Maryland Legislative Update

Maryland Legislative Update

The Maryland legislature recently enacted the Maryland Mortgage Assistance Relief Services Act (the “Act”) and the Regulated Sustainable Energy Contract Program.  Both bills are effective July 1, 2013.

MARYLAND SENATE BILL 383/HOUSE BILL 291

 

 

“Dwelling” means a residential structure containing 4 or fewer units, whether or not that structure is attached to real property, that is primarily for personal, family, or household purposes.

 

 

“Mortgage assistance relief service” means any service, plan, or program, offered or provided to the consumer in exchange for consideration, that is represented, expressly or by implication, to assist or attempt to assist the consumer as set forth in the federal Mortgage Assistance Relief Services Rule (the “Rule”).

 

 

“Mortgage assistance relief service provider” means any person that provides, offers to provide, or arranges for others to provide, any mortgage assistance relief service.

 

 

A mortgage assistance relief service provider providing mortgage assistance relief service in connection with a dwelling in Maryland that does not comply with the Rule is in violation of the Act.

 

 

The attorney exemptions from the Rule apply only to an individual admitted to practice law in Maryland who provides mortgage assistance relief service as part of the individual’s regular practice of law.

 

 

For the purpose of venue under the Act, a violation of the Act will be considered to have been committed:

  • In the county in which the dwelling is located for which mortgage assistance relief service is being provided;
  • In the county in which an act was performed in furtherance of the violation; and
  • In the county in which a person alleged to have violated the Act had control or possession of any proceeds of the violation.

 

The Attorney General and the Commissioner of Financial Regulation (the “Commissioner”) may seek an injunction to prohibit a person who has engaged or is engaging in a violation of the Act from engaging or continuing to engage in the violation.  The Commissioner may enforce the Act by exercising his or her investigative and enforcement powers.

 

 

The court may enter any order or judgment necessary to:

  • Prevent the use by a person of any prohibited practice;
  • Restore to a person any money or real or personal property acquired from the person by means of any prohibited practice; or
  • Appoint a receiver in case of willful violation of the Act.

 

In any action brought by the Attorney General or the Commissioner, the Attorney General or the Commissioner, respectively, is entitled to recover the costs of the action for Maryland’s use.

 

 

The Commissioner may enforce the Act by requiring a violator to take affirmative action to correct the violation, including the restitution of money or property to any person damaged by the violation.

 

 

The Commissioner may investigate violations and aid any other unit of state government that has regulatory jurisdiction over the business activities of the violator.

 

 

The Commissioner may cooperate in the investigation and prosecution of any violation of the Act with:

  • The Office of the Attorney General, a state’s attorney, or any other unit of state law enforcement; or
  • The Federal Trade Commission, the Consumer Financial Protection Bureau, or the U.S. Department of Housing and Urban Development.

 

In addition to any action otherwise authorized by law, a person may bring an action for damages incurred as a result of a violation of the Act.  A person may bring an action for damages without having to exhaust administrative remedies under the Act and regardless of the status of an administrative action or a criminal prosecution.

 

 

A person who brings an action and who is awarded damages may seek, and the court may award, reasonable attorney’s fees.  If a court finds a violation of the Act, it may award damages equal to 3 times the amount of actual damages.

 

 

A person who violates the Act is guilty of a misdemeanor and on conviction is subject to imprisonment not exceeding 3 years, a fine up to $10,000, or both.  A person convicted of violating the Act must pay restitution to any person damaged by the violation and may be subject to a fine, imprisonment, or both.  Each violation of the Act is a separate offense.  A violation of the Act is an unfair or deceptive trade practice and subject to the enforcement and penalty provisions of Maryland law.

 

MARYLAND HOUSE BILL 621

 

 

“Qualified contractor” means a person authorized by the Maryland Energy Administration (the “Administration”) to provide sustainable energy products to residential property owners under a regulated sustainable energy contract.

 

 

“Regulated sustainable energy contract” means a contract between a residential property owner and a qualified contractor that meets the requirements below and does not exceed $30,000.

 

 

A regulated sustainable energy contract requires, for each property expected to be subject to the regulated sustainable energy contract, the qualified contractor to notify, by first class certified mail, any party that holds a recorded mortgage or deed of trust on property of:

  • The expected existence and terms of the regulated sustainable energy contract; and
  • The right of the party that holds a recorded mortgage or deed of trust to object to the contract.

 

A party that holds a recorded mortgage or deed of trust on property that would be subject to a regulated sustainable energy contract has 30 days from receipt of the notice required to object to the contract.  Any objection to the contract on the part of a party that holds a recorded mortgage or deed of trust on the property must be in writing and addressed to the owner of the property and the qualified contractor.  If an objection is made by a party that holds a recorded mortgage or deed of trust on the property, the regulated sustainable energy contract may not become effective and if executed will be void.

 

 

The Administration can, by order or regulation, establish specific requirements for a regulated sustainable energy contract, including a requirement that, if there is no objection by a party that holds a recorded mortgage or deed of trust, the regulated sustainable energy contract must be recorded in the land records of the county in which the property is located.

 

 

A qualified contractor may not enter into a regulated sustainable energy contract unless, for each property that would be subject to the regulated sustainable energy contract:

  • Property taxes and mortgage debt are current;
  • There are no outstanding or unsatisfied liens;
  • There are no notices of default or other evidence of property-based debt delinquency for the lesser of:
    • The 3 years immediately preceding the contract date; or
    • The length of time that the property owner has owned the property; and
  • The regulated sustainable energy contract has not been objected to by a party that holds a recorded mortgage or deed of trust on the property that would be subject to the regulated sustainable energy contract.

 

A property owner may subject property to a regulated sustainable energy contract by recording or authorizing the recordation of the regulated sustainable energy contract among the land records in the county where the property is located.

 

 

A person who acquires property subject to a regulated sustainable energy contract, whether by purchase or other means, assumes the obligation to pay the qualified contractor in accordance with the rate and payment schedules in the regulated sustainable energy contract.

 

 

A person selling or transferring a property subject to a regulated sustainable energy contract must provide written notice to the person acquiring the property that the person acquiring the property assumes the obligation to pay the qualified contractor in accordance with the rate and payment schedules in the regulated sustainable energy contract.

 

 

A lien on property subject to a regulated sustainable energy contract may not take priority over a lien, mortgage, deed of trust, or other security interest that is already attached to the property.

 

 

If a property subject to a regulated sustainable energy contract is foreclosed, any deficiency due as a result of a lien arising from the regulated sustainable energy contract must be:

  • Added to the total balance due on the contract; and
  • Subject to periodic payment as provided in the contract.

 

If a party that holds a recorded mortgage or deed of trust on a property subject to a regulated sustainable energy contract acquires the property through foreclosure, the party may not be charged for any amount due on the regulated sustainable energy contract.

 

 

Payment on a regulated sustainable energy contract must resume when the property subject to the regulated sustainable energy contract is sold or transferred to a person who is not related to the person who held the recorded mortgage or deed of trust when the property was foreclosed.