelchair accessible housing.  NOTE:  This does not apply to any site for which condo application for registration was filed on or before March 15, 2006.  [Effective 3/16/06.]
     

  • HB1006 (Chapter 370) amends RP Sections 11-102 and 11-138 to permit Baltimore City or incorporated municipalities to select certain income eligibility figures for which households can elect on extended lease if a residential rental facility is converted to condominium. If the municipality does not otherwise elect, then 80 percent of median area income shall be used.  NOTE:  Like HB123, this is also an emergency measure that is effective as of 3/16/06.  Interestingly enough, the edits to Section 11-137, addressing the actual income figures, do not mirror the changes proposed by HB123 regarding handicapped citizens versus individuals with a disability.
     

  • SB1089 (Chapter 32) amends RP Section 11B-113.5, and addresses annexation of two residential areas of land in Columbia, Maryland near Columbia Mall that are not part of any of Columbia’s villages.  Without being part of a village, the residents cannot participate in Columbia Association or Columbia Council.  To be annexed, currently the annexation would have to be approved by FHA (which is no longer part of the process) or by two-thirds of all CA voters, which has become too large an area to effectively accomplish this.  As amended, annexation is requested and approved at the village or town center level.  This bill was enacted April 6, 2006, as an emergency matter, effective immediately.
     

  • HB298/SB253 (Chapter 568) amend RP Section 14-117 to require that residential sales contracts in all but certain excluded counties require a disclosure that the property may be located “near a military installation that conducts flight operations, munitions testing, or military operations that may result in high noise levels.”  Excluded counties are Allegheny, Carroll, Frederick, Garrett, Howard, Montgomery or Washington.  [Effective 10/1/06.]
     

  • HB128 amends RP Section 14-123 and 14-129 to require developers in Baltimore City that develop a residential project of more than 20 units, that will be located within a geographical area represented by a community association, to meet with the community association before proceeding.  It also deletes the requirement that Baltimore City have a local regulation that any new development of more than 20 units within an existing community association set aside at least 12.5 percent of the new units for affordable housing.  [VETOED ON CONSTITUTIONAL GRUONDS.]

 

2.         Tax-Property. A number of bills amend varying property tax credits.  Unless otherwise noted, if enacted, these would be effective 6/1/06 and apply beginning in tax years after 6/30/06:

  • HB941 (Chapter 362) amends T-P §9-103 to permit businesses located within an Enterprise Zone to remain eligible for property tax credits for 3 years after the expiration of the Enterprise Zone designation.
     

  • HB173 (Chapter 160) amends T-P §9-105 to clarify that if a deed to property subject to the homestead property tax credit is signed between January 1 and June 30, but is not recorded until after June 30, the new owner may apply to have the credit extended effective as of the date that the deed was made, not the date it was recorded.
     

  • HB1532 (Chapter 403) amends T-P §9-203 to expand the tax credit for solar or similar energy devices to include those used to generate electricity.
     

  • HB354 (Chapter 89) amends T-P §7-307 and 9-109, adds 9-243 and repeals TP 9-109.1.  These extend tax credits from post-Isabelle reconstruction.
     

  • HB114 (Chapter 296) amend T-P §7-208 to provide that a residence owned by a surviving spouse of certain military veterans shall be exempt from state property taxes, effective tax years beginning 7/1/06.
     

  • HB1026 (Chapter 373) amends Art. 17, PG County Code §10-187, local laws, to exempt Prince George’s County municipal or county police officers from transfer taxes on the sale of housing that will be used as the officer’s primary residence.  [Effective 7/1/06]
     

  • HB1235/SB1076 (Chapter 447) amend HCD §6-404 to expand eligibility for the Neighborhood and Community Assistance Tax Credits by including real property contributions, and increases the maximum value of the credit to $250,000.  [Effective as of 10/1/06 for all tax years beginning 1/1/07]
     

  • HB313/SB215 and HB5 (Chapter 27) amend T-P §9-104 regarding the calculation of the homeowner’s property tax credit to exclude cash value of retirement accounts from “assets,” include withdrawals from retirement accounts within “income” and amend the calculation regarding the value of the property against which it can be claimed, and excludes homeowners who earn more than $55,000 per year.  HB313/SB215 are not entirely consistent with the enacted version (HB 5), which also addresses Renter’s property tax relief.
     

  • HB275 (Chapter 169) amends T-P §9-105 regarding the Homestead Tax Credit to extend the credit to owners who temporarily do not occupy the homes due to illness or medical care, or because of a natural disaster, or to members of an agricultural limited liability entity, and amends the calculation for razed or substantially improved property.  In addition, retroactive refunds are permitted for certain post-Isabelle situations.
     

  • HB127/SB361 amend T-P §8-101, 8-209 and 9-107 to permit conservation property to be taxed at the agricultural rate, even if it is not actively used for agricultural purposes.
     

  • HB953 (Chapter 363) amends T-P §1-402 and 14-201 to require SDAT to provide information on the property assessments, and calculation of the assessments, on the SDAT website, in lieu of providing owners with hard copies of work sheets by mail if one is requested.  (Effective 10/1/06; applicable after 10/31/07.)

 

3.         Housing

  • SB11(Chapter 63) and SB12(Chapter 64) recodify (non-substantially) former Article 44A of the Annotated Code as Division II of the Housing and Community Development Article.
     

  • HB960 (Chapter 596) amends HCD 12-502 to permit housing authorities to develop housing projects through any non-profit entity, as opposed to just through a non-profit corporation. [Effective 7/1/06]

 

4.         Insurance

  • HB1460/SB463 (Chapter 620) amends Insurance §10-101, 10-121, and 22-102 by addressing numerous issues within the title insurance industry.  The “insurance producer independent contractor” (not an employee or associated with a licensed title insurance producer) is defined, but may not be used in a transaction unless the contractor holds an appointment with the title insurer on which the title insurance contract will be placed.  The bills also address site reviews for title insurance producers, exclude law firms from licensing, binding and similar requirements, and exclude commercial real estate transactions from notice requirements.  [Effective 10/1/06]
     

  • HB570/SB913 (Chapter 580) amends numerous sections of the Insurance Article and provides a 45-day underwriting period for non-renewal policies (including property and commercial liability policies), and clarifies an insurer’s cancellation procedures. [Effective 1/1/07.]
     

  • HB285 (Chapter 454) amends Insurance §27-501 to prohibit an insurer from canceling a policy based only on an inquiry for which no claim was paid. [Effective 10/1/06]

 

5.         Commercial Law

  • HB512/SB354 (Chapter 521) amend Title 9 of the Commercial Law Article (UCC) to clear up an inconsistency regarding continuation statements.  In 2001, expiration dates of financing statements were shortened from 12 years to 5 years.  This bill clarifies that continuation statements are effective if filed within 6 months after the expiration of the financing statements, as the expiration date was set when the financing statement was originally filed.  [Will apply to all financing statements filed before 7/1/06.]
     

  • HB1288 amends Commercial Law 12-124, 12-410, 12-909 and 12-1007 to clarify that lenders cannot require borrowers to insure property for more than full replacement costs.  [Effective 10/1/06.]

 

6.         Brokers

  • HB1107 (Chapter 200) amend Business Occupations 17-322 and 17-3A-10 to permit reciprocity for brokers licensed outside of Maryland to offer services in Maryland, at the level (salesperson, associate broker, broker) most similar to the broker’s home state license, if the out-of-state broker affiliates with a licensed Maryland broker.  [Effective 10/1/06.]
     

  • HB715 (Chapter 188) amend Business Occupations §17-518 to permit a licensed salesperson to manage a real estate branch office if the salesperson both meets brokerage educational and testing requirements and has a commitment from an existing broker to be engaged as an office manager [Effective 10/1/06.]
     

  • SB55 (Chapter 35) clarifies that fees set in Business Occupations in Title 17 shall remain in force until new fees are adopted as of July 1, 2007.  [Effective 7/1/06.]
     

  • HB1166 (Chapter 606) amends Business Occupations §10-206 to permit a non-lawyer to represent a common ownership association in any board or commission hearing.  [Effective 10/1/06.]

 

For additional information on topics of less general interest, please see: 

Land Use:

  • HB1277 (Chapter 490) - DNR/local land use applications and conservation easements

  • HB1141 (Chapter 381) - Comprehensive plans and annexed land; related to WSSC

Public Safety:

  • SB485(Chapter 136) – Exemptions from building performance standards for agritourism

Land Preservation Easements:

  • HB769 (Chapter 192) – tax credits for agricultural districts

  • HB460 (Chapter 174) – limited waiver of lot size restrictions for released lots

  • HB90 (Chapter 76) – dwelling relocations

  • HB2 (Chapter 289) – funding and programs, Agricultural Stewardship Act of 2006