COMAR Archives - Real Estate News and Commentary

November 4, 2017November 23, 2021

Confidential information

A real estate agent, who allegedly represented Paul Manafort’s family, recently asserted his fiduciary privilege to avoid appearing in front of a grand jury. However, as Politico reported, his efforts were thwarted by a judicial opinion, and subsequently reported to the grand jury. But can confidential information be disclosed?

A fiduciary is generally described as someone who acts as a custodian of their client’s rights and/or assets. The fiduciary has a responsibility to act with honesty and integrity, as well as act in their client’s best interest and not exert influence or pressure on their client for their own or others interests.

Both the National Association of Realtors and the Annotated Code of Maryland (COMAR) reference directly and indirectly a real estate agent’s fiduciary obligation and handling confidential information. The NAR Code of Ethics Standard of Practice 11-2 states that a Realtor (when acting as an agent or subagent) has “the obligations of a fiduciary.” COMAR states about the brokerage relationship (MD BUSINESS OCCUPATIONS AND PROFESSIONS Code Ann. § 17-534):

“Except as otherwise provided by this title or another law, keep confidential all personal and financial information received from the client during the course of the brokerage relationship and any other information that the client requests during the brokerage relationship to be kept confidential, unless (i) the client consents in writing to the disclosure of the information; or (ii) ) the information becomes public from a source other than the licensee.”

Of course, all jurisdictions are different, having their own laws and customs that govern the actions of real estate agents. Manafort’s alleged real estate agent claimed a fiduciary privilege under the DC and VA real estate statutes, which is similar to Maryland’s. However, in a recently unsealed Memorandum Opinion (www.dcd.uscourts.gov/unsealed-opinions-sealed-cases), Chief Judge Beryl A. Howell of the US District Court for DC believes that real estate agents don’t have an “absolute duty of confidentiality.” She opined that a real estate agent is not excused from complying with an obligation to respond to a grand jury. But what about confidential information?

Judge Howell wrote:

“The respondents take the position that a court order compelling compliance with federal grand jury subpoena is required to overcome the confidentiality protection afforded to real estate brokerage records under District of Columbia and Virginia law. They rely on identical provisions of District of Columbia and Virginia statutes that require a real estate licensee engaged by a buyer, such as the Clients, to ‘[m]aintain confidentiality of all personal and financial information received from the client during the brokerage relationship and any other information that the client requests during the brokerage relationship be maintained confidential unless otherwise provided by law or the buyer consents in writing to the release of such information.’ D.C. Code § 42-1703(b)(1)(C); Va. Code § 54.1-2132(A)(3) (emphasis added). The government does not dispute that these statutes extend confidential treatment to the subpoenaed information, but argues that ‘the laws do not impose an absolute duty of confidentiality on real estate agents’ or excuse compliance with ‘a legal obligation—enforceable by a federal court—to respond to the grand jury’s request for documents, testimony, or both.’”

A real estate agent’s fiduciary obligation and handling confidential information is not taken lightly. Thankfully, most real estate agents don’t face a grand jury subpoena. However, during the course of daily business, a real estate agent does have an obligation (whether by NAR Code of Ethics, their local statute, or both) of keeping their client’s personal and financial information confidential.

Original published at https://dankrell.com/blog/2017/11/04/revealing-confidential-information/

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

February 24, 2011July 25, 2019

Can you depend on your real estate agent?

The trite idiom, “what you don’t know won’t hurt you,” is not the catch phrase you want your real estate agent to embrace. However, home buyers and sellers are often confronted with issues that often fall into this category, but should not prevent you from asking for more information or consulting with your attorney. Some common top red flag situations include guidance regarding contracts and addenda, having an agent insist you hire their vendor, and receiving an offer to purchase with conflicting information.

Although it is recommended that a home buyer and seller consult with their attorney to explain a listing or sales contract as well as addenda, the reality is consumers often rely on their agent’s understanding and explanation of the forms they sign. An example of this is the first time Maryland home buyer addendum. Besides the fact that a first time Maryland home buyers have their portion of the state transfer tax paid by the seller, the Annotated Code of Maryland (14-104 (c) – Real Property) states that the recordation and local transfer tax is to be paid by the seller unless both parties agree to a different arrangement. Even though section 14-104 (c) is clearly stated on the first time Maryland homebuyer addendum, I am increasingly hearing how some first time home buyers were not made aware of this opportunity. One home buyer recently told me they fired their agent because after reading the addendum to their agent, the agent told the buyer that transfer taxes are automatically split between buyer and seller regardless. Although it may have been true that first time Maryland home buyers often waived this opportunity during a seller’s market, it is increasingly being asserted in today’s buyer’s market.

Another red flag situation is when an agent insists a home buyer use a specific provider. For example, it is not uncommon for some buyer agents to compel their clients to hire a home inspector they use on a regular basis; the agent wants to ensure that the deal will not be jeopardized by an inspector pointing out too many concerns. I have heard home owners regretting having hired their agents’ home inspector without an interview or checking into their credentials, because of issues that turn up after closing. Additionally, some home inspectors will recount stories of how they have been pressured by buyer agents to not report items on the home inspection report so as not to “kill” the deal.

For home sellers, a red flag situation arises when they receive a purchase offer with inconsistent terms. Listing agents are often given offers that have inconsistent information, such as deposit checks amounts that conflict with the contract, or loan approval letters that are written for less than the purchase price. Sometimes, after digging a little deeper, is not uncommon to find out that the lender is not licensed to do business in Maryland, or the deposit check bounced. Without the proper information, the seller cannot make a solid decision.

Although you might think your real estate agent should be looking out for you best interest, intentionally or unintentionally- it is not always the case. Although, seemingly innocent or harmless situations can sometimes raise a red flag in your mind, most resolve without issue; however, it should not prevent you from asking for additional information, clarification, asking for credentials, and/or a consultation with your attorney.

By Dan Krell
Copyright © 2011

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.

August 4, 2010June 28, 2019

New laws affecting homeowners and homebuyers

Are you curious about new laws that may affect you as a home owner or home buyer? Now that the State legislative session is over, we can pour over the many bills affecting real estate. Some of the bills, such as a state home buyer tax credit, did not pass; however, there were many that did pass. Of the many that passed, here are the highlights:

Earlier this year, a transfer tax controversy stirred surrounding the decision by several local Maryland counties to collect transfer taxes on the forgiven mortgage amounts in short sales. In response to the controversy, Attorney General Gansler provided an opinion that temporarily deferred the contentious transfer tax collection. HB590 clarified the issue when it was signed into law on May 10th 2010, indicating that transfer taxes may not be collected on forgiven mortgage amounts in a short sale.

Low income residents who depend on the Maryland Homeowners’ Property Tax Credit program will find that the assessment limit will be raised from $300,000 to $450,000 (for tax years beginning after June 30, 2010). The tax credit program that has been around since 1975 limits the property tax paid depending on applicants’ income levels.

Federal employees who are stationed abroad get a break through an extension of the Maryland homestead credit. Normally, a home owner must reside in the home to receive the credit; however, HB 199 extends the Maryland homestead credit for federal employees who are stationed outside of Maryland. Effective for the tax year beginning after June 30th, 2010, the time limit to claim the homestead credit while outside of Maryland is six years.

Beginning October 1st, 2010, real estate sales contracts will be required to inform home buyers they have the opportunity to appeal the tax assessment on their new home. To appeal, the home purchase must be between January 1st and July 1st and must be made within the first sixty days of ownership.

Home owners in foreclosure are provided additional assistance through the new foreclosure mediation law (HB 472). The law that became effective July 1st, 2010 is supposed to give homeowners additional time and support to seek foreclosure relief by allowing a mediator assist the process. When lenders notify home owners of default, lenders are required to provide home owners foreclosure alternatives (such as lender and government mortgage modification programs). Before foreclosing, lenders are required to file affidavits describing foreclosure alternatives provided to the home owner as well as an opportunity for the home owner to “opt in” for foreclosure mediation.

Tenants residing in foreclosed homes are now extended additional protection under Maryland law. In addition to the notice that is required to be provided, HB 711 allows the tenant living in a foreclosed home an additional ninety day lease extension beyond the foreclosure sale. The law became effective June 1st.

Home owners filing bankruptcy later this year will have an increased homestead exemption, thanks to the passing of HB 456. Effective October 1st, the Maryland homestead exemption will now be equal to the federal exemption. The exemption can only be used for owner occupied properties and cannot be claimed by both husband and wife in the same proceedings.

Other new laws affecting real estate (ownership, transactions, etc) can be viewed on the “Legislative Wrap Up” of the Maryland Legislature.

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.

January 14, 2009October 5, 2019

Transparency in Real Estate

Since September, transparency has become the buzzword. Everyone is trying to fit this buzzword into the conversation without regard to context or meaning (such as: government transparency, intervention transparency, etc). However, the new buzz is about Realtor transparency.

Realtor Transparency may be the ideal quality for a Realtor. Realtor transparency is not about disappearing real estate agents because of a sluggish market. Instead, Realtor transparency is about Realtors facilitating the transaction to the point of making it effortless for their clients. Although most Realtors strive to make each transaction as effortless and stress free as possible, all transactions are different due to unique issues and crises which challenge meeting a client’s high expectations.

Certainly, if your expectations are set too high, your Realtor may never meet your needs. So, what can you realistically expect from your Realtor? The National Association of Realtors (NAR) requires Realtors to follow a Code of Ethics and Standards of Practice (Realtor.org). Additionally, the Annotated Code of Maryland (COMAR) has incorporated some of the NAR Code of Ethics for Maryland real estate agents to adhere to, which includes the duties of a licensee.

Both the NAR Code of Ethics and COMAR emphasize the fiduciary duties of a Realtor. For example, Article 1 of the NAR Code of Ethics (Realtor.org) states: “When representing a buyer, seller, landlord, tenant, or other client as an agent, Realtors pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve Realtors of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, Realtors remain obligated to treat all parties honestly.”

The NAR summarizes the duties of a Realtor as: “Loyalty (to act at all times in the best interest of the principal and to put those interests above all others, including yourself); Obedience (to obey promptly all lawful instructions of the principal); Disclosure (to disclose all known, relevant facts to the principal); Confidentiality (to safeguard the principal’s secrets, unless keeping the confidence would violate disclosure requirements about the property’s condition); Reasonable care and diligence (to diligently use real estate skills and knowledge when pursing the principal’s affairs); and Accounting (to account for all funds and property entrusted by the principal)” (Realtor.org).

So what do you do if your Realtor does not meet your expectations? First, try to communicate what you need from your Realtor. If there is a breakdown of communication, you should next try contacting Realtor’s managing broker. By communicating with the broker, you will (hopefully) find a sympathetic ear to assist you in achieving your goals. The broker may be helpful by acting as a facilitator; in some cases the broker may assign another Realtor to represent you.

If you find that your concerns are falling on deaf ears, you can contact the Maryland Real Estate Commission (MREC). Although it is common knowledge that some consumer complaints to the MREC are due to the client’s unreasonable expectations, the commission takes every consumer complaint seriously.

Regardless of your Realtor’s transparency, your Realtor should be acting within the NAR and COMAR guidelines. Communicating your expectations with your Realtor prior to your entering into any agreement or contract can increase your chances of meeting your housing goals.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of January 5, 2009. Copyright © 2009 Dan Krell.