The General Assembly ended its session on April 10, 2017. A number of bills that affect, or are of interest to, the title insurance industry were passed. Below are some of the highlights.
Senate Bill 31 (Chapter 38)
This bill authorizes the Insurance Commissioner to issue a rating organization license for title insurance. The bill also authorizes, but does not require, a title insurer to fulfill its rate filing obligation to the Commissioner by (1) being a member of or subscriber to a title insurance rating organization that makes filings and (2) authorizing the Commissioner to accept filings on its behalf from the rating organization. A title insurance rating organization also may request a hearing on behalf of its members or subscribers on notice of disapproval of a filing. The bill exempts title insurance rate filings made by a rating organization on behalf of a title insurer from the requirement that the Commissioner make a determination on the filing within a limited time period or the filing is considered approved. Finally, the bill establishes that a title insurance rating organization is subject to the same regulatory oversight provisions as other rating organizations, including being examined at least once every five years.
Senate Bill 40 (Chapter 41)
This bill repeals the requirement that each partner or officer of a title agency hold a title insurance producer license and instead requires each controlling person and each trust money controller to hold such a license, and makes technical and conforming changes. If an applicant for a license is a business entity, the application must include an entity authorization that contains specified information. Furthermore, the Insurance Commissioner must investigate the character of each individual identified as a controlling person or trust money controller by the entity authorization. The bill also expressly authorizes a title insurer to limit the review of a title producer or agency that holds appointments with more than one title insurer to files, separately held accounts, and written documentation relating to its title insurance policies
Senate Bill 111 (Chapter 63)
This bill exempts from recordation and transfer taxes the transfer of real property from a sole proprietorship to a limited liability company, if the sole member of the limited liability company is identical to the converting sole proprietor and specified other conditions are met. The bill also clarifies that the transfer of a controlling interest in a limited liability company that is the product of an untaxed conversion from a sole proprietorship is subject to the recordation and transfer tax under specified circumstances. The bill took effect July 1, 2017.
Senate Bill 376 (Chapter 521)
THIS BILLWAS SPEARHEADED BY MLTA Effective October 1, 2017, the certificate of preparation, stating that an instrument has been prepared by or under the supervision of a Maryland attorney will no longer be required on Deeds of Trust. The requirement remains for leases and deeds.
Senate Bill 487 (chapter 595)
This bill prohibits a ground lease holder from bringing any suit, action, or proceeding against the current leasehold tenant to recover ground rent that was due from a former leasehold tenant before the date that the current leasehold tenant acquired title to a property subject to a residential ground lease, if the property is (1) owned or acquired by the current leasehold tenant by any means and (2) abandoned property as defined in the Public Local Laws of Baltimore City. The bill clarifies that, for any property subject to such a limitation (as well as an existing limitation related to distressed property as defined in the Public Local Laws of Baltimore City) on recovery of past-due ground rent, the ground lease holder may request, in writing, that the current leasehold tenant acquire the reversionary interest under the ground lease for the established market value, as specified.
Senate Bill 823 (Chapter 616)
This bill establishes a task force to study tax sales in the State. The President of the Senate and the Speaker of the House must designate the chair of the task force. The Department of Housing and Community Development (DHCD) must provide staff for the task force. By December 1, 2017, the task force must report its findings and recommendations to the Governor and the General Assembly. The bill took effect June 1, 2017, and terminates June 30, 2018.
Senate Bill 1033 (Chapter 617)
This bill authorizes secured party to petition the circuit court for leave to immediately begin an action to foreclose a mortgage or deed of trust on a vacant and abandoned residential property, and it requires the court to promptly rule on the petition. The bill establishes criteria for determining whether residential property is vacant and abandoned, and if the court finds that a residential property is vacant and abandoned and the secured party is entitled to judgment, the court must grant the petition. The bill applies prospectively and has no effect on any order to docket (OTD) or complaint to foreclose that is filed before its October 1, 2017 effective date.
House Bill 1604 (Chapter 148)
This bill establishes a county transfer tax exemption, applicable only in Howard County, for county law enforcement officers or fire and rescue services members. To be eligible for the exemption, the individual must meet the following requirements: (1) the property must be the individual’s principal residence; (2) the individual must be a first-time home buyer in Howard County; and (3) the individual must be employed as a county police officer, county deputy sheriff, or a fire and rescue services member for a minimum of three years following the home purchase. In addition, the bill limits the county transfer tax rate to 0.7% for a second and subsequent residential purchase by these individuals. The bill takes effect July 1, 2017. MLTA led the opposition to Senate Bill 76/HB 280 that sought to rename the Land Records Improvement Fund the State Judiciary Technology Fund. Although MLTA requested that the bills be referred to summer study, they were defeated outright. We argued that this was a “money grab” to support the Electronic Courts initiative at the expense of the Land Records, when the fund was created, and supported by, the recording surcharges in the Land Records. We suggested that the two projects have separate funds supported by separate charges. MLTA expects that the bill will be back in some form in the 2018 session.