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 Summer/Fall 2013  

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MESSAGE FROM THE MREC STAFF

 

Katherine Connelly On September 20, 2013, Kathie Connelly was elected to the position of President-Elect of the Association of Real Estate License Law Officials (ARELLO). Her one-year term begins in January 2014, which will lead to her installation as President of ARELLO in September 2014 for a term beginning January 2015. The Commissioners and staff of the Commission congratulate Kathie on her election to this position.

Congratulations!

Steve, Pat, Charlene, Celestine, Darchelle, Brenda, Lucinda, John, Dawn, Patrick, Jack, Bill, Jennifer, Bob and Diane

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LICENSING BOARDS IMPLEMENT MAJOR INITIATIVE FOR VETERANS
The Veterans Full Employment Act of 2013
HB225 signing
First Lady Michelle Obama looks on as Lieutenant Governor Anthony G. Brown, Senate President Thomas V. Mike Miller, Jr., Governor Martin O'Malley and House Speaker Michael E. Busch enact The Veterans Full Employment Act of 2013

Credit: Executive Office of the Governor

The Maryland Real Estate Commission, along with the Department of Labor, Licensing and Regulation's (DLLR) other occupational and professional licensing boards, have finished designing a new, streamlined licensing process for Maryland's military personnel, veterans and their spouses. In the 2013 Session of the Maryland General Assembly, Maryland joined a number of other states in supporting the initiative of First Lady Michelle Obama and Dr. Jill Biden to help military families transition from military service to the civilian workforce. The Veterans Full Employment Act of 2013 was signed by Governor Martin O'Malley on April 17, 2013, with the First Lady present. Others present for the signing were Senate President Thomas V. Mike Miller, Jr., House Speaker Michael E. Busch, and Lieutenant Governor Anthony G. Brown.

The Act, which went into effect on July 1, 2013, is part of the Governor's effort to achieve full employment for Maryland veterans by the end of 2015. It removes a lot of the paperwork, costs, and waiting that veterans and their spouses often endure when they are seeking employment due to frequent out-of-state moves or discharge after deployment. The First Lady lauded Maryland's law before the General Assembly. She said, "...your bill here in Maryland is one of the best bills that we have seen in this entire country. You are tackling three big issues at once. You're helping our veterans obtain professional credentials. You're helping them earn college credit. And you're making it easier for military spouses to continue their careers as they transfer to your state."

O'Malley greets First Lady
Credit: Executive Office of the Governor
The new law affects many of the State's industries that require licensing, as well as public educational systems that are part of the path to licensure. Veterans will be assured credit for their relevant military training, education and experience when accumulating academic credit and fulfilling licensure requirements. Service members, veterans and their spouses who are licensed in another state will see expedited licensing procedures, including the issuance of temporary licenses, if they relocate to Maryland and meet our requirements for reciprocity.

The full text of the Act can be found here. On the DLLR website, the occupational and professional boards have published the process for obtaining licensure under the guidelines of the Act, as well as the materials needed for expedited applications. As of July 1, active duty and recently-discharged members of the U.S. Armed Forces, reserve components of the Armed Forces, or a state national guard can now expect a faster, easier process to obtain licensure in Maryland. To read more about the process, please click here.

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TIMETABLE SET FOR BROKERS TO PASS EXAM AND APPLY FOR LICENSURE
At the July 2013 meeting of the Maryland Real Estate Commission, final action was taken on new regulations that add time restrictions to some of the requirements of a Maryland broker's exam and license. The adopted regulations amend Regulation .14 and repeal Regulation .05 under COMAR 09.11.01 General Regulations to contain the new provisions.

In order to obtain a Maryland broker's or associate broker's license, an applicant must:
  • Pass both portions of the real estate broker's examination within one year of completing pre-licensing education. If an applicant does not take or pass the exam within one year of completing the education requirements, the applicant will be required to complete a new set of education requirements in order to take or retake the exam.
  • Apply for licensure within one year of successfully completing the exam. After one year, exam results are invalidated.
  • Provide satisfactory evidence on the broker's application that he or she has practiced as a licensed salesperson, broker, or associate broker in good standing for at least three years immediately preceding submission of the application. 
In order to phase in the requirements, Regulation 09.11.01.14 contains conditional provisions for applicants who have already completed the education requirements. If an applicant completed the requirements more than one year prior to August 31, 2013, the applicant must pass both portions of the exam no later than February 28, 2014. If an applicant completed the requirements less than one year prior to August 31, 2013, the applicant must pass both portions within one year of completion of the requirements. In both cases, if the applicant fails to take or pass the exam by the cut-off date, he or she will have to complete a new set of education requirements in order to take or retake the exam.

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MREC FOCUSES ON ADVERTISING AT CONFERENCE
Members of the Commission and MREC staff took part in an effective outreach effort to licensees at the 2013 annual MAR Conference & Expo in Ocean City this September. This year, the MREC chose a theme of real estate advertising for its conference booth, with special attention paid to advertising used by teams and groups. As in previous years, our booth was well-received and provided us with an opportunity to demonstrate how to design signs, email blasts, and business cards to be compliant with Maryland law.

A simple rule of thumb to remember about real estate advertising is that if your name and telephone number appear in an ad, then your broker's full company name and number must also appear in the ad. Also, your broker or branch office manager's name and number must be displayed in a "meaningful and conspicuous way" (See Md. Code Ann., Bus. Occ. And Prof. 17-547(b)). In other words, your target audience shouldn't have to use a magnifying glass in order to read the name of your affiliated brokerage. Section 17-547 also mandates that the name of at least one licensee belonging to the team or group must appear in the ad, if it has a name other than the licensee's name. The licensee is free to include his or her cell phone number, but the office number must appear just as prominently as the cell phone number.

Finally, Section 17-547 dictates certain guidelines for the use of team and group names in real estate advertising. The team or group may not advertise using a name that contains the terms "real estate," "real estate brokerage," or any other term that may be construed as offering brokerage services by the team independent of the team's broker. The team name must also be "directly connected" to the name of the brokerage, meaning it must appear next to the broker's name, using "of" or "with" to establish the connection.

Take a look at the following fictitious half-page advertisement for a luxury high-rise condominium for sale in Baltimore. Can you tell why the MREC marked it "non-compliant"? We'll give you the answers at the end of this newsletter:


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WEBSITE SERVICES: ONE SIZE DOES NOT FIT ALL
Marketing services that offer web-based, ready-made advertising templates to real estate professionals have proliferated in recent years. More than simply offering web design services, these businesses offer to maintain sites that come complete with almost all of the content already written. By paying for the service, an agent becomes part of a network of agents listed as experienced providers, and receives a customizable website tailored to his or her business.

The Commission recently reviewed the website of a business that promised to generate thousands of leads for agents who want to advertise themselves as experienced in handling short sales. The template being sold was packed with information, tutorials, consumer resources, and premade forms for transacting short sales. However, after reading through some of the information, the Commission found that some of it was not correct or not legal for conducting short sales in Maryland. It was also noted that some of the suggested activities listed in the premade web pages would not be considered real estate brokerage services in our State.

Please pay careful attention to advertising materials you consider purchasing for your practice, especially when there is supplied copy as part of the product. If you would like the MREC to review an advertising product before you decide to buy it, please send it to kconnelly@dllr.state.md.us.

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MREC ISSUES GUIDELINES FOR LICENSEES IN SHORT SALE TRANSACTIONS
If you missed the email we sent to all licensees in July regarding short sale transactions, you can download a copy of the MREC guidelines here. During the 2013 legislative session, the Maryland Mortgage Assistance Relief Services Act (MD MARS Act) was passed. Since real estate licensees are not specifically exempted from the Act, the MREC developed guidelines to help licensees act within the scope of their license during the short sale process. It is very important for licensees to know where the lines are drawn between the types of services covered by a real estate license and those requiring compliance with the MD MARS Act or a credit services business license.

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REVISED DISCLOSURE/DISCLAIMER FORM AVAILABLE
As of July 1, 2013, all sellers are required to execute the  newly-revised Disclosure/Disclaimer statement regarding the condition of their home, including improvements and known defects. Changes were made to three areas of the form regarding sewage disposal, smoke alarms and renovations that require permits. The form may be downloaded here. We made some minor edits to the form after July 1st, so be sure to use the most current version containing a revision date of 8/30/13 on the bottom of page four.

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PROTECTING CONSUMERS: IS THAT HOUSE COVENANT-CONTROLLED?
In June 2013, the Commission received a letter from a homeowners association in Baltimore, alleging that area realtors routinely neglected to make prospective home buyers aware of the covenants binding to their community. The association had been involved in disputes with new homeowners claiming they had no knowledge of existing covenants because the information  wasn't disclosed to them at the time of purchase.

Sellers who own homes in covenant-controlled communities are required to disclose to buyers, in writing, that there are legally binding covenants and/or residency dues associated with their properties. Licensees can check Question 18 of the Maryland Residential Property Disclosure and Disclaimer Statement for that information. If it isn't disclosed, then any restrictive covenants should appear in the deed to the property. To access Maryland land records in order to pull a deed, visit MDLandRec.Net. The site is free and easy to use.

Please make sure to verify sellers' answers to Question 18 on the Disclosure/Disclaimer form. Licensees are required by the Code of Conduct to make a "...reasonable effort to ascertain all material facts concerning every property for which the licensee accepts the agency, in order to fulfill the obligation to avoid error, exaggeration, misrepresentation, or concealment of material facts." See COMAR 09.11.02.01D.

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DO YOU HAVE A NEW EMAIL ADDRESS?
Do you have a new email address or any changes to your personal information? The best way to notify the MREC is to make the changes yourself. When you enter your new information into the Commission's website, you are directly accessing the licensing database that contains your licensing data. Some licensees attempt to make changes by replying to our newsletters and other email communications, but that isn't as effective as accessing your record yourself. Our digital communications are not directly linked with our licensing database.

When you need to notify us of a name or address change, an alteration in the status of your license, or when you want to transfer to another broker, click on the MREC's status change area of the website. It's easy, your information is protected, and the changes take effect immediately. That way, you'll know it's done and you can cross it off your to-do list.

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TRENDING NOW: BROKERAGE INDUSTRY DEBATES "POCKET LISTINGS"
Reprinted from the August 2013 ARELLO Boundaries newsletter with permission. The following article is intended for informational purposes only and is not intended to reflect the position or opinion of ARELLO or any of its members, employees or agents. ARELLO position statements can only be issued in accordance with the ARELLO Bylaws and Policies and Procedures.

The resurgence of "pocket listings" in many U.S. residential real estate markets has renewed the industry debate over the practice, pitting proponents who argue that pocket listings are perfectly legal and serve the needs of many sellers in today's residential markets, against opponents who raise open market, fiduciary duty and fair housing concerns.

"Pocket listings" [also called "private", "quiet" or "off-market" listings] involve the practice of withholding residential listing data from multiple listing service (MLS) systems. Instead, the property is marketed by real estate licensees to existing clients and contacts through informal networks and/or various Internet-based services that provide alternatives to the MLS [e.g., www.pocketlistings.net]. The practice is not new to the real estate industry, but seems to proliferate when market conditions include low inventories, low mortgage rates and rising home prices.

Opponents of the practice argue that sellers may be disserved by pocket listings since MLS systems provide the widest possible market exposure and thus produce the highest possible selling prices. They also assert that pocket listings harm the effectiveness of the MLS cooperative brokerage system, skew MLS listings-based data that support accurate property valuations, and beg the question of whether agents may be utilizing narrowed marketing methods to collect the full available brokerage commission instead of soliciting purchase offers through cooperating brokers.

Proponents of the practice say that there are many reasons why sellers may not want to engage in the traditional practice of listing their properties on an MLS. For example, pocket listings are sometimes used to market high end luxury homes whose owners have no interest in allowing showings to the general public and want the property marketed to those who have realistic means of purchasing it. Some owners may wish to establish a working relationship with a real estate licensee in order to obtain advice about making repairs or improving the marketability of the home (e.g., staging) prior to advertising it for sale. Others may have privacy or security concerns about listing properties on widely broadcast MLSs or publishing interior photos of the property. Pocket listing proponents also argue that the MLS, which publishes the number of days a property has been on the market, can disadvantage owners who experience failed transactions due to complications that have nothing to do with the fair market price of the property.

Both supporters and critics generally agree that pocket listings are not illegal, per se. Real estate licensing laws, which vary among jurisdictions, may dictate the specific form of written listing agreement that must be used by licensees, the point at which it must be executed and/or require that certain brokerage relationship and other types of disclosures be included in the agreement. But the manner in which the property is to be marketed, and for what amount and form of brokerage commission, are matters that are generally left to be negotiated by the listing licensee and the seller.

Still, some observers suggest that pocket listings may subject brokers and agents to accusations that they put their own interest in collecting a commission for both "sides" of a transaction ahead of the seller's interests in obtaining the highest possible sale price, a scenario that, if true, could raise issues involving common law fiduciary and/or statutory brokerage duties. Other critics question whether sellers are being provided with disclosures that fully explain the potential disadvantages of narrowed marketing efforts. Still others warn that pocket listings may run afoul of federal fair housing laws that not only prohibit readily apparent or intentional housing discrimination against protected classes, but also practices that have a "discriminatory effect" that "... actually or predictably results in a disparate impact on a group of persons or creates, increases, reinforces, or perpetuates segregated housing patterns because of race, color, religion, sex, handicap, familial status, or national origin." [See, "Fair Housing: HUD Formalizes 'Discriminatory Effect' Liability Test", Boundaries March 2013; "HUD Study: Subtle Housing Discrimination Persists", Boundaries July 2013). It should be noted that much of the brokerage industry debate about pocket listings centers on MLS rules that require members to enter listing data within a short period of time following the execution of a listing agreement, as well as National Association of REALTORS ethics code provisions that address cooperation among its members. However, some MLS systems allow the practice through an opt-out form executed by the seller and NAR has not taken a formal position on the matter. Regardless of those issues, it is fairly clear that real estate licensees who engage in pocket listings may be well advised, as with all brokerage practices, to inform their efforts with a thorough knowledge and understanding of applicable real estate licensing laws involving brokerage relationships and disclosures, advertising, conflicts of interest and other licensing law strictures that may bear upon the practice.

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COMMISSION CHANGES

This spring and summer, the MREC experienced a major change in membership of our Industry Commissioners. Sadly, we bid farewell to Nancy Rothwell Simpers, who decided to not seek reappointment after having served 14 years on the Commission. During her tenure, Commissioner Simpers served as Chair and Vice-Chair, and tirelessly shared her expertise in service to the Commission, real estate professionals and the general public. We will miss you, Nancy.

In July 2013, we welcomed William "Bill" J. Neary, Jr. to serve as an Industry Member representing the counties of eastern Maryland. Commissioner Neary is an associate broker with Fountain, Firth and Holt in Easton, Maryland. He brings over 29 years of real estate experience to the MREC, with most of those years spent in high-profile leadership roles. Neary was president of the Maryland Association of REALTORS (MAR) in 2001, and has served in numerous capacities for MAR, the National Association of REALTORS, and the Mid-Shore Board of REALTORS. Welcome, Bill.

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STAFF CHANGES

The Commission would like to extend a warm welcome to our two newest staff members, Diane Carson and Dawn Mazzaferro. Diane joined us as an Investigator, making our investigative team a total of five. Dawn was hired as an Office Secretary III, and works in complaints, education and as an assistant to the Director and Assistant Director. Both employees came to us from the State Department of Public Safety and Correctional Services.

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UPCOMING COMMISSION MEETINGS

The Maryland Real Estate Commission holds regular meetings that are open to the public. The meetings begin at 10:30 a.m. and are located at the offices of the Division of Occupational and Professional Licensing, Department of Labor, Licensing and Regulation. The address is 500 North Calvert Street, 3rd Floor Conference Room, Baltimore, Maryland 21202. Please contact the Division at 410-230-6220 or op@dllr.state.md.us for additional information.


Wednesday, November 20, 2013

Wednesday, December 18, 2013

Wednesday, January 15, 2014

Wednesday, February 19, 2014

Wednesday, March 19, 2014

Wednesday, April 16, 2014

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ADVERTISING: DID YOU GUESS CORRECTLY?
Did you read the article about the MREC's booth at the MAR Conference & Expo? Why was the example advertisement of the Baltimore condo non-compliant? There were two errors that violated the Maryland Real Estate Brokers Act:
  • The advertisement does not contain the name of the affiliated brokerage attached to the group name of K. F. Connelly & Associates.
  • The group's name itself is misleading because it appears to be a brokerage. In order for K. F. Connelly to be able to use "& Associates" as part of its group name, every member of the group must be a licensed associate broker.

 Here is how we revised the advertisement to bring it into compliance:

 

 

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DIVISION PERSONNEL

Michael Vorgetts,
Acting Commissioner, Occupational and Professional Licensing

Janet Morgan,
Outreach Coordinator

COMMISSIONERS

John Nicholas D'Ambrosia,
Chair, Industry Member, Charles County

Anne S. Cooke,
Vice Chair, Industry Member, Howard County

Marla S. Johnson,
Industry Member, Frederick County

William J. Neary, Jr.,
Industry Member, Talbot County



Robin L. Pirtle,
Consumer Member, Montgomery County

Jeff Thaler,
Consumer Member, Worcester County

Georgiana S. Tyler,
Industry Member, Baltimore City

Colette P. Youngblood,
Consumer Member, Prince George's County

MREC STAFF

Katherine F. Connelly,
Executive Director

Steven Long,
Assistant Executive Director 

Patricia Hannon, Education Administrator

Diane Carson, Investigator


Charlene Faison,
Licensing Supervisor

Jennifer Grimes, Investigator

Celestine Hall, Reception/Education

Robert A. Hall, Investigator

Brenda Iman, Paralegal

Darchelle Lanteon, Licensing

Dawn Mazzaferro, Secretary

Jack Mull, Investigator

William F. Reynolds, Investigator

Patrick Richardson, Auditor

Lucinda Rezek Sands, Paralegal

John West, Complaint Intake Administrator

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Department of Labor, Licensing and Regulation / Maryland Real Estate Commission
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