Maryland Real Estate Practices
- Attorney Involvement
- Cancellation/Commitment Fee
- Certificate of Release (of Mortgage)
- Joinder of Spouses
- Mortgage Tax
- Payment Customs
- Real Estate Taxes
- Search and Examination Fees
- Search Requirements
- Security Instruments (Deed of Trust vs. Mortgage)
- Standard Exceptions and Requirements
- State-specific Policy Variations
- Title Insurance Form and Filing Regulations
- Transfer Taxes
- Withholding Taxes
- Witness Requirements
Please describe any requirements under applicable state law for attorney, abstractor or other special professional involvement, for example, in the search, examination, opinion of title, signing, closing, disbursement, recording, preparation of documents, and/or policy-issuance.
Attorney involvement is not required for title searches, examinations, opinions of title, disbursements, document recording, preparation of standard closing documents, or policy-issuance.
Maryland Real Property §3-104(f)(1) requires an attorney to certify that any deed, mortgage or deed of trust has been prepared by an attorney or under an attorney’s supervision, or a certification that the instrument was prepared by one of the parties named in the instrument, in order to record the instrument.
Where title insurance is involved, only licensed title insurance producers may perform escrow, closing, or settlement services, or exercise control over trust money. In most cases, attorneys who solicit, procure or negotiate title insurance contracts require a title insurance license. There are special bonding, education and examination requirements for attorneys. Under Maryland unauthorized practice of law standards, only licensed attorneys may close uninsured transactions.
Does your state permit or require a cancellation fee or commitment fee upon cancellation?
Certificate of Release (of Mortgage)
If anyone other than the lender (such as a title agent, settlement agent, underwriter or attorney) has the authority to release the security instrument, please describe.
Under Maryland Real Property §3-105.2(c), when the debt secured by a mortgage, deed of trust, or lien instrument is paid fully or satisfied by a licensed title insurance producer, a title insurer, or a lawyer admitted to the Maryland Bar, and the party satisfied fails to provide a release suitable for recording, the settlement agent, title insurer, or lawyer may prepare and record a statutory release affidavit that may be received by the clerk and indexed and recorded as any other instrument in the nature of a release or certificate of satisfaction; and has the same effect as a release of the property for which the mortgage, deed of trust, or lien instrument is the security, as if a release were executed by the mortgagee, named trustees, or secured party. A copy of a certified copy of the payoff check or proof of a wire transfer must accompany the affidavit.
Please describe the kinds of deeds that are customary for commercial and residential transactions. Please describe the kinds of deeds that are generally not insurable.
Special warranty deeds are most commonly used in Maryland, and general warranty deeds are also accepted. Quit-claim deeds are highly disfavored, and may not be insured in the chain of title without underwriter approval.
Joinder of Spouses
If a non-title holding spouse is required to join in the execution of a deed or a security instrument, please describe. Any analogous rights, such as those in a civil union or equivalent, should also be addressed.
Maryland has abolished both dower and curtesy. No requirement exists for spousal joinder. Maryland’s same-sex marriage law took effect on January 1, 2013.
Is there a mortgage tax in your state? If yes, is it uniform across the state or does it vary? If it is uniform, please describe.
Yes. Each Maryland county (and Baltimore City) in Maryland establishes rates for its own recordation taxes. Please contact the Circuit Court Clerk’s office for the appropriate jurisdiction to calculate applicable taxes.
Who customarily pays for:
(a) Owner’s Policy?
(b) Transfer Tax & Recording Fee?
(c) Survey Charges?
(d) Closing/Settlement Fees?
Home buyers typically pay all costs related to purchasing the property (except for pro-rated items such as real property taxes, HOA dues, ground rents, etc.). Transfer taxes and recordation taxes are usually split between the parties, or as agreed to in the real estate contract. Under Maryland Tax-Property Article §13-203(b), the state transfer tax of 0.25% must be paid entirely by the seller when the property is sold to a first-time Maryland homebuyer.
Real Estate Taxes
Please describe the general tax year, due dates, and delinquency dates, including lien dates and payment cycle.
The fiscal year for real estate taxes is July 1 through June 30. Property tax bills are issued in July/August of each year by the 23 counties and Baltimore City, as well as the 157 incorporated municipalities in Maryland. Tax bills for a principal residence may be paid in two installments: one by September 30, and the other by December 31. Depending upon the county, there may be a discount for paying the entire tax bill in full by July 31/August 1.
Search and Examination Fees
Is it permissible and/or customary to charge a separate search and/or examination fee, and under what circumstances? If your jurisdiction is all-inclusive, please state that.
Search and examination fees are not regulated in Maryland. Search fees are pass-through charges typically paid by the purchaser/borrower. Examination fees are charged at the discretion of the title agent.
Is there a minimum period of time for a title search required: (a) by state law, (b) pursuant to marketable record title acts, or (c) by any other applicable title examination standards (e.g., state bar association)? Please respond to each category. If a minimum search period exists for any category, please state it.
A) In Maryland, a 60 year search is the standard for examining marketable title. See Coe v Hayes, 105 Md. App. 778, 785 (1995). Extension of this time period may be required if circumstances so indicate (e.g., restrictive covenants in old subdivision that pre-date a 60 year search). See Dept of Natural Resources v Welsh, 308 Md. 54, 57 (1986).
B) Maryland does not have a Marketable Title Act.
C) Other than case law, there are no applicable title examination standards.
Security Instruments (Deed of Trust vs. Mortgage)
Please describe the customary and permissible form(s) of security instruments used in your state.
Who can be listed as the trustee on the Deed of Trust (e.g., residency and/or natural person requirements, etc.)? Can an underwriter or title agent be designated as the trustee, and, if so, is it customary?
Deeds of trust and mortgages are both acceptable under Maryland law, however, deeds of trust are used in almost every residential transaction. Under Maryland Real Property §7-105 and Maryland Rule 14-214(b)(2), corporate trustees may not exercise the power of sale. An individual (i.e., a “natural person”) appointed as trustee in a deed of trust or as a substitute trustee shall conduct the sale of property subject to a deed of trust. The individual need not be a Maryland resident. Stewart Title does not authorize any of its officers, employees or associates to be named as a trustee under any security instrument.
Standard Exceptions and Requirements
Please identify the standard exceptions and requirements that are customarily used in your state.
Rights or claims of parties in possession not recorded in the Public Records.
Easements or claims of easements not recorded in the Public Records.
Encroachments, overlaps, boundary line disputes, or other matters which would be disclosed by an accurate survey and inspection of the Land.
Any lien, or right to a lien, for services, labor, or material heretofore or hereafter furnished, imposed by law and not recorded in the Public Records.
Taxes or assessments which are not recorded as existing liens in the Public Records.
State-specific Policy Variations
If there are state-specific changes to the provisions in the ALTA policies (e.g., Arbitration, Minerals), please describe.
Title Insurance Form and Filing Regulations
Please describe the form and/or rate filing requirements, if any, related to policies and endorsements. Please describe any applicable rating bureau.
Rates and forms are filed with the Maryland Insurance Administration (“MIA”).
Is there a transfer tax in your state? If yes, is it uniform across the state or does it vary? If it is uniform, please describe.
There is a 0.50% state transfer tax applicable to purchases/sales. Some counties and Baltimore City also charge their own transfer taxes. Under Maryland Tax-Property Article §13-203(b), a state transfer tax of 0.25% must be paid entirely by the seller when the property is sold to a first-time Maryland homebuyer. Please contact the Circuit Court Clerk’s office for the appropriate jurisdiction to calculate applicable taxes.
Is usury coverage available?
Yes, subject to underwriter approval. Usury coverage is considered an extra-hazardous endorsement.
What are your state’s requirements, if any, with regard to withholding proceeds from a sale, similar to but not including FIRPTA?
MD imposes a non-resident withholding tax of 7% of the net proceeds of the transaction for an individual, or 8.25% for entities. See Maryland Bulletin MD2015006 for details here: http://www.vuwriter.com/en/bulletins/2015-1/md2015006.html
Are witnesses required on a deed or security instrument? If so, please describe.
In general, a notary acknowledgment is required for legal documents affecting title. Be aware that a notary acknowledgment and two witnesses (one of whom may be the notary) are required for Maryland powers of attorney.