MD RE Broker cheat sheet

The Maryland Real Estate Commission (MREC) sits within the Division of Occupational and Professional Licensing (Maryland Department of Labor); it licenses brokers, associate brokers, salespersons, and real estate teams.

Commission members are appointed by the Governor with Senate advice and consent and serve staggered terms; the Commission adopts regulations through COMAR Title 09, Subtitle 11.

Broker license requires at least 3 years of active experience as a licensed salesperson or associate broker (or equivalent experience accepted by the Commission), plus a 135-hour broker prelicense course, 3 hours of broker supervision, and a passing exam.

Salesperson prelicense education is 60 hours; licensees must complete 15 hours of continuing education per 2-year renewal term, including the required fair housing and ethics topics set by regulation.

License renewal runs on a 2-year cycle; failure to renew results in expiration, and continued practice on an expired license exposes the licensee to disciplinary action.

MREC may suspend, revoke, fine, or reprimand for misrepresentation, conversion of trust funds, undisclosed dual agency, failure to supervise, or unlicensed activity; hearing rights follow the Administrative Procedure Act.

A licensed salesperson must be affiliated with a licensed broker; only the broker (or an associate broker acting for the broker) may accept compensation for brokerage services.

Brokerage entities must register with MREC, designate a licensed broker, and notify the Commission of changes in the designated broker or business address.

Unlicensed persons may not perform acts requiring a license, though limited clerical and referral-fee exceptions exist under Maryland law and regulation.

Maryland uses a single agency framework: a licensee may represent seller, buyer, or both as disclosed dual agent; subagency is not presumed, and cooperating licensees are presumed to represent their own client.

Dual agency requires the informed written consent of all parties before the licensee acts; without consent, the licensee must act as a disclosed neutral (non-agent) or decline representation.

The agency relationship is established by a written agreement; the Maryland Residential Property Disclosure and Disclaimer Statement must be delivered by the seller before a contract is formed.

Statutory duties include loyalty, confidentiality, disclosure of material facts, accounting for money, obedience to lawful instructions, and reasonable care and diligence.

Confidential information learned before agency (or after termination) may not be used against a former client; material facts about the property's physical condition must still be disclosed to all parties.

A licensee working with a buyer without a written buyer agency agreement is presumptively the seller's subagent only if the brokerage has a written subagency arrangement; otherwise the licensee owes no agency duty to the buyer.

Licensees must disclose in writing their license status and any interest in the property when buying or selling on their own account.

Dual compensation (fees from both sides) must be disclosed and consented to in writing; net listing arrangements are prohibited in Maryland.

Termination of agency occurs by performance, expiration, mutual agreement, revocation, or bankruptcy; confidentiality survives termination.

Exclusive right to sell, exclusive agency, and open listing are the recognized listing types; an exclusive right to sell earns a commission regardless of who procures the buyer.

Listing agreements must state a definite termination date, be in writing, and be signed by the seller; oral listings are unenforceable for commission purposes.

Buyer agency agreements must be written, state the term, compensation, and whether the broker may receive compensation from the seller or listing broker.

Advertising must include the brokerage name as registered with MREC; team names must be registered and shown with the brokerage name in all advertising.

Advertisements for a specific property must identify the brokerage, and licensees may not advertise a property without the owner's consent.

Records of listings, offers, agency agreements, disclosures, and transaction files must be retained by the broker for at least 3 years after termination of the transaction or the agreement.

Trust account and transaction records must be available for MREC inspection; commingling of client funds with broker funds is prohibited.

Advertising through social media and websites is subject to the same brokerage-identification rules; personal pages used for business must disclose the brokerage affiliation.

Earnest money and other client funds must be deposited into a separate trust account (or a separately designated escrow account) no later than the next banking day after receipt, unless the contract directs otherwise.

Maryland permits the broker to hold deposits in a trust account, but the broker may not commingle personal or operating funds; an escrow account may be used for a single transaction.

Trust account withdrawals require the broker's authorization and must be supported by a ledger; disbursements must be documented by a settlement statement or written instruction.

Settlement statements (ALTA or HUD-style) show the purchase price, loan amount, prorations, closing costs, and disbursements; the buyer's and seller's debits and credits must balance to the same cash-to-close figure.

Prorations of taxes, rent, and homeowner association dues are calculated to the closing date using a 365-day year (or the actual month days) unless the contract specifies otherwise.

The broker must reconcile trust accounts monthly and retain reconciliation records; shortages must be corrected immediately and reported.

A broker may not disburse earnest money to a party without written release from all parties or a court order, unless the contract provides a specific forfeiture procedure.

Maryland requires the seller to provide the Residential Property Disclosure and Disclaimer Statement; the buyer's acknowledgment is part of the transaction file.

Forms of co-ownership include tenancy in common (no survivorship, unequal shares allowed), joint tenancy (right of survivorship, equal shares), tenancy by the entirety (married couples), and sole ownership.

Freehold estates: fee simple absolute, fee simple determinable, fee simple subject to condition subsequent, and life estate; leasehold estates are personal property interests.

A lien is a claim against property securing a debt; mortgage liens, mechanics' liens, tax liens, and judgment liens are common encumbrances that affect title.

Easements, covenants, conditions, restrictions, and encroachments are encumbrances that may not be liens; they run with the land and can affect use and value.

Title transfer occurs by deed (general warranty, special warranty, bargain and sale, quitclaim), by operation of law (inheritance, foreclosure, adverse possession), or by court order.

Maryland deeds must be in writing, signed by the grantor, acknowledged before a notary, and recorded with the clerk of the circuit court in the county where the property is located.

Recording gives constructive notice; a bona fide purchaser for value without notice may prevail over an unrecorded interest under Maryland's race-notice recording statute.

Title insurance protects against defects; a title search and survey identify liens, easements, and encroachments before closing.

Adverse possession in Maryland generally requires actual, open, notorious, exclusive, hostile, and continuous possession for the statutory period (20 years for non-payment-of-tax claims under common law).

A valid contract requires offer, acceptance, consideration, capacity, lawful purpose, and mutual assent; the Statute of Frauds requires real estate contracts to be in writing and signed.

Maryland residential contracts typically include financing, appraisal, home inspection, and title contingencies; the buyer must apply for financing within the stated period.

The Maryland Residential Property Disclosure and Disclaimer Statement must be delivered by the seller; the buyer may rescind within a specified period if the statement is not delivered.

Lead-based paint disclosure is required for pre-1978 housing under federal law; the buyer receives the EPA pamphlet and a 10-day inspection opportunity.

Financing instruments: note (promise to pay), mortgage/deed of trust (security instrument), and the deed (transfer of title); Maryland uses deeds of trust with trustees and a power of sale.

Loan types include conventional, FHA, VA, and USDA; each has different down payment, mortgage insurance, and underwriting requirements.

The Loan Estimate must be delivered within 3 business days of application; the Closing Disclosure must be delivered at least 3 business days before consummation under TRID.

RESPA prohibits kickbacks and unearned fees; affiliated business arrangements require disclosure and may not require the use of a particular provider.

Agency disclosure, dual agency consent, and the brokerage relationship disclosure must be provided in writing before the parties sign the contract.

Zoning regulates use, density, setbacks, height, and lot coverage; nonconforming uses may continue but generally cannot be expanded without variance or conditional use approval.

Variances address hardship from the strict application of zoning; special exceptions/conditional uses address uses permitted with conditions; rezoning changes the classification of the property.

Subdivision and site plan approval require compliance with local platting, infrastructure, and stormwater management rules.

Environmental issues include wetlands, floodplains, lead paint, asbestos, radon, underground storage tanks, and mold; disclosure obligations vary by statute.

The three approaches to value are the sales comparison approach (most reliable for residential), the cost approach (special-purpose or new construction), and the income approach (investment property).

Gross rent multiplier = sale price / gross monthly rent; capitalization rate = net operating income / value.

Adjustments in the sales comparison approach are made to the comparables to reflect differences from the subject property.

Highest and best use is the reasonably probable, legally permissible, physically possible, financially feasible use that produces the highest value.

Maryland's Critical Area Act restricts development within 1,000 feet of tidal waters; local programs regulate buffer and impervious surface limits.

The broker is responsible for supervising all affiliated licensees, including associate brokers, salespersons, and team members; supervision must be documented.

Brokers must maintain written policies on agency, advertising, trust accounts, and fair housing, and provide training to affiliated licensees.

Fair housing laws prohibit discrimination based on race, color, religion, sex, national origin, familial status, disability, and additional protected classes under Maryland law (including source of income and sexual orientation).

Maryland law prohibits discrimination based on source of income, marital status, sexual orientation, gender identity, and disability; local jurisdictions may add protected classes.

Reasonable accommodations and modifications must be permitted for persons with disabilities; steering, blockbusting, and discriminatory advertising are prohibited.

Brokers must maintain transaction files, trust records, and advertising records for at least 3 years and make them available to MREC on request.

Independent contractor agreements must be in writing; brokers must withhold and remit appropriate taxes and maintain workers' compensation coverage where required.

Brokers must ensure affiliated licensees complete continuing education and renew licenses on time; unlicensed assistants may not perform licensed activities.

Commission = sale price × commission rate; net to seller = sale price − commission − payoff − closing costs − prorations.

Loan-to-value ratio = loan amount / purchase price or appraised value (whichever is lower); down payment = purchase price − loan amount.

Monthly principal and interest can be computed from the amortization formula: M = P × [i(1+i)^n] / [(1+i)^n − 1], where i = annual rate/12 and n = number of payments.

Proration for taxes and rent uses the number of days owned divided by 365 (or the actual month days) times the annual or monthly amount.

Points: 1 point = 1% of the loan amount; discount points increase the effective yield to the lender.

Capitalization approach: value = net operating income / capitalization rate; gross income multiplier = price / gross income.

Area calculations: 1 acre = 43,560 square feet; a section = 640 acres = 1 square mile.

Transfer and recordation tax calculations depend on the consideration paid and the county rate; first-time Maryland buyers may qualify for reduced recordation tax.

Seller's net proceeds = sale price − loan payoff − commission − closing costs − prorated expenses + prorated income.