Selling Your Home in a Seller’s Market

To real estate sellers, a “hot” market might mean quick, easy money for their home. After all, a hot market means limited inventory and lots of buyers seeking the perfect place. In many cases, a hot market does mean quicker sales at or above the asking price. But there are some risks that a home seller in a seller’s market should be aware of before they can start counting the money.

Ensure that Your Home and Property are Ready to Show

A “fortunate” aspect of a hot market is that quirky or outdated properties sell faster than they otherwise would. Buyers become far less discerning about the home they want, and they are willing to overlook superficial flaws and might even consider accepting expensive fixes such as leaky windows or an old roof.

In a seller’s market, a homeowner has a better possibility of selling a property “as-is” rather than having to make significant updates. As a seller, whether or not you need to make any major updates is best determined through a discussion with your real estate agent to assess comparable properties in that area.

On the other hand, home staging is advisable even in a seller’s market. Staging is a great way to attract multiple offers on your home right after listing it. Buyers must move fast in a market like this, and emotions and first impressions often drive them. To make someone fall in love with your property, there is no better way than to make it more attractive through staging.

If you cannot afford to stage your house, the property should at least be thoroughly cleaned and de-cluttered to prepare it for showings.

Get Your Disclosure and Other Documentation Organized

As properties in a hot market tend to sell fast and have shorter contract deadlines, you should have all relevant documentation ready to be sent to potential buyers at short notice. Before listing your house, consider getting an inspection done to present an accurate picture to buyers right from the beginning.

Make sure your disclosure documents are ready before the property goes on the market. If, as a seller, you appear fully prepared to sell, a buyer will feel more encouraged to make a quick closing offer.

Based on this, you or your agent might want to speak to a title company before putting the house on the market. While many contracts allow a buyer to decide on the title company, having a reliable, reputable title company at hand for the buyer can help and enable the process to move more effectively toward closing. In some cases, a buyer might still want to choose another title company. However, more often, they will work with the seller’s chosen title company simply for convenience.

Don’t Overlook the Professionals to Market Your Property

In a booming market, many homeowners will consider using for sale by owner (FSBO) to sell their home. The assumption in a seller’s market is that buyers are ready to jump on the first property that comes up for sale without the need for any marketing. Therefore, it doesn’t make sense to pay commission if the property will essentially sell itself, right?

It might be true that buyers are abundant in a hot market, but sellers should not write off the expertise of a professional. In the case of low inventory, buyers are more likely to work with an agent to identify homes for sale either before they come up for sale or immediately after listing. Agents often search for clients on the MLS or speak to other agents to determine new listings for their buyers. To gain the most exposure for your property and take advantage of the numerous buyers out looking, you still want to hire a real estate agent to market your property.

Work with a Dedicated Real Estate Lawyer

A real estate attorney will meticulously evaluate the extensive paperwork involved in your house sale to catch errors and protect your rights every step of the way. In the early stages of your sale, you can ask them to assess the listing agreement with your agent to make sure that the terms are favorable to you.

A real estate attorney can review offers as they come in, identify tax benefits and considerations, and raise potential red flags. After the offer stage is completed, a real estate attorney will draft contracts and assess the title, mortgage, and transfer paperwork. Moreover, they will write the deed and review the final breakdown of sale proceeds at closing.

Apart from the above, if an unexpected complication stalls your transaction, such as a judgment or lien on the title or a question on disclosure, your experienced real estate attorney will help you navigate these complexities and steer the deal to a successful conclusion. A real estate attorney adds an additional layer of scrutiny to ensure that the deal closes smoothly, and no legal issues are revealed after the sale.

To speak to a skilled real estate lawyer at Evans Law in Maryland, message us online or call today at (410) 626-6009.

Mistakes to Avoid if You Are a First-Time Home Buyer

First-time home buyers often feel overwhelmed. The following list of common first-time buyer errors can help you spot pitfalls before it’s too late. It will be beneficial to understand what you should do before purchasing a residential property to avoid common missteps.

Handling the Purchase Alone

Purchasing your first house is a big deal. It is a significant financial transaction and has deep emotional implications as well. This is the place that will protect and shelter your loved ones. Thus, it is important to protect yourself by working with a real estate lawyer, who will make sure that you steer clear of any potential missteps.

Under Maryland state law, it is not necessary for parties to hire an attorney to help them in their residential real estate deals, including with respect to the closing process. However, an experienced Maryland residential real estate attorney can be invaluable in helping to address your questions, concerns, issues, and problems, as well as identify any potential problems before or during the settlement or closing process.

Seasoned residential real estate lawyers handle countless closings and have the knowledge base that only a certain kind of volume, scope, and exposure can develop. Further, a skilled attorney will be ready and willing to undertake all legal services necessary to buy or refinance a private property, both for sellers and buyers alike. In addition, a lawyer would be aware of the competitive marketplace and the availability of alternative sources of legal help available.

Assuming You Need Minimum 20% Down Payment to Buy

A common mortgage myth is that you need to put a twenty percent down payment on a residential property to own one. In fact, most home buyers do not put down a down payment that large.

There are various mortgage programs for first-time buyers, and most of them do not necessitate a twenty percent down payment. The most common loan programs include USDA, VA, FHA, and conventional home mortgages. Notably, when you put less than twenty percent down in a conventional mortgage program, you will need to purchase private mortgage insurance, which will add to your monthly housing payment.

Failure to Undertake Due Diligence

It can be an enjoyable experience looking at homes. At times, buyers erroneously get distracted by the glitz of a specific property. The “shiny object” appears so tempting that other potentially vital elements are disregarded. Very often, these issues include external aspects that could contribute adversely towards the appeal of a property.

You are responsible for undertaking due diligence as the final purchasing decision falls on your shoulders. Due diligence includes performing adequate research about the property and the locality to make sure you do not miss any red flags. Making a list of the things to inspect is a good idea. You could review whether permits were taken out for improvements and check the sex offender registry, among other tasks before you hand over the money.

Not Accounting for the Total Cost of Purchasing a Property

Many other costs, besides the actual purchase price, are associated with buying a home. Most often, closing costs are the costs that take first-time buyers by surprise. The miscellaneous fees necessary to complete the transaction can add up to two to five percent of the total purchase price.

When purchasing a home, look into a summary of all associated costs. You do not want any surprises, particularly as a first-time homebuyer. Speak to all parties involved that may charge you fees to understand what you are facing, such as your lender, your agent, the insurance provider, and the title company.

Focusing Only on the Home

The locality where the home is situated in is arguably just as crucial as the actual property. Many first-time buyers fail to account for the area as they are so fixated on the home, which is not a good idea. There are various factors pertaining to the location that will significantly impact your experience living there, including the traffic, public transport options, crime rate, amenities, school systems, and more.

Work with Experienced Real Estate Attorneys for a Successful Home Purchase Transaction

A successful home buying transaction involves the right location, meticulous financial planning, a deep understanding of the market, and a committed support team. We at Evans Law have decades of experience and can help create a seamless process for you as a first-time buyer. Call (410) 626-6009 today to speak to an established real estate attorney.

What Does a Real Estate Attorney Do for a Buyer?

In life, most people aspire to own a safe, secure home. A home purchase is a big decision, and one where you cannot afford to make a mistake. For this reason, it is a good idea to work with a real estate lawyer who has an expert understanding of mortgage fraud, disclosure fraud, subdivision and zoning, and contracting on land use laws.

As a home buyer, you should engage a knowledgeable and skilled real estate lawyer to ensure that the process of real estate being transferred occurs in a smooth and seamless manner. Following are some ways in which a real estate lawyer can help you as a buyer:

Title Documents Review

A title document refers to a paper that defines the legal ownership of any asset or property. A real estate lawyer searches and reviews this vital document on the buyer’s behalf. A title usually includes three key elements, which are legal ownership, occupation, and possession.

An important area in the transfer of real estate property between buyer and seller is a title search. A real estate lawyer ensures that the property will be sold without any issues, such as judgments or liens against the real estate. A key question is whether the seller is legally allowed to sell the property. Thus, it is crucial to work with a real estate lawyer who has significant experience in handling such matters.

Sales and Purchase Agreement Preparation

A sales and purchase agreement is a critical document that encompasses legal stipulations. This document represents a legal contract obligating a buyer to buy the property and a seller to sell the property.

It is important to note that this kind of agreement is typically associated with all types of real estate transactions to ensure that both the buyer’s and seller’s interests are protected. A seasoned real estate lawyer will ensure that the terms and conditions of this agreement are valid and protect the client’s interests.

Mortgage Documents

Mortgages are debts which the obligator must pay back according to predetermined plans. These debts can be taken to purchase real estate if the buyer cannot or does not want to pay the property’s entire price upfront. An expert real estate lawyer can explain the terms and conditions of mortgage documents and contact the lender if necessary.

Most homebuyers are not well-versed with mortgages and other legally binding documents. A real estate lawyer specializes in handling mortgage loans and associated paperwork, which makes the real estate transaction smoother for all parties involved.

Other Filings Processes

In a real estate transaction, filings are an important aspect. A real estate lawyer is a qualified professional who undertakes the filing of all kinds of real estate deeds at the state level. A real estate lawyer can handle problematic issues in a real estate deal, such as in cases where a specific type of construction is not allowed.

Property Transfer Process

The transfer of the property is possible when the contract is ready. Following contract preparation, the property transfer is undertaken in compliance with state regulations. A real estate lawyer handles various complicated aspects of property transfer as well as prepares these vital documents to ensure a seamless transaction.

Title Insurance

Homebuyers require title insurance before closing, and a skilled real estate attorney can offer help in acquiring this insurance. An attorney will carefully review these documents and check for any inaccuracies or errors. Further, the attorney will review tax issues and update you on the findings.

Closing

The final and most important step in a real estate buying process is the closing. At closing, all documents related to the purchase and sale of the real estate are signed by both parties. The real estate lawyer helps the buyer understand all the paperwork to sign and complete the real estate buying process. After the closing, the property’s ownership is transferred to the buyer.

Following the closing, the real estate lawyer will register all documents related to the purchase and selling process with the court to ensure a lawful transfer of real estate from one party to another.

Hire a Skilled Real Estate Lawyer for Your Real Estate Transaction

At Evans Law, our experienced real estate lawyers understand and are legally authorized to develop and review documents and contracts pertaining to the sale and purchase of a residential property. With our attorneys by your side, you can rest assured that someone is looking out for your best interests and will guide you through any complications that may arise.

The purchase of real estate can be a formidable process, which can be confusing for most buyers. You cannot afford to make a mistake as this is one of the most substantial investments you would likely make in your life. Working with a real estate lawyer can make this process more secure and smoother for you. To schedule a free consultation, message us online or call us today at (410) 626-6009.

 

What Are the Most Common Causes of Construction Disputes?

In Maryland, the construction process is largely smooth. However, there can be problems even with the most well-organized construction projects. Many parties are involved in construction projects, ranging from contractors and subcontractors to property owners. With so many parties involved, the circumstances are ripe for disagreements.

In addition, a substantial amount of money is involved in new construction as well as remodeling projects. Disputes commonly occur in construction projects due to the large sums of money involved, and the complexity of new builds and remodeling work.

Common Disputes in Construction Projects

There are various reasons due to which construction disputes arise. But there are some commonly occurring disputes that arise during ongoing construction projects. The following are some of the most common reasons for construction disputes:

Disputes over Contract Terms

The reasons for a conflict over the contract terms may be unique in every case. For instance, conflicts over insurance agreements can be a reason for contention. One of the parties involved in the project may feel that they deserve some compensation while the other party or the insurer may disagree.

Contract disputes can also manifest themselves from disagreements on each party’s scope of work. This is one reason why a proper understanding needs to occur before the project begins. Moreover, one party may feel that the assigned tasks are not a part of their job description and demand higher pay for the completion of these tasks.

Disputes over Construction Quality

It is a judicious idea to develop a detailed contract that explains precisely what the construction work will involve. However, conflicts commonly occur on whether a contractor provided an acceptable standard of workmanship.

If developers and property owners do not find the work provided by a contractor or subcontractor to be of an appropriate standard, they can sue those who completed the sub-standard work. A contractor may also file a lawsuit if a customer refuses to pay for work they believe to be substandard.

Disputes over Materials Used

This source of conflict is related to disputes on construction quality. A comprehensive construction contract can help mitigate the risk of the occurrence of such disputes. But if a contractor does not use the materials enlisted in a contract and instead, uses lower quality material or any material unacceptable to the property owner, it can give rise to conflicts.

Disputes over Delays in Construction and Timelines

Often, construction work takes much longer than expected. A property owner or developer could file a lawsuit if a contractor or subcontractor does not deliver work by mutually agreed-upon deadlines specified in the contract. Even in the absence of specific deadlines in a construction contract, the work should be performed in a timely and effective manner.

Disputes over Construction Project Abandonment

Sometimes a property owner may feel that a contractor has abandoned the project prior to completion, which often leaves the owner suing to recover money paid for unfinished work and left in a position where substantial additional funds need to be paid for the work to be completed as required.

Disputes over Nonpayment

At times, a contractor or subcontractor delivers satisfactory work using good quality materials, but the property owner does not pay as agreed upon. In these situations, contractors can sue the property owner for nonpayment. Another way for contractors to get a property owner to pay is through Mechanics’ liens. The contractor could place a lien on the owner’s property until the unpaid amount is not cleared in full.

Before starting any commercial or residential construction, it is vital to have a comprehensive construction contract in place. In addition, if you feel you have a problem on hand, you should promptly consult an experienced construction dispute lawyer.

Reasons for Construction Conflicts by Clients

  • The mentality to get the lowest price when hiring a contractor
  • Inadequate management supervision
  • Failure to respond on time
  • Contract document discrepancies
  • Poor communication
  • Failure to engage a project manager

Reasons for Construction Conflicts by Contractors

  • Poor understanding and lack of agreement in contract procurement
  • Delays in execution of work
  • Failure to comprehend and appropriately bid or price the works
  • Improper CPM scheduling and update frequency
  • Inability to plan and execute changes of works
  • Being reluctant in seeking clarification

Reasons for Construction Conflicts by the Consultants

  • Increase in costs due to over design
  • Failing to understand its scope of responsibilities under the design team contract
  • Changes due to design errors
  • Incomplete drawing and specification
  • Design and specification inaccuracy and mistakes or omissions from specialists

Legal Help from an Experienced Construction Disputes Lawyer in Maryland

At Evans Law, our Maryland construction disputes lawyers offer solid legal guidance on conflict resolution to property owners, contractors, subcontractors, and developers, among others.

In order to save money and resolve your construction-related problems as soon as possible, our skilled and knowledgeable attorneys can help you identify the most effective techniques to settle the disputes that have arisen. To learn more and speak to an experienced construction dispute attorney, call today at (410) 626-6009.

Three Issues to Consider Before Listing Your Home for Sale

Finding the right buyer for your home is not an easy task. It requires a lot of time, planning, and effort on your part. The good news is that residential properties all over the country have increased in value since the Great Recession. So, the effort you put in can help you earn a decent profit.

Let us take a look at three of the key issues you need to consider before listing your home for sale:

1. Price

This is the first and possibly the most important factor you need to consider before listing your home for sale in Maryland. A lot of homeowners tend to have unrealistic opinions about their property’s value and end up pricing it too high. This is one of the reasons why some houses tend to stay on the market for a long time without an offer.

In order to avoid pricing your property out of the reach of potential buyers, you need to do a lot of research. Here is what you can do to make sure your property is competitively priced:

  • Make a note of the selling price of all the recently sold homes in your neighborhood. These homes should be comparable to yours in terms of their size, amenities, and features.
  • Find out how long it takes on average to sell a home in your neighborhood.
  • Find out the difference between the listing price and the sold price for homes that are similar to yours.

If you are not able to set the right price for your property based on the aforementioned details, it is a good idea to get it professionally appraised. Generally, it is a good to set your asking price 5% to 10% higher than the going rate for comparable homes in your neighborhood, so that you can have some room for negotiation with potential buyers.

2. Curb Appeal

Studies show that most buyers decide whether or not they are interested in buying a home within 10 seconds. This is why it is extremely important for you to put some effort into improving your home’s curb appeal.

Here is what you can do to make sure your home looks appealing to potential buyers:

  • Clean, clean, and clean. Your home should look, feel, and smell clean.
  • De-clutter and get rid of all the unwanted space fillers from your home so that it looks spacious to the buyer.
  • De-personalize your home by removing all your personal items, pictures, and collectibles. It will make it easier for the buyer to visualize living in your home with their family.
  • Fix loose or broken handles, repaint the doors, windows, and walls, clean your pool, and place some potted plants and other natural elements to your front yard.

You should be careful not to spend too much money on improving your home’s curb appeal. If you do, you might have to increase the asking price accordingly, as a result of which you might price yourself out of the radar of potential buyers. So, make sure to spend money only on things that are likely to yield a positive return on your investment (ROI).

3. Disclosure or Disclaimer

As a Maryland resident, this is something you need to decide before listing your home for sale. When selling your home, you are legally required to disclose the defects in your home to the buyer. The amount of information you are required to disclose depends on whether you choose the disclaimer option or the disclosure option.

If you opt for the disclaimer option, you can sell your home on an ‘as is’ basis, disclose the latent defects (defects that might not be spotted by the buyer during an inspection), and provide a disclaimer stating that you do not make any warranties regarding the condition of your home.

If you opt for the disclosure option, you need to fill out a detailed questionnaire, in which you have to answer a number of questions about all the possible defects in your home.

The disclaimer option can reduce your risk of liability (the buyer suing you for not disclosing certain defects in your home) significantly. On the other hand, it can prompt the buyer to negotiate for a lower price, since they have no idea how much they have to spend on repairs and renovations.

With the disclosure option, the risk of liability is slightly higher, since you have the responsibility to disclose all the material defects in your home to the buyer. It can, however, help you sell your home for a higher price, since the buyer is likely to feel more secure about the purchase.

Experienced Real Estate Lawyers in Maryland

If you are planning to sell a home in Maryland, the attorneys at the Law Offices of Matthew S. Evans III can help you. We can evaluate the offers made by potential buyers, advise you on what to disclose and what not to disclose to the buyer, review all contracts and documents to be signed, and guide you through the closing process.

You can contact our firm at (410) 626-6009 for a free consultation with our attorneys. 

What Happens When Home Sellers Fail to Disclose Defects in Maryland?

When you sell a real estate property in Maryland, you are required by law to make certain disclosures about its physical condition to the buyer. There are statutes in place which require you to disclose what are called ‘latent defects’ to the buyer. Failing to do so can open you up to lawsuits from the buyer later on.

Real Estate Disclosure Laws in Maryland

When it comes to selling a real estate property in Maryland, you generally have two choices:

  1. You can choose to sell your property on an ‘as-is’ basis and file a disclaimer stating that you do not make any representations or warranties with respect to its condition.     
  2. You can choose to disclose the defects in your property to the buyer by filling out a questionnaire.

Choosing the Disclaimer Option

The most important thing you need to know about the disclaimer option is that it does not allow you to sell a home without disclosing any details to the buyer. Section 10-702 of Maryland’s Real Property Article states that a seller must disclose the latent defects in their property to the buyer.

Latent defects, in this context, refer to the kind of defects that the buyer might not be able to spot during an inspection. For example, if there is a problem with your roof and if the contractor tells you that it needs extensive repairs or if it needs to be replaced altogether, you are required to disclose it to the buyer, even if you file a disclaimer. Failing to do so is not only a breach of your duty as the seller, it is also against the law.

Choosing the Disclosure Option

If you choose the disclosure option, you need to fill out a form which contains a variety of different questions about your property – structural defects, repairs done in the past, presence of hazardous materials, presence of pest infestations, zoning and building code violations, and many more. All you need to do is answer ‘yes’ or ‘no’.

The form has a pretty extensive list of questions, which is likely to cover all the possible defects in your property. If there are any defects in your property that are not covered under the questions, you can add your own comments as well.

Under What Circumstances Can the Buyer Sue You?

The buyer might be able to hold you liable for the defects in the property under the following circumstances:

  • If you rate a particular feature in your property as being in a much better condition than it actually is, and if it breaks down soon after the buyer moves in
  • If you fail to mention a latent defect, despite being aware of it
  • If you deliberately misrepresent, withhold information, or outright lie about a material defect in your property

In the aforementioned scenarios, the buyer can accuse you of not disclosing the defects in your property, file a lawsuit against you, and seek damages to cover the cost of repairs and replacements.

It should be noted that you can be held liable only for defects that you knew of or should have known about at the time of selling the property. You are not expected to be aware of and disclose every minor or unknown defect in your property.

The buyer might be able to recover damages from you only if the defects you failed to disclose are serious and/or pose a threat to the health and wellbeing to the buyer and their family.

For example, if there is a major problem with your HVAC system and if it needs to be replaced entirely, you should definitely inform the buyer of the same – even if you file a disclaimer – since it is the kind of defect that can influence the buyer’s decision.

Upon being told about the defect, the buyer might ask you to fix it as part of the contingencies that need to be fulfilled before the closing or ask you to lower the price. So, failing to disclose such a defect might result in financial losses to the buyer, in which case they might be able to take legal action against you and seek damages.

Real Estate Lawyers in Maryland

The real estate attorneys at the Law Offices of Matthew S. Evans III LLC are well versed with the federal, state, and local regulations regarding real estate transactions.

If you are planning to sell a property, we can tell you what you need to and need not disclose to the buyer, review all the documents related to the transaction, and oversee the whole process to make sure that your rights and interests as a seller are protected.

You can contact our real estate attorneys at (410) 626-6009 for a free consultation. 

What You Need to Know About Zoning Appeals in MD

Real estate development and construction activity is vital to the economy of Maryland, and well-organized development in conformance to the local laws benefits the residents at an individual as well as a community level.

Every land parcel in Maryland is governed by zoning regulations, which help determine what the property can be used for as well as the construction siting on the property.

In the cities across Maryland, zoning maps are used to assign a zoning category to every land parcel in the city. And zoning codes are used to define the type of land use that is legally permissible within each category.

Need for Zoning Appeals

When the property zoning code permits the type of land use and layout that a property owner is seeking, the owner usually has a legal right to go ahead with obtaining the necessary construction permits in order to build the project. The owner can proceed with the construction activity in such cases despite any opposition from the neighbors. (However, a few exceptions may apply, such as historical building designation and environmental restrictions.)

In a situation where the zoning code does not permit the type of land use development that the property owner is seeking, a zoning appeal will be required. This will involve a public hearing before the Board of Municipal and Zoning Appeals. (This is the legal body with the authority to decide whether the land use and layout can be allowed.)

Any individual or organization can put forward their viewpoint at this public hearing, and anyone who has a direct concern with the situation should use this opportunity to speak up.

What Steps are Involved in Zoning Appeals in MD?

The following steps can help you raise your concerns in the most effective manner at a hearing in front of the Board of Municipal and Zoning Appeals. However, remember that every individual situation is unique with its own challenges. Therefore, these steps may have to be modified to suit the requirements of your specific situation.

  1. Determine the property’s zoning code and go through the code carefully to see whether the desired land use and layout is allowed.
  2. Determine what type of action is required, such as a relaxation in the regulations because of the property’s specific physical attributes, or a condition land use.
  3. Determine on what date a hearing related to your type of application will be held, and what is the timeline for submitted written comments. If posting of a notice on the property is required, make sure to satisfy this requirement.
  4. Go through the procedural rules with regard to Zoning Appeals. Make a list of the particular items that you want the Zoning Appeals Board to consider.
  5. Keep a copy of all the details you submit to the Board, including all written information and drawings.
  6. If you have hired the services of an attorney, discuss your goals and concerns with them. They will advise you on what are the best possible solutions.
  7. If you are able to reach an agreement with another involved party, make sure the agreement is prepared in writing and reviewed by your attorney before you sign it. Include this agreement copy in the application file.
  8. In absence of an agreement, be prepared to attend the City Hall public hearing. Discuss with your attorney to acquire a complete understanding of the hearing requirements and procedures. Where possible, have a group of community members or neighbors that share your concerns. Focus on the facts and follow the procedures that the Board has outlined while you make your presentation.
  9. When possible, carry documentation and photographs to back your concerns, and submit a copy of your testimony in writing for the record.
  10. When a Council member is in agreement with your stated position, you may request them to testify before the Board.
  11. If you do not succeed in getting the desired outcome at the hearing before the Board of Municipal and Zoning Appeals, you might have an option to file a fresh appeal in the Circuit Court. Discuss with your attorney if you intend to appeal the decision of the Board.

Consult a Maryland Attorney with Expertise in Zoning and Planning Matters

At the Evans Law, we have extensive experience and in-depth knowledge of local land use and zoning laws, and we can provide strong legal representation to help you accomplish your goals.

Our experienced lawyers will provide you the right legal advice and support to obtain favorable outcomes in any transactions or disputes related to zoning and land development in Maryland and Washington D.C. To learn more, message us online or call us at 410-431-2599 for a consultation.

What is Normal Wear & Tear on a Rental Property and When Can a Security Deposit be Withheld?

Renting has been an increasingly preferred housing option in recent years. Part of this is due to the Great Recession of the late 2000s, when so many homeowners were stung by the collapse in the housing market. As a result, many homes ended up in foreclosure, forcing large numbers of consumers to rent. 

The trend toward renting is also partially a generational preference. Recent data from the Pew Research Center shows that nearly 75% of millennials were renting as of 2016. This percentage is significantly higher than previous generations who were surveyed at the same point in their lives.

Renting certainly has some advantages, and much of its appeal centers around the freedom renters have to move when they want, and not having to deal with the headaches of maintaining a property. But someone else does have to worry about making repairs and keeping the property maintained; the landlord. And this is where landlords and tenants often have a disagreement.

When a tenant moves out, the landlord has to clean the property and make any necessary repairs in order to get the unit ready for the next tenant. And this often brings up the question, “what is considered normal wear and tear, and when can I withhold a security deposit to pay for damage a tenant caused?”

What is Normal Wear and Tear?

The owner of a rental property has to expect that there will be “ordinary wear and tear” to the property over time. This is simply the cost of doing business, and it must be accounted for. In other words, a landlord should expect that the carpet will be worn down and the walls will have nicks and scratches over time. This will eventually necessitate replacing the carpeting and repainting the walls.

According to the Maryland Attorney General’s website, “there are no hard and fast rules (regarding “damage” vs normal wear and tear) that fit every situation.” Much of it, they say, is based on common sense. For example, if a tenant left a small hole in the wall from a picture that was hung, that would be ordinary wear and tear. On the other hand, if someone got angry and punched a large hole in the wall that requires a plaster or drywall repair, that would be considered excessive tenant damage.

Essentially, normal wear and tear can be defined as the deterioration of a property that happens over time and under normal conditions. “Normal” being defined as people living in the unit (if the landlord is renting it out and making money from it).

Some common examples of ordinary wear and tear may include:

  • Minor chips, dents, scratches, smudges, cracks, and holes in the walls;
  • Carpeting that is worn thin by normal use, particularly in higher traffic areas of the rental;
  • Faded paint;
  • Slightly torn or faded wallpaper;
  • Moderately dirty or faded lamps, window shades, curtains, or blinds;
  • Dirty grout surrounding the floor tiles;
  • Scratches in hardwood floors or fading in hardwood floors due to sunlight;
  • Appliances that are malfunctioning due to normal use or defective equipment;
  • Sinks and drains that become clogged because of aging pipes.

When can a Security Deposit be Withheld in Maryland?

Landlords in Maryland are allowed to collect a security deposit equivalent to up to two months rent. When tenants move in, they have the right to request a written list of existing damages (to the rental) if they do so within 15 days of taking occupancy. The security deposit must be put into an escrow account, and if it is $50.00 or more, the landlord must pay interest on the deposit.

The landlord is required to return the deposit plus interest accrued within 45 days of the tenant moving out. Failure to do so without good reason can make the landlord liable for up to three times the amount withheld plus reasonable attorney fees.

In general, there are three instances in which a landlord can withhold part or all of a security deposit in Maryland:

  • Unpaid rent;
  • Losses the landlord incurs when a lease is broken (e.g., re-renting the property);
  • Excessive tenant damage (that goes beyond normal wear and tear).

When a landlord withholds a security deposit, they must send a written list of damages along with a statement of the costs incurred to repair the damage to the tenant by first-class mail within 45 days of the tenant moving out. If the landlord does not send an itemized list within the allotted time frame, they forfeit the right to withhold the security deposit.

Involved in a Landlord-Tenant Dispute in Maryland? Contact an Experienced Real Estate Attorney

Disagreements over normal wear and tear vs. excessive tenant damage, withholding security deposits, and other types of landlord-tenant disputes can get messy. And if you do not follow the proper procedures in dealing with these disputes, you can end up in legal hot water. If you have any type of issue related to real estate law in Maryland, the Law Offices of Matthew S Evans, LLC is here to help! Contact our office today at 410-431-2599 or message us through our online contact form to schedule a personalized consultation.

How do Short Rentals Impact Condo Owners Associations?

Short-term renting is not an entirely new concept for homeowners and owners of townhomes and condominiums. In the past, owners have rented their dwellings on a short-term basis for special events in their city (such as the Super Bowl or the Final Four), or during certain times of the year (such as hunting season). Owners in heavy vacation spots such as Hawaii and numerous coastal towns in the continental U.S. have also done short-term rentals for a long time. This used to be done by placing an ad in a local newspaper or more recently, placing an ad on a website such as Craigslist.

The “sharing economy” has resulted in a vast increase in short-term rentals throughout the country and worldwide. Home-sharing websites such as Airbnb, HomeAway, and VRBO have made it easier than ever for owners to rent out their dwelling for a few days or a week or more at a time. These websites provide home and condo owners with the opportunity to earn extra money from short-term rentals, and they provide travelers with more options and often allow them to find a lower rental rate than what they would pay at a local hotel.

While short-term rentals can be lucrative for owners, they present several unique challenges and concerns for homeowner’s and condo owner’s associations. These include:

  • Usage of Common Living Space: Airbnb renters and other short-term tenants have access to the common areas within a community; such as hallways, elevators, lobbies, parking lots, gymnasiums, pools, playgrounds, and picnic areas. These tenants may not be familiar with the association’s rules and regulations in common areas, and since they are only going to be there for a short time, there is great potential for misuse and resulting damage.
  • Noise and Pollution: Travelers who are on vacation tend to stay up late, play the music too loud, smoke, and engage in illicit activities. While the HOA bylaws may impose fines for many of these activities, the short-term tenants may not be concerned about that since they will be gone soon.
  • Liability for Injuries: Another major concern is what happens if a short-term tenant gets hurt in one of the common areas of the property. This could expose the HOA to liability if these types of injuries are not covered by their insurance.

Short-Term Rentals and FHA Certification for Condo Associations

Condominium communities are eligible for FHA (Federal Housing Administration) certification if they consist of two or more units. FHA certification allows condos within the community to qualify for FHA-backed loans. Since roughly 60% of new home buyers use FHA financing, having FHA certification can be beneficial to condo associations by vastly increasing the pool of prospective buyers, thus enhancing the value of the units. FHA rules state that if a condo association allows short-term rentals of 30 days or less, they are ineligible for FHA-certification. This is another good reason for associations to consider prohibiting this practice.

How Should Condo Owners Associations Manage their Owners’ Ability to do Short-Term Rentals?

Many homeowner and condo owner associations do not have any explicit language in their bylaws addressing short-term rentals. This is especially true if they are not located in a popular vacation spot. These days, every association needs to address this issue regardless of where they are located. The first step should be to have a board and/or community meeting to decide if the owners want to allow or prohibit Airbnb and other short-term rentals.

After weighing the pros and cons of each side, many associations will likely decide that it is best for the community to prohibit short-term rentals. Once this is decided, they should consult their attorney to have explicit language to this effect added to the association’s rules and regulations.

To ensure that they continue to qualify for FHA certification (this is an ongoing process as they need to be re-certified every two years), it is important to state that rentals of any units must be for a period of at least 30 days. The board or community may wish to go further and extend this period to 60 days or even a full year.

If the association determines through a majority opinion of the board and/or owners that it is in the best interests of the community to allow short-term rentals, associations should work closely with a qualified attorney to create bylaws that address the specific areas of concerns around having short-term guests to ensure that owners and long-term tenants who reside there are safe and protected, and that the association is shielded from liability exposure.

Enforcing a Ban on Airbnb and other Short-Term Rentals

It is one thing to prohibit short-term rentals in condo association bylaws, it is quite another to enforce this prohibition and ensure that residents comply. Some condo owners may try to get away with it thinking that the extra money they can earn is worth the risk, and that they are not likely to get caught. There are a few ways condo associations can deal with this:

Restricting the Number of Units an Individual Can Own

Since many owners who rent units on Airbnb and other sites purchase multiple units in the same community, one possible way to deter (or at least limit) this activity is to prohibit the ownership of multiple units. The association may also reserve the right to deny ownership to prospective buyers if they have used short-term rental sites in the past.

Levying Heavy Fines and Penalties for Violations

The association needs to make the penalties for violations harsh enough to deter owners from trying to get away with a short-term rental. This can be done with heavy fines. However, fines can take time to collect, and they may require the association to take the owner to court to obtain a judgment and use various means to enforce the judgment. Another penalty that might be effective in combination with a fine would be to restrict the use of common areas, such as the pool or the workout facility.

Monitoring Short-Term Rental Sites for Listings within the Community

The association can monitor sites like Airbnb for any prohibited listings from owners in the community. They can do this themselves if they have the manpower, or they can hire an outside service to do it for them. If they run across a prohibited listing, there are two actions they can take:

  • Have the association’s attorney send a “cease and desist” notice to the owner who is in violation.
  • Contact the website where the rental is listed to let them know that the rental listed by the owner is in violation of association rules and thus, it is in violation of the terms and conditions of the site.

How to Sell Your Home

Are you thinking about selling your own home? It’s not uncommon for home sellers to question whether it’s a good idea to sell a home on their own versus hiring a real estate agent to manage the process. Your results may vary. Real estate markets fluctuate, and you might live in an area or own a home that is in high demand.

Selling a home can be a stressful and complex process. If you are unfamiliar with the real estate market and even the lingo used, you may not know where to begin. There are pros and cons to choosing either path to selling a home, but there is also a middle of the road solution that can help protect your rights.

Do You Need a Real Estate Agent to Sell Your Home?

First, there is no requirement by law that you must have a real estate agent to sell or buy a home in Maryland. There are pros and cons to signing a contract with an agent. The biggest benefit is that you will receive the expertise of a real estate professional, including access to the Multiple Listing Service (MLS), which can give your home more exposure.

The downside to using a real estate agent is that you are going to pay your agent a significant percentage of the sales price (about 5%-7%) at the closing. So, if your home sells for $350,000, your agent fee could be as high as $24,500. For this reason alone, many homebuyers are now opting to sell their homes themselves and enlist the services of a real estate attorney.

How to Sell Your Home by Yourself

If you plan to sell your home without a real estate agent, this is called For Sale by Owner (FSBO). Depending on your market and the features of your home, this might be more work than you’re willing to take on or it could be a fun challenge. Some of the tasks that you’ll need to handle include:

  • Studying the local market and values of comparable homes
  • Determining an appropriate listing price for your home
  • Deciding what you will repair and improve (if anything) in advance of listing your home for sale
  • Creating presentation and advertising materials to market your home
  • Completing the appropriate disclosure documents for the home
  • Placing ads online or in the local newspaper to attract buyers
  • Arranging for interested parties to visit and view your home
  • Answering questions of potential visitors and their real estate agents
  • Potentially scheduling and holding one or more open houses
  • Receiving, considering, and negotiating offers
  • Navigating any issues that lead up to closing

A Real Estate Attorney’s Role in Selling Your Home

The above list seems like a lot of work – and it is! While most of this will need to be handled by the seller if they are not using an agent, an experienced real estate attorney can provide some valuable services along the way as well as prevent future problems.

Ideally, you will speak with a real estate attorney at the start of this process, since selling a home involves a series of legal forms and agreements. Your real estate attorney can assist with several vital tasks, including:

  • Review your home disclosure forms
  • Prepare and review all legal documents, including the Agreement of Purchase and Sale
  • Negotiate the terms and conditions associated with the sale to safeguard your interests
  • Prepare the deed for your home
  • Check that the buyer has secured title insurance
  • Deal with any special issues that arise between contract and closing
  • Ensure all legal requirements are met for a successful closing
  • Prepare the statement of financial adjustments
  • Represent your interests at closing

Speak with a Qualified Maryland Real Estate Attorney

In a seller’s market, it might make sense to sell your own home, but there is still a lot of work involved. Even if you have a real estate working for you, there may be some legal issues that you’d like reviewed. In both cases, an experienced Maryland real estate attorney can be an invaluable resource.

The Evans Law is a full-service real estate firm that can help you with all of your real estate needs. Contact our Annapolis office now at 410-626-6009 or reach us online to schedule a consultation.