MD Underwriting Summary

Search/Exam

• Minimum Search Requirements -- Case law – 60 years or as necessary. Coe v Hayes, 105 Md. App. 778, 785 (1995). Dept of Natural Resources v Welsh, 308 Md. 54, 57 (1986).

B) Maryland does not have a Marketable Title Act.

C) Other than case law, there are no applicable title examination standards.

• Plant or other search restrictions -- No
• Additional Requirements for REO Searches --
• Foreclosure Checklist --
• Special Searches Required (Code, HOA, Utilities)? --
• Survey Requirements -- Owner – Yes; Loan - No

UPL

• UPL Hot Button Issues -- Doc Prep, Uninsured Closings

Maryland requires that only licensed title insurance producers or attorneys conduct closings if title insurance is being offered. Only licensed attorneys may close uninsured transactions (cash transactions) (i.e., Only licensed attorneys may close transactions where title insurance is not being offered/purchased according to the UPL requirements.).

Witness Requirements

No separate witness requirement. In general, a deed containing the names of the Grantor and Grantee, a description of the property and identification of the interest to be granted is sufficient, if executed, acknowledged and recorded. See Maryland Real Property Code Sections 4-101 and 4-103.

Property Tax

The Maryland Department of Assessments and Taxation (SDAT) performs property value assessments. Maryland’s counties (23), Baltimore City and various incorporated cities (155) issue property tax bills based on the SDAT tax assessments. See www.dat.state.md.us for more details. The locality establishes the tax rate. Much of this information is online at the website for each locality.

Mortgage/Transfer Tax

Each County (and Baltimore City) in Maryland has its own recordation tax which varies. All such information may be found at: http://www.dat.state.md.us/sdatweb/recordation.html

Spousal Joinder Requirements/Homestead

Maryland abolished both dower and curtesy in ___. Maryland does not require spousal joinder by the spouse not in title.

Power Of Attorney

See Maryland Real Property Code Section 4-107 for execution and recordation requirements.

See Maryland Estates & Trusts Code Section 17-101 et seq. for general provisions related to the General and Limited Power of Attorney Act. The Act became effective in 2010 and is modeled after the Uniform Power of Attorney Act. The Act contains statutory forms (see Sections 17-201 through 17-204), specifically a “Personal Financial Power of Attorney” (about seven printed pages in length) that includes a clause addressing Real Property (buy, sell, convey, mortgage, borrow and so forth) unless limited by Special Instructions or a termination date (see Section 17-202 for the Form) and a “Limited Power of Attorney” (roughly 20 printed pages). The “check the box” style Form is designated “Limited,” in part because it does not address heath care decisions. However, if all of the powers are given, it is more comprehensive then the “Personal Financial Power of Attorney.”

Real Property is Paragraph A under “Subjects and Authority” in the Limited Power of Attorney. Express powers granted related to real estate should be specifically identified. The Form also contains provisions for “Grants of Specific Authority” and “Limitations on Agent’s Authority” that you should review closely as well as the “Effective Date” and optional “Termination Date.” See Section 17-203 for the Form. Each Form requires two witnesses.

Code Section 17-204 provides a statutory form for the Agent’s certification as to the validity of the Power of Attorney and the Agent’s Authority.

Construction Liens

Maryland mechanics’ lien rights do not arise until the contractor has filed a Petition to Establish a Lien and the Court holds a Show Cause hearing so the judge can establish an “Interlocutory Lien.” Compare this procedure to states where mechanics’ lien rights arise as soon as the contractor supplies labor or materials (see Virginia for example) even through the actual lien is not filed until sometime (perhaps months) later. As a result, the priority of a Maryland mechanics’ lien is based on its recordation making it inferior to anything recorded before it such as a Deed of Trust, judgment or Deed.

The Notice of Intent to Lien must be served on the property owner within 120 days after supplying the labor or materials. (Maryland Real Property Code Section 9-104 CONFIRM). The Petition to Establish a Lien (a lawsuit) must be filed within 180 days after the work is completed by the claimant or the materials furnished (Maryland Real Property Code Section 9-105 CONFIRM) followed by a petition to enforce the Lien which is normally filed simultaneously (one year deadline if not simultaneous). (Maryland Real Property Code Section 9-109 CONFIRM). Once the Petition to Establish a Lien is filed, the court holds a Show Cause (similar to “probable cause”) hearing. The case is heard on a summary basis. The court allows the case to proceed if the claimant is deemed more or less likely to succeed in the final trial. The court can deny the lien entirely, enter a final order (if the owner does not defend) or enter an interlocutory order establishing a temporary lien and establishing a trial date (within six months). If successful at trial, the resulting lien “relates back” to the time of the interlocutory order. The end result of the enforcement action is foreclosure of the real estate. Such a sale is rare.

Instrument Requirements

See generally (Code Sections). Acknowledgment forms are set forth in Maryland Real Property Code 4-204.

Who May Serve As Trustee On Deed Of Trust

Under Maryland Rule 14-202(a) a trustee may be an individual or an entity and does not need to be a Maryland Resident.

Whether a non-natural person could serve as a Deed of Trust Trustee previously had been the subject of some controversy in Maryland. Some title insurance companies still require that only natural persons be named as Trustees.

Note that only individuals may actually foreclose property in Maryland. See MD Real Property Code Section 7-105. As a result, a Substitution of Trustee must occur for any Deed of Trust naming a non-natural person as Trustee in the event foreclosure proceedings are anticipated. Regardless of the Trustees (individual or non-natural person) identified in the original Deed of Trust, a substitution is customary in virtually all foreclosure cases.

Time Limitations

• US Judgment Liens -- 20 years. See 28 U.S.C. Section 3201.
• State Court Judgment Liens -- 12 years, (see Maryland Courts and Judicial Proceedings Code Section 5-103 (a) (3) and Maryland Rule 2-625) – can be renewed for 12 year periods. Note that the time period is unlimited for judgments against uninsured tortfeasors where the plaintiff received compensation from the Maryland Automobile Insurance Fund (MAIF). Such judgments are assigned to the State of Maryland. Confirm that such judgment was not assigned.
• Federal Tax Liens -- 10 years (+ 30 days)
• State Tax Liens -- No expiration (See Rossville Vending v. Comptroller, 114 Md App 346 (1997) invalidating seven year limitation found in Maryland Tax General Code Section 13-1103. A subsequent effort by the MLTA to impose a 40 year period failed to pass the Legislature.
• Estate Tax Lien -- 10 years
• State Inheritance Tax Liens -- No expiration
• Mechanics Liens -- 1 year (Need to correct this information)
• Financing Statements -- 5 years
• Mortgages -- 20 years after the maturity date; 40 years from date of security instrument if no maturity date stated.
• HOA Liens -- 12 years; see Maryland Real Property Code Section 14-204 limiting any act to foreclose to 12 years following recordation of the statement of lien.
• Condominium Liens -- 12 years; see Maryland Real Property Code Section 14-204 limiting any act to foreclose to 12 years following recordation of the statement of lien.
• Child Support Liens --

Odd Stuff

1. Maryland Annotated Code, Real Property Section 3-105.2 allows a licensed settlement agent, title insurer or lawyer to execute a release affidavit and present the cancelled check or wire disbursement (with proper authentication from bank).

2. Maryland has a version of the Uniform Transfer on Death (TOD) Securities and Registration Act. See Maryland Estates and Trusts Section 16-101 et seq. Unlike TOD statutes in some other states, the Maryland version does not authorize TOD deeds. 2015 legislation to authorize TOD deeds was defeated with assistance by the MLTA. The MLTA took the position that TOCD Deeds conflicted with the long standing Maryland tradition of relying on life estate deeds (both with and without powers) to transfer property upon death of the life estate tenant.

3. Ground Rent and Leasehold Estates:

4. Automatic Subordination:

5. Estate and Inheritance Taxes: Maryland is one of the few states that imposes both an estate tax and an inheritance tax.

6. HOA Assessment “Super” Priority: Because of the unique “super” priority given certain Maryland HOA assessments, use of ALTA Planned Unit Development Endorsement 5-06 is forbidden. Only the ALTA 5.1-06 is permitted. A portion of the unpaid regular assessments have priority over a first Deed of Trust recorded on or after October 01, 2011. This portion can be the equivalent of four months of regular assessments not to exceed $1,200.00. See Maryland Real Property Code Section 11B-117.

7. Condominium Assessment “Super” Priority: Because of the unique “super” priority given certain Maryland condominium assessments, use of ALTA Condominium Endorsement 4-06 is forbidden. Only the ALTA 4.1-06 is permitted. A portion of the unpaid regular assessments have priority over a first Deed of Trust recorded on or after October 01, 2011. This portion can be the equivalent of four months of regular assessments not to exceed $1,200.00. See Maryland Real Property Code Section 11-110.