With legislators engaged in untangling the state's fiscal crisis, there probably won't be much time to consider real estate matters in the 1992 General Assembly.
Still, real estate industry representatives will press for legislation that reduces closing costs for Maryland homebuyers, and will oppose any bills that could boost these costs.
For the third consecutive year, the Maryland Association of Realtors (MAR) will support a bill permitting homeowners to pay property taxes on a semiannual basis, rather than annually. Instead of paying between 12 and 14 months of property taxes at settlement, as is currently required, some homebuyers would only need to cover six to eight months.
Such legislation would enable far more people to purchase homes, says Joe McGraw, director of the Greater Baltimore Board of Realtors government relations department. A homebuyer who would ordinarily have to pay nearly $2,000 in property taxes when purchasing a $120,000 home in Baltimore County might have a bill of only about half that amount.
"The Realtors I've talked to have said it would make a significant difference to first-time homebuyers to cut closing costs just by $500 to $1,000," said Mr. McGraw, who noted that Maryland is one of only a few states to collect all property taxes at settlement.
The amount of savings depends upon when settlement occurs and whether or not the seller is paying the taxes semiannually, according to Robert Goodman, director of the Office of Research and Information Systems at the Maryland Department of Housing and Community Development (DHCD). That agency is sponsoring the bill.
Similarly, previous bills were defeated largely because county governments claimed they could not afford to convert their systems to accommodate semiannual collections, said Mr. Hilley.
But the current proposal allows counties to charge administrative fees to handle the additional paperwork, and to charge interest on the unpaid principal, said Mr. Hilley. It is structured to take effect in 1993.
Baltimore County will probably oppose the DHCD bill, as well as a similar one filed by Sen. Nancy Murphy, D-Baltimore County, according to Pat Roddy, director of legislative relations for the county.
"I believe this is a perception problem that may be worth solving at some point, but not in a year when you have real fiscal problems," said Mr. Roddy. Implementing a new system able to handle semiannual payments would probably cost Baltimore County at least $400,000 upfront, he added.
Mr. Roddy also noted that "if you talk to the economists, and really do the number work, you're not saving anybody money." The buyers are saving money because they don't have to pay the administrative fees and interest, he said.
MAR also will keep an eye on attempts to repeal a law that exempts homebuyers from a state transfer tax on the first $30,000 of a home's purchase price.
Sen. Barbara A. Hoffman, D-Baltimore, who proposed such a repeal in a special session last fall, is considering similar action this session. Her bill did not come up for consideration in the fall session.
"This costs the state a lot of money, but it hasn't made a difference in the number of people buying houses," said Ms. Hoffman, who noted that the state transfer tax only amounts to one-half of 1 percent of the purchase price. "It's not enough money to make a decision for people who are buying a home."
Yet industry representatives see repealing the current law as a slap in the face to would-be homebuyers.
"This is a step backward when you're talking about keeping housing affordable for the average person," said Tom Quattlebaum, executive director of the Anne Arundel County Association of Realtors. "We have extremely high transfer taxes and recordation fees compared to other states, all of which increase the initial cost of housing. If you're trying to make housing affordable, you've got to reduce some of these fees so people can save enough money to buy a house."
MAR, Mr. Hilley said, would consider changing the current law to remove the $30,000 exemption for most homebuyers, but to retain some exemption for first-time homebuyers.
Still another issue looming on the horizon is a proposal to require the interest earned on escrow accounts held by title companies to be designated for the Maryland Housing Resources Corp. (MHRC). MHRC is a quasi-governmental entity that builds and rehabilitates low-income housing in Maryland.
Currently, such interest is allocated to the title company. Although the sum is about $50 per settlement, the title company usually does not collect that entire amount, because there are bank charges for services associated with the maintenance of the account, according to James Cosgrove, vice president of Sentinel Title Corp., a Baltimore-based title company.
An escrow account serves as a clearinghouse for funds received from the lender and the buyer. They are distributed by the title company at settlement to parties including the seller and the realty agents.
Title company representatives and MAR oppose such legislation, which is expected to be introduced by Sen. Clarence Blount, D-Baltimore. They claim that depriving title companies of such -- funds would force them to raise their fees.
"The interest earned [on escrow accounts] is an important source of income for title companies," said Mr. Cosgrove, a member of the legislative committees of the Greater Baltimore Board of Realtors and the Maryland Land Title Association. "As a result of its being earned, we are able to keep closing costs competitive. If we lose that source of income, we'd have to make it up somehow."
About $750 of closing costs on a $125,000 house is now designated for title exam and insurance fees, said Mr. Cosgrove. That sum could increase to $800 or $825 if the bill passed.
Last year, a bill requiring such interest to be designated for other beneficiaries, including the Baltimore City Jail, was defeated in the House.
Mr. Blount did not return phone calls to his office.
Other potential issues include the following:
* Disclosure laws. With urging from the National Association of Realtors, many state Realtors' associations, including MAR, are pushing for legislation that will require sellers to reveal known hTC defects and problems in their homes to potential buyers.
Currently, Maryland sellers are not mandated by law to disclose such conditions, although some realty agents ask their sellers to do so voluntarily. California and Maine are the only states with such provisions.
Sen. Larry E. Haines (R-Carroll County) will sponsor the legislation, which would require sellers to fill out a 40-item questionnaire about their homes. Subjects covered in the questionnaire would include the condition of the roof, the basement and utilities, as well as the existence of such hazards as lead paint.
If enacted, such legislation would prove helpful not only for buyers and sellers, but also for realty agents, because it would provide them with a degree of protection against lawsuits, said Mr. Quattlebaum.
* Continuing education. To ensure that realty agents are familiar with new laws, MAR wants legislation that would eventually require agents to attend 24 hours of continuing education to renew their licenses.
Currently, agents must attend 12 hours of classes every two years. Under the proposed bill, that number would increase to 18 in 1992, and to 24 in 1994, said Mr. Hilley.
A bill proposing a jump from 12 directly to 24 was defeated in the Senate last year.
"We think it's best for the licensees to augment their knowledge," said Mr. Hilley. He noted that the bill would specify that six hours of the classes required of realty agents focus on changes in laws or regulations enacted by local, state or federal
governments.
Key issues
In the upcoming legislative session, the real estate industry will:
* Support a bill permitting homeowners to pay property taxes on a semiannual basis.
* Keep an eye on attempts to repeal a law exempting homebuyers from paying state transfer taxes on the first $30,000 of purchase price of their homes.
* Oppose a bill allocating interest earned on escrow accounts held by companies to the Maryland Housing Resource Corp.
* Support a bill requiring sellers to reveal all known defects in their homes to buyers.
* Support a bill increasing to 24 the number of continuing educa- tion hours agents will need to renew their licenses every two years.