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09.11.01 - Maryland Real Estate Commission - Proposed Regulations

PROPOSED ACTION ON REGULATIONS
MARYLAND REGISTER, VOLUME 44, ISSUE 2,
FRIDAY, JANUARY 20, 2017

Title 09 DEPARTMENT OF LABOR, LICENSING, AND REGULATION

Subtitle 11 REAL ESTATE COMMISSION

09.11.01 General Regulations

Authority: Business Occupations and Professions Article, §§17-208, 17-303, 17-306, 17-315, and 17-530, Annotated Code of Maryland

Notice of Proposed Action
[17-032-P]

The Real Estate Commission proposes to repeal existing Regulations .04, .08, .15, and .26, recodify existing Regulations .05, .12, .17, .20, .22—.25, and .27 to be Regulations .04, .10, .14, .17, .19—.22, and .23, and amend and recodify existing Regulations .06, .07, .09, .10, .11, .13, .14, .16, .18, .19, and .21 to be Regulations .05, .06, .07, .08, .09, .11, .12, .13, .15, .16, and .18 under COMAR 09.11.01 General Regulations.

This action was considered at a public meeting held on July 20, 2016, notice of which was given by posting notice on the agency website, pursuant to General Provisions Article, §3-302(c), Annotated Code of Maryland.

Statement of Purpose

The purpose of this action is to repeal certain regulations and amend certain regulations which are inconsistent with or duplicative of current statutes; make revisions to clarify the Commission’s policy regarding license applications; repeal certain regulations and amend certain regulations which do not accurately reflect current Commission policy; make corrections to outdated or invalid terminology, references, and typographical errors; clarify the requirements related to pre-license education; and clarify the requirements related to a licensee’s obligation to respond to the Commission’s written inquiries.

Comparison to Federal Standards

There is no corresponding federal standard to this proposed action.

Estimate of Economic Impact

The proposed action has no economic impact.

Economic Impact on Small Businesses

The proposed action has minimal or no economic impact on small businesses.

Impact on Individuals with Disabilities

The proposed action has no impact on individuals with disabilities.

Opportunity for Public Comment

Comments may be sent to Kathie Connelly, Executive Director, Real Estate Commission, 500 North Calvert Street, or call 410-230-6227, or email to kathie.connelly@maryland.gov, or fax to 410-333-0023. Comments will be accepted through March 6, 2017. A public hearing has not been scheduled.

[.06] .05 Submission of Credit Report.
An applicant for an original real estate broker’s license shall submit a credit report from an approved credit reporting agency. The credit report shall include any [a statement of the applicant’s personal background with respect to lawsuits,] judgments[,] and local, state or federal tax liens [the moral character] of the applicant.

[.07] .06 Records of Transactions.
[Licensees shall maintain adequate records of all real estate transactions engaged in by them as licensed real estate brokers or salesmen.] If a licensee has custody or possession of money belonging to others, in the absence of proper written instructions from the parties involved in the transaction to the contrary, [these funds may not be intermingled with funds belonging to the licensee, but rather] they shall be deposited and retained [as required] in a non-interest-bearing escrow account clearly designated as containing funds held for others. [The records of transactions, including bank accounts or deposits referred to in these regulations, shall be available during usual business hours for inspection by the Commission, its field representatives, or other employees.]

[.09] .07 Establishing an Escrow or Special Account.
  A. A real estate broker shall maintain a non-interest-bearing escrow or special account and report the bank’s name and account number to the Commission as soon as trust monies are received. If a licensee establishes another non-interest-bearing or special escrow account, changes [his] the escrow account number, or transfers the account to another bank, [he] the licensee shall notify the Commission in writing within 10 days after the action.
  B. The establishment of individual interest-bearing accounts, as provided under Business Occupations and Professions Article, §17-505, Annotated Code of Maryland, [and accounts which earn interest to benefit the Maryland Housing Resource Corporation, as provided under Business Occupations and Professions Article, §17-506,] need not be reported to the Commission as long as records are maintained for each account and available for inspection by Commission personnel during regular business hours.

[.10] .08 Change of Business Location.
When a licensed broker changes [his] business location, [he] the licensed broker shall notify the Commission in writing within 10 days.

[.11] .09 Instruction in Real Estate Principles and Practices for Salespersons.
  A. (text unchanged)
  B. The minimum 60 clock-hour educational requirement for a salesperson shall embrace the following areas of study:
    (1) — (13) (text unchanged)
    (14) Property Condition Disclosure and Latent Defects;
    (15) (text unchanged)
  C. — D. (text unchanged)
  E. An individual who demonstrates by evidence satisfactory to the Commission active and regular engagement in real estate practice as a licensed real estate salesperson in a jurisdiction other than Maryland [for at least 3 of the 5 years immediately preceding submission of an application] may be considered to have satisfied the educational requirement for a salesperson set forth in this regulation if the prelicensing education requirements of that jurisdiction are equivalent to or greater than those of Maryland.
  F. (text unchanged)
  G. Completion of Examination.
    [(1) Subject to §G(2) and (3) of this regulation, an] An applicant for a salesperson’s license shall have 1 year from completion of a prelicensing education course to pass both portions of the salesperson licensing examination. An applicant who does not pass both portions of the licensing examination within 1 year of the course completion date must complete a new prelicensing course in order to be eligible to take or retake the examination.
    [(2) An applicant who has completed a prelicensing course more than 1 year prior to March 1, 2013, must pass both portions of the salesperson licensing examination no later than August 31, 2013, in order to avoid the need to complete a new prelicensing course.
    (3) An applicant who has completed a prelicensing course less than 1 year prior to March 1, 2013, must pass both portions of the salesperson licensing examination within 1 year of the course completion date to avoid the need to complete a new prelicensing course.]

[.13] .11 Place of Business for Real Estate Broker.
The definite place of business required by Business Occupations and Professions Article, §17-507, Annotated Code of Maryland, shall be an office or headquarters where the real estate broker and [his] the real estate broker’s employees regularly transact the business of a real estate broker. The records of the brokerage business, including the records of the escrow account, shall be kept in this office or headquarters. The Real Estate Commission may not consider an answering service, a mechanical message recording device or a mail drop, singly or in combination, to satisfy the requirements of an office under Business Occupations and Professions Article, 17-517, 17-518, and 17-520, Annotated Code of Maryland.

[.14] .12 Instruction in Real Estate Principles and Practice for Brokers.
  A. — G. (text unchanged)
  H. Licensing Examination.
    [(1) Subject to §H(2) and (3) of this regulation, an] An applicant for a broker’s license shall have 1 year from full completion of prelicensing education requirements to pass both portions of the broker licensing examination. An applicant who does not pass both portions of the licensing examination within 1 year of completion of the requirements shall complete a new set of prelicensing education requirements in order to be eligible to take or retake the examination.
    [(2) An applicant who has fully completed prelicensing education requirements more than 1 year prior to August 31, 2013, shall pass both portions of the broker’s licensing examination no later than February 28, 2014.
    (3) An applicant who has fully completed prelicensing education requirements less than 1 year prior to August 31, 2013, shall pass both portions of the broker’s licensing examination within 1 year of completion of the requirements to avoid the need to complete a new set of prelicensing education requirements.]
  I. (text unchanged)

[.16] .13 Form of Licensee’s Reply to Commission’s Written Inquiries.
A licensee shall reply in writing to the Commission within 20 business days of receipt of written inquiries directed to the licensee by the Commission. Failure to reply in this way may be considered by the Commission to be a violation of Business Occupations and Professions Article, [§17-322(a)(25)] §17-322(b)(25), Annotated Code of Maryland, for which revocation or suspension of the license can be imposed.

[.18] .15 Amount of Compensation Recoverable from Real Estate Guaranty Fund.
The amount of compensation recoverable by a claimant from the Real Estate Guaranty Fund, pursuant to Business Occupations and Professions Article, Title 17, Subtitle 4, Real Estate Guaranty Fund, Annotated Code of Maryland, shall be restricted to the actual monetary loss incurred by the claimant, but may not include monetary losses other than the monetary loss from the originating transaction. Actual monetary losses may not include commissions owed to a licensee of this Commission acting in [his] the licensee’s capacity as either a principal or agent in a real estate transaction, or any attorney’s fees the claimant may incur in pursuing or perfecting the claim against the guaranty fund.

[.19] .16 Use of Trade Names.
  A. — B. (text unchanged)
  C. Licensee Using Trade Name.
    (1) In the advertising of or contracting for any real estate brokerage services defined under Business Occupations and Professions Article, §17-101, Annotated Code of Maryland, a licensee using a trade name shall clearly and unmistakably include in the advertisement or contract [his] the licensee’s name or trade name, as registered with the Commission, to insure that [his] the licensee’s identity is meaningfully and conspicuously displayed to members of the general public.
    (2) A licensee using a trade name on a for-sale sign, business card, office sign, sales contract, listing contract, or other document relating to real estate activities as defined under Business Occupations and Professions Article, §17-101, Annotated Code of Maryland, shall clearly and unmistakably include on any of these documents [his] the licensee’s name, or trade name, as registered with the Commission.
  D. Any licensee who is in the course of oral communication with another person (whether in person or by telephone), shall clearly and unmistakably include in the communication [his] the licensee’s name, or trade name, as registered with the Commission, to insure that [his] the licensee’s identity is meaningfully and conspicuously made known to that person.

[.21] .18 Disposition of Deposit Monies Held by Licensees.
In any transaction in which a licensee has custody or possession of funds which belong to others, in the absence of a provision to the contrary, in the contract of sale, rental lease, option agreement, or other similar type of document, and a dispute arises as to the disposition of these funds by and between the parties to the transaction, the licensee shall:
  A. (text unchanged)
  B. File a bill of interpleader in the proper court in the county or Baltimore City, as the case may be, thereby causing these funds to be deposited in the registry of this court; [or]
  C. Hold these funds until such time as one of the parties to the transaction files suit and the court in which this suit is filed orders the disbursement of these funds, whichever event under the purview of B and C of this regulation shall first occur[.]; or
  D. Distribute the funds in accordance with the procedure set forth in Business Occupations and Professions Article, §17-505, Annotated Code of Maryland.

KATHIE CONNELLY
Executive Director
Real Estate Commission