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New Maryland Landlord-Tenant Law Effective October 1, 2023

Rental License Needed for ALL Eviction Cases

Pursuant to Senate Bill 100, effective October 1, 2023, if a county or municipality requires a rental license, a landlord MUST have a rental license to file any of the following actions:

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            Employers must be aware of, and revise their employment-related documents to reflect, the recent changes to Maryland and federal law.  One of a Company’s most powerful way to deter future litigation is by ensuring that its agreements, handbooks, and policies are legally compliant.

            Companies often face claims of discrimination, harassment, and retaliation by their employees.  As such, it is imperative that employers are cognizant of the Maryland legislature’s substantial expansion of anti-discrimination and harassment laws.  With the passage of SB 450, the Maryland legislature adopted a less stringent standard of determining harassment, allowing employees to establish that they have been the subject of harassment based on the “totality of the circumstances.” Additionally, Maryland has imposed greater requirements for employers to reasonably accommodate not only employees’ disabilities but also an applicants’ disabilities.  Finally, the Office of the Attorney General can now independently initiate investigations of federal and state civil rights violations and file a lawsuit on behalf of the employees in Maryland, making it even more essential that employers properly handle complaints of discrimination. 

            Although Maryland has long disfavored the use of non-competition agreements, it has recently made non-compete and conflict of interest provisions unenforceable against employees earning less than 150% of the state’s applicable minimum wage.  The legislature has also taken great strides to provide paid time off for employees requiring medical leave for themselves or for those of eligible family members.  The Time to Care Act created a Family and Medical Leave Insurance Program (FAMLI), pursuant to which eligible employees would receive twelve weeks of paid family and medical leave, with the possibility of 12 additional weeks of paid parental leave (for a possible of 24 weeks of paid leave).  Under the FAMLI rules, contributions will be made by employees and employers with 15 or more employees, as well as self-employed individuals who opt-in to the program.  Employees who work for a company with less than 15 employees will make the full contributions themselves.  Contributions will commence on October 1, 2024, with benefits first becoming available as of January 1, 2026.

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What if I purchase a home “as-is” and later discover latent defects that are significant and expensive to repair?

Buyers can submit to mediation through Maryland REALTORS® to recover damages associated with latent defects not disclosed at the time of sale.

In the State of Maryland, the standard Residential Contract of Sale form used by Maryland REALTORS® includes a provision that allows for mediation of disputes arising out of the sale and purchase of a residential property.  Mediation is a process where parties attempt to resolve a dispute without, or before the filing of a lawsuit with the assistance of a neutral mediator.  When a buyer of residential property discovers a latent defect after purchasing property and it is clear the seller knew about said defect and failed to disclose it to the buyer, mediation through Maryland REALTORS® can be an effective process to achieve a resolution.  A copy of the Residential Contract of Sale form can be found here: https://www.mdrealtor.org.

What is a latent defect?

In Maryland, a “latent defect” in residential property is a material defect that the seller knows about and (1) is not visible, (2) could not be reasonably expected to be uncovered by the buyer before the purchase is made, and (3) could endanger the health or welfare of the buyer.

A “material defect,” as encompassed in the term latent defect, is a significant issue with a residential property’s system or structure that adversely affects the property’s value, poses a health or safety risk, or undermines the buyer’s capacity to enjoy it.  Notably, a material defect is a substantial problem, as opposed to a minor or aesthetic issue.  Examples of material defects include, but are not limited to:

  • Major structural issues or other decay in the property’s architecture, including damaged foundation, sloped floors, bowed walls, or horizontal cracks.
  • Significant roof or basement leaks that require extensive repairs.
  • Outdated and malunctioning plumbing or electrical issues that make the property unsafe.
  • The presence of asbestos, lead paint, mold, or other hazardous materials.

As you can see from the above examples, these material defects would not be visible or expected to be uncovered by a buyer before purchasing the property, and all pose significant health and safety risks.

Does a seller have a duty to disclose latent defects, even if the property is being sold “as-is”?

Yes, sellers of residential property, even if it is being sold “as-is,” have a duty in Maryland to disclose any latent defects of which the seller had actual knowledge and that a buyer (or the buyer’s home inspector) could not reasonably expect to find by a visual inspection and pose a direct threat to health or safety of the buyer.  While a seller can still indicate that the property is being sold “as-is,” the seller is still required to indicate latent defects by completing the Maryland Residential Property Disclosure and Disclaimer Statement, which is included in the Residential Contract of Sale form used by Maryland REALTORS®.

What if the seller failed to disclose a latent defect and as a result, I now have significant and expensive costs to repair the property?

Our office can help you review the contract of sale to determine if you are eligible for mediation with the Maryland REALTORS®.  Importantly, all claims or disputes between a buyer and seller must be submitted to mediation with the Maryland REALTORS® within one year following the closing date of the sale, so you should not delay in contacting an attorney.  If a latent defect is discovered after one year, you may still have legal recourse.  In Maryland, the standard statute of limitations to file a claim is three years, so if you miss the one-year mediation deadline, you should still contact an attorney to determine if you have a viable claim.

Can I skip mediation offered by Maryland REALTORS® and immediately file a lawsuit in court?

Mediation is generally faster, simpler, and often less expensive than litigation.  However, mediation is a voluntary process that must be agreed to by the buyer and seller.  Under certain circumstances, you may choose to bypass the mediation and immediately file a lawsuit in state court.  However, the Maryland Residential Contract of Sale expressly states that if you file a lawsuit in state court and ultimately lose, you will be responsible for paying the other party’s attorneys’ fees, in addition to your own.  Our office can provide advice regarding whether you should proceed with mediation or litigation based on the unique facts of your case.

If you need assistance with reviewing a Maryland Residential Contract of Sale and/or believe you have a dispute or claim to submit to mediation with Maryland REALTORS®, please do not hesitate to contact us by phone or e-mail:

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Calling Law Enforcement or Emergency Services No Longer Grounds for Termination

Pursuant to Senate Bill 214, which takes effect on October 1, 2023, Section 8-208 of the Real Property Article which governs prohibited lease provisions has been amended to prohibit a form of lease that limits the ability of a tenant to summons law enforcement or emergency services, and/or penalizes a tenant for summonsing law enforcement or emergency services.

This is particularly relevant in breach of lease cases as it will no longer be a sufficient basis for termination that law enforcement is called to a unit.

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Pet Protections During Evictions

Pursuant to House Bill 102, effective June 1, 2023, a landlord and law enforcement carrying out an eviction have the following obligations with regard to any action for possession of real property (nonpayment of rent, tenant holding over, breach of lease, or wrongful detainer):

(1) Upon eviction, the unit must be immediately inspected for any pet;

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What do I need to do to file a Failure to Pay Rent Case in Baltimore City? Baltimore City landlords must comply with registration, inspection, and licensing requirements before initiating Nonpayment of Rent actions in rent court.

Residential landlords that anticipate the need to file a Failure to Pay Rent Complaint in the coming weeks and/or months should be aware of recent changes to Baltimore City’s licensing scheme which requires housing providers to have a rental unit registered, inspected, and licensed before a landlord is able to utilize rent court to collect unpaid rent.

Residential Landlord Requirements in Baltimore City

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Being appointed an agent under a financial power of attorney, or as a Court-appointed guardian, comes with a significant delegation of authority.  However, it is important to know that such delegation of power is not without limits.  For example, an agent can only exercise powers specifically granted under the power of attorney document.  And, in the case of a guardianship, the guardian is obligated to periodically account for the Court of their efforts on behalf of the ward.  And, of course, a fiduciary under either scenario cannot abuse their power or use their power unlawfully.

Recently, the Court of Appeals issued an opinion that provides yet more useful guidance for fiduciaries.  In United Bank v. Richard Buckingham, et al., the Court answered the following two certified questions from the United States District Court for the District of Maryland: (1) whether changing beneficiaries on a life insurance policy constitutes a conveyance under the Maryland Uniform Fraudulent Conveyance Act; and (2) whether a guardian of property has the authority to change beneficiaries for a life insurance policy of the ward.

The Court answered the first question in the affirmative, explaining that a change in life insurance beneficiary made with intent to hinder, delay, or defraud creditors is subject to the Maryland Uniform Fraudulent Conveyance Act.  The court then answered the second question in the negative, noting that a guardian of property clearly does not have the authority to change the beneficiary of a life insurance policy on the life of a ward, citing the provisions of Section 15-102(t) of Maryland’s Estates and Trusts Article.  Instead, the Court found that a fiduciary may only change the beneficiary of a life insurance policy following application to and approval of a court of equity.

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After the enactment of the Tax Cuts and Jobs Act in 2017, the limitation on an individual’s ability to itemize tax deductions resulted in higher income tax for many Maryland business owners.  On May 8, 2020, Maryland enacted legislation allowing pass through entities (primarily LLCs, partnerships and S corporations) to elect to pay tax on a member’s distributive share at the entity level.  As a result, the taxable gross income of individuals receiving distributive shares of the entities net income is less.  In addition, the election creates a federal income tax deduction for the business that is not subject to the $10,000 itemized deduction limit established by the Tax Cuts and Jobs Act.

Single member LLC’s, partnerships and S corporations are the most likely beneficiaries of the pass-through election and they should carefully consider their options.  C corporations and Schedule C taxpayers that are ineligible for taxation at the entity level should seek counsel to determine if restructuring may be beneficial.

Silverman Thompson regularly counsels Maryland businesses, including corporations, partnerships, and limited liability companies.  If you would like further information about entity formation and structuring options, please contact Elizabeth Fitch at efitch@silvermanthompson.com or at (410) 385-2225.  If you would like to learn more about Silverman Thompson’s business practice, please contact its chair, Bill Sinclair, at bsinclair@silvermanthompson.com or at (410) 385-9116.

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WeWork.  WeLitigate.

We Holdings LLC and We Company (collectively “WeWork”) is a privately held company that leases office space on a short-term basis.  Following a failed IPO in 2019, the company was faced with a liquidity crisis.  In response, the board of directors formed a special committee (the “Special Committee”) to evaluate strategic alternatives to the IPO and to negotiate a potential transaction to save the company.  The Special Committee was comprised of two directors.  Together, the two Special Committee members and entities affiliated with them held over 34 million shares of WeWork.

On October 22, 2019, the Special Committee entered into a Master Transaction Agreement with Softbank Group (“SBG”) which contemplated a tender offer, equity financing, and debt financing.  On November 22, 2019, SBG made a tender offer to purchase shares from WeWork.  Issues arose shortly thereafter and on April 1, 2020, SBG terminated the tender offer.  On April 7, 2020, at the direction of the Special Committee, WeWork filed suit against SBG.  WeWork’s co-founder, Adam Neumann, also filed suit.  The suits were consolidated by the Court of Chancery of the State of Delaware (the “Court”) into In re WeWork Litigation (“WeWork”).

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