2012 Baltimore REIA Presentation M. Arnold Politzer Attorney at Law

The 2012 Legislative Session What Happened and How will it affect owning and operating investment Property

ANOTHER FUN YEAR FOR THE REAL ESTATE INVESTOR

Making Money in Real Estate is Easy Right ?

5 Reversal of part of the Lead Paint Law Court of Appeals Case Jackson et al. v. Dackman Co. et al (October 2011)

The Court of Appeals ruled in this case that the limits on landlord’s liability which had been $ 17, was unconstitutional The Court said that “$ 17, was miniscule and not reasonable compensation” for a child permanently damaged by lead poisoning

This decision led to a number of new bills proposed in the 2012 Legislature Of the Bills proposed 2 significant Bills passed

House Bill 644 Makes important changes to the Reduction of Lead Risk in Housing Law Act (the ‘Lead Law’)

EXPANDED THE TIME PERIOD COVERED BY THE LAW Prior to the change the law applied to properties that were constructed before 1950 Beginning January 1, 2015 the law will apply to properties that were constructed before 1978

The law changed what had been the rebuttable presumption “that an owner of affected property that was not in compliance with the “lead law” was presumed to have failed to exercise reasonable care with respect to the lead hazard”

The law now allows the owner’s compliance or non compliance with the lead law to prove that an owner did or did not exercise reasonable care. This alone doesn’t “get you off the hook” but does put one more stumbling block in way of Plaintiff’s case.

12 A major item was added that would require any party who either alleges or denies time and place of residence or visitation by a person at risk “without a good faith basis”

will require the party, their attorney, or both to pay reasonable costs including the opposing party’s attorney’s fees that would be incurred by the adverse party in opposition to the allegation if you can’t prove the allegation.

This affects those cases where a child didn’t necessarily live at a property but instead “visited there”. Plaintiff now has to do a good job of proving that the child did in fact visit the specific address included in the suit.

Another important change the Bill makes is that as of January 1, 2015 the registration fee per property will increase from $ to $ per property and will then include all properties built before 1978.

House Bill 472 This bill is hoped to eventually establish a Lead Poisoning Compensation Fund

The bill was created to try to find a method to compensate individuals with injuries due to lead poisoning and for providing liability coverage to residential rental property owners for lead poisoning injuries

The Workgroup

The Bill requires that a workgroup be formed under the auspices of the Insurance Commissioner to evaluate and make recommendations relating to lead liability protection for owners of pre-1978 rental property.

The membership of the workgroup will include two senators and two delegates and others from the public sector. The Committee shall report back to the Legislature by December 2012 with its recommendations.

It had been suggested during the Bill’s debate that a fund be established by the State to provide up to a specified amount of money for a bona fide lead claim. The money was primarily to come from fees per house charged against property owners.

No specific details about how this will be done or how much it will cost have been set into law. The only thing this law does is start the ‘discussion process’.

At this point, the passage of this Bill is not a Quick Fix for the Property Owners.

HB 472/SB 177 This bill requires that a ground rent holder must fully comply with the already existing requirement of registering with the SDAT before they can:

 1) collect any ground rent payments due under the ground lease;  2) bring a civil action against the leasehold tenant to enforce any rights the ground rent holder may have under the ground lease  3) obtain a lien on the property.

The Bill also voids that provision of the earlier law which called for ground rents not registered within a certain time period to be extinguished.

House Bill 1373 requires DLLR to establish and maintain an Internet-based Foreclosed Property Registry to provide information relating to foreclosure sales of residential property. House Bill 1373

The law also establishes the Foreclosed Property Registry Fund, the purpose of which is to support the registry’s development, administration, and maintenance. The matter is now being sent to DLLR to institute the law. DLLR must report back to the Legislature by Jan 1, 2013 as to its status.

The law requires individuals who purchase a property at foreclosure to file an initial registration form within 30 days of the foreclosure sale and a final registration form within 30 days from the date the deed was recorded. A fee will be designated for payment with one or both forms.

Failure to file could result in a fine up to $ 1,

Senate Bill 123 This law requires that a purchaser of residential property sold at foreclosure provide a copy of the Court Order ratifying the foreclosure sale to the Supervisor of Assessments for the county in which the property is located.

House Bill 126 This bill expands the rights of the officers and appointed individuals of a Condo Association to enter a unit to make repairs. It authorizes the entry in order to investigate damage when it appears necessary for public safety to other parts of the condominium association

The bill requires that the council of unit owners make a reasonable effort to notify the owner of the unit being entered in order to investigate damage unless the situation involves manifest danger to public safety or property.

This almost seems to amount to a ‘self- help’ provision in addressing urgent repairs needed in a condo.

Maryland Real Estate Commission The statutory cap on the amount of a claim to the Guaranty Fund has been raised from $ 25, to $ 50, Also, the amount a consumer may recover from the Fund without a hearing before the Commission is $ 5,000.00

With that kind of a “Bounty” on their heads, real estate agents need to be especially careful in doing their job.

Pit Bull Controversy In April 2012 the Court of Appeals decided the Tracey v. Solesky case in which it found, as a matter of law that Pit Bulls are inherently dangerous.

As a result of this ruling, the old “first bite is free” law in Maryland no longer applies when the first bite is made by a Pit Bull.

Before the Court made this ruling, the law in Maryland was that an animal first must show a propensity to be dangerous before it could be considered as such. Only after the first “bite” could the owner be held liable in most cases

Pursuant to the Court’s decision, if a Pit Bull attacks someone both the owner of the dog and the owner of property where the dog resides can be sued. This would seem to include Property Managers as well as Owner/Operators.

STUPID LANDLORD TRICKS

Making my tenant my friend…………………… Please don’t insult the tenant by asking them to sign a repair ticket………. I’ll get the rent now, and the security when they move in……………. The lease says the tenant must take care of all repairs so I don’t have that responsibility………

The inspector said “I passed” no need to get it in writing……………. Identify yourself as the ‘property owner’ to your tenants once you hire a property manager……….. “I got so damn mad at the tenant I turned off their utilities………….” They said they were moving anyway so I trashed out their house……..

After all this do you really want to be an investor…………………………

Thank You Arnold Politzer