New Maryland Real Estate Laws

[Russell Brazil]

Two important pieces of legislation took affect on October 1st. The first which cover the whole state is a change in the agency law. Previously if you were a buyer working with an agent, and you did not have a written agreement it was Presumed that you were working in an agency relationship, thus a relationship called Presumed Agency. Now if an agent shows you a property, and you do not have a written agency agreement with the agent, then they are representing the seller.

So what is the reality of this situation? It likely means that your agent will now need a written agreement with you to operate within the parameters of the law.

The 2nd major piece of legislation applies to Montgomery County. All single family homes (SFH, TH, Not Condo, Not Commercial) sold in Montgomery County now require a radon test before closing. Some lenders are requiring a copy of the test for underwriting as well. The law does not dictate who will pay for the test, buyer or seller.....however the new disclosure forms seem to allow the seller to choose who will pay for it.

So I think in reality, all buyers should be prepared to pay for the test, and I think, though I dont know for sure, that lenders will require remediation if the level is above the federally prescribed safety levels.

[Russell Brazil]

@Chin P. The idea behind the law change was to protect consumers. They believe that a consumer should have a written, easily understood agreement with their agent so everything is very clear. This is how things have been done in Virginia for years. I however am of the belief that this actually hurts the consumer.  One of the most important aspects of the agent/client relationship is the duty of confidentiality. So previously if a consumer were to meet an agent, and start to tell them something confidential, that agent would be bound by confidentiality because the agency relationship was presumed to exist. I believe that consumer will continue to presume that it exists, when now it does not. Now technically the agent who is de facto representing the seller in this situation would have a fiduciary duty to disclose these conversations with the buyer to them to help them in the negotiation process, as they would be a sub-agent of the listing agent if there is no written agreement with the buyer. I find this to be unethical personally, but it is how the law currently exists.

@Thada Bornstein dual agency in Maryland means something completely different from the colloquial meaning as it is understood in other states. Dual agency in Maryland merely means that both agents involved in a transaction both work under the same broker, such as the 10,000 agents at Long & Foster all being under the one broker of record for the entire company. The same agent can not represent both sides of a single transaction as they can in other states in what is known in those states as dual agency (Which exists in both DC and VA)