That’s a Wrap! Curtains Close on a Successful 2024 General Assembly Session

BY LISA MAY
Director of Advocacy and Public Policy for Maryland REALTORS^®.

The final bells rang, the confetti fell, and the General Assembly adjourned sine die for the 2024 Session. While there was the typical set of both highs and lows, victories and disappointments, REALTORS^® overall have much to celebrate from this year’s 90 days at the State House.

Thumbs Up to Housing

Just six short months ago, our 2024 Session Preview article asked, “Would this be the year of Housing in the General Assembly?” That answer was an overwhelming yes!

Two of the Administration’s bills aimed at boosting housing supply, HB 538 and HB 599, found approval. HB 599, the Housing and Community Development Financing Act, establishes a state-level housing finance agency to better leverage and direct funds for affordable housing development.

But the big bill, and the one Maryland REALTORS^® supported as vital to addressing our state’s housing crisis, was HB 538, the Housing Expansion and Affordability Act. This bill establishes the following:

• Local zoning ordinances cannot prohibit manufactured or modular dwellings in areas designated for single-family residential uses.
• “Middle Housing” and “Cottage Cluster” are defined in state law for the first time.
• Former state properties and federal government military reservations can receive bonus density of 30% above the current maximum in exchange for dedicating as affordable 25% of the new units.
• Transit-oriented developments within 0.75 mi of a rail station can receive bonus density of 30% in exchange for dedicating 15% of new units as affordable.
• Lands owned by non-profits may receive a 30%density bonus in exchange for dedicating 25% of the units as affordable.
• Local governments may not impose unreasonable restrictions or excessive public hearing requirements on the above projects.

That bill alone accomplished more on housing than many previous sessions combined. However, the General Assembly did not stop there.

HB 7 and SB 203 establish the Housing Innovation Pilot Program and Housing Innovation Fund to assist localities in the development of mixed-income housing projects and reward counties that are making strides in reducing their local housing shortages. In addition, HB 131 requires jurisdictions with over 150,000 residents to annually report data on local housing production to state agencies.

Success on REALTOR^® Issues

More good news came from the unanimous passage of four REALTOR® priority bills. Those include:

• HB 520/SB 461 – allows submission of anonymous complaints to the Maryland Real Estate Commission (MREC) for advertising violations. The law is limited to advertising because those violations are readily apparent, and licensees will still be afforded due process in accordance with the current MREC disciplinary process.
• SB 564 – addresses changes in MREC continuing education reporting requirements that were instituted last year. Agents were no longer able to self-certify credits completed prior to license renewal and CE providers had reporting times reduced by nearly 80%. To address this, licensees will now complete required CE credits 30 days prior to license expiration, which allows reporting times for CE providers to be fully restored. Those completing CE credits less than 30 days before expiration will be subject to an additional renewal fee.
• SB 542 – In keeping with both existing Maryland law and the proposed NAR settlement, REALTORS® secured clarifications to the brokerage act regarding buyer and seller compensation. Under this bill, both buyer and seller brokerage agreements must clearly state the amount of compensation owed as a percentage, dollar amount or both. In addition, buyers’ agreements must state who is obligated for payment, whether compensation can be sought from someone other than the client, and what actions entitle the broker to that compensation.
• HB 709/SB 462 – resolves a discrepancy in the law that allows office managers to oversee many office locations while limiting brokers to just one. Once enacted, brokers and managers will have the same ability to conduct reasonable and adequate oversight of branch offices.

Disclosure Details

Changes to real estate disclosure laws are once again on the horizon following the passage of two bills in 2024.

The first is HB 143/SB 46, which addresses the presence of asbestos in condominium developments. REALTORS^® successfully narrowed the disclosure requirements for condominium owners, which now include knowledge of asbestos in the unit or whether abatement has taken place during their occupancy. The condominium associations have separate disclosure requirements on health or safety violations regarding asbestos.

Then, under HB 486/SB 125, home sellers will be required to determine whether their property is within one mile of one of Maryland’s 26 Superfund sites, per the Environmental Protection Agency’s online lookup tool. If the property is within that radius, the seller must attach an addendum with Superfund information. The buyer has 5 days following receipt of the notice to cancel the contract.

One disclosure that did not pass before adjournment was HB 1408, which would have required those engaging in “wholesaling” practices to disclose to both the seller and the eventual buyer that an assignment of contract was taking place. Maryland REALTORS^® and other stakeholders reached consensus on this bill, and we are hopeful that it will pass in 2025.

A Mixed Bag on Rentals

The Administration’s housing package included a third bill, HB 693, aimed at rental housing issues. Maryland REALTORS^® began negotiations with staff from DHCD and the Governor’s office starting in 2023 to deal with a very specific part of this bill: a tenant right-of-first-refusal program.

As originally proposed, this bill would have allowed a tenant to match a third-party offer to purchase their rental property. From the REALTOR^® standpoint, this process was a disservice to both to tenants, who would need to scramble to meet an offer they did not negotiate, and to landlords and third-party purchasers, who would be left in limbo while the tenant made their decision.

Instead, our feedback shaped the final product, which is an exclusive negotiation period for tenants to work with their landlords on a potential purchase. Prior to listing the rental property for sale, landlords will send a notice to the tenant outlining the terms they are seeking. The tenant has 30 days to develop their offer, with subsequent 5-day periods for counteroffers. If unable to reach an agreement after those timeframes, tenant rights are extinguished, and a landlord may list the property as intended.

The only exceptions to that process are if the landlord accepts an offer for 10% less than what the tenant offered, or if the landlord receives an unsolicited offer to purchase. In those cases, the tenant will have the option to match those offers and, if they do, the landlord will accept the offer from the tenant.

The bill also:

• establishes an Office of Tenant and Landlord Affairs;
• limits security deposits to one month in most circumstances;
• increases eviction filing surcharges, allowing for recoverability from the tenant’s security deposit for judgements in favor of the landlord; and,
• limits tenant evictions during extreme weather events.

Also passing was HB 1117, the Tenant Safety Act of 2024. This bill deals with the rent escrow process for rental units that are deemed uninhabitable for tenants and penalties for landlords that do not repair serious and dangerous defects. REALTORS® and other multi-family housing groups expressed concern that this legislation could impact landlords who were acting in good faith to make repairs, not just those who were willful in neglecting their properties.

However, that bill’s passage helped to assure the defeat of a more significant bill in the Senate Judicial Proceedings Committee. REALTORS^® and other stakeholders have long opposed Just Cause/Good Cause legislation (HB 477), which would require a landlord to give a valid reason for lease non-renewals. Absent one of those reasons, the landlord would be forced to continue a tenancy. Even though this bill was a local option, it received REALTORS^®’ highest level of opposition, as it upends basic contract law and property rights of rental owners.

Condo Conundrums

A lack of General Assembly action on Condo and HOA issues continues to be a source of frustration for the industry. REALTORS^® saw defeat of priority bills SB 898/HB 1039, to conform timelines across the two acts and limit resale document fees to only those listed in statute. While REALTOR^® efforts to reach a consensus on the bill fell short, we will again bring legislation in the 2025 session to address association practices.

Other measures to provide oversight of association activities met similar fates. This includes HB 273, to regulate Common Ownership Community Managers, and HB 1457, to establish the Common Ownership Community Ombudsman Unit in the Attorney General’s Office.

One area where we expected legislation to pass was on reserve study requirements. Many communities have reported difficulties in meeting their reserve requirements, particularly in older, high-rise condominiums.

While REALTORS^® supported several bills proposed to address the issue, HB 281 was the vehicle to advance in the House. That bill would have extended the current funding period from three years to five years and provided flexibility in how reserves were met. Unfortunately, that bill did not receive a Senate vote prior to adjournment. What passed was HB 280/SB 446, which allows local governments to assist condominium and HOA communities with necessary infrastructure repairs.

Good News on Budget, Taxes

Arguably the biggest and most contentious issue of the 2024 Session centered on the state budget. Maryland faces dire outyear projections for expenses while experiencing anemic economic growth.

This could have been a difficult environment not just for REALTORS^® but for housing in general. Thankfully, it was not.

REALTORS^® advocated to preserve funding levels for the Department of Housing and Community Development (DHCD) and services like the Maryland Mortgage Program. While other areas of the state budget were eyed for cuts, DHCD’s funding remained steady, with federal pandemic aid reductions offset by a 5.9% increase in state funding.

That doesn’t mean real estate was not under threat this session. Our REALTOR^® Advocacy efforts once again defeated a proposed 5% sales tax on services (HB 1515), which would have imposed an additional $4 billion in taxes on businesses such as real estate brokerages, property management and home construction. REALTORS^® sent over 700 letters to members of the House Ways and Means Committee in opposition to the bill, which died in that committee without receiving a vote.

Other revenue measures targeting the industry included HB 638, to create a progressive state transfer tax that would increase costs on properties valued above $500,000; HB 751, to institute a 15% transfer tax on properties sold to institutional investors; and the Fair Share for Maryland Act (HB 1007/SB 766), which among other provisions would have lowered the estate tax cap to $2 million and imposed additional taxes on passthrough and capital gains income. None of the above measures passed either as standalone bills or were included in the budget reconciliation act.

Much of the above success was due to the Senate and the Governor holding the line on broad tax increases. However, REALTORS^® should expect that taxes and revenue will be a defining issue of the next few sessions, and that we will see some or all these measures again.

A full listing of these and other bills from the 2024 session is available on our Advocacy Priorities page.