Comprehensive Maryland Real Estate Brokerage and National Standards Study Guide

Agency Relationships and Licensed Agent Roles

• Agent (No Agreement): This professional works with the buyer but not for the buyer. They function as a sub-agent of the listing broker, meaning their primary loyalty is legally bound to the seller.

• Buyer's Agent: This relationship is established through a signed, written buyer-broker agreement.

• Dual Agent: In these scenarios, the broker serves as the dual agent. It is important to note that all listings and buyer agreements belong to the broker; technically, "everything belongs to the broker."

• Intra-company Agent (ICA): The broker appoints two intra-company agents within the same firm—one to represent the seller specifically and one to represent the buyer specifically.

• Dual Agency Personnel Requirements: To conduct dual agency, there must be at least $3$ licensees within the company. This includes the broker and at least $2$ salespersons.

• Representation Restriction: One single agent is strictly prohibited from representing both parties in the same real estate transaction.

Fiduciary Duties and Standards of Conduct

• Duty to the Client (COLD AC): This acronym represents the core fiduciary duties owed to a client:     * Care: Exercising skill and diligence.     * Obedience: Following lawful instructions.     * Loyalty: Putting the client's interests above all others.     * Disclosure: Sharing all relevant information.     * Accounting: Proper handling of all funds and property.     * Confidentiality: Protecting the client's private information.

• Duty to the Customer: While customers are not clients, they are still owed specific duties, including care, honesty, fair dealings, and the disclosure of all material facts related to the property.

Ethics and Professional Relationships

• Scope of Ethics: The Code of Ethics defines a licensee's relationship to the public, to their clients, and to fellow licensees.

• Relationship with the Commission: The Code of Ethics does not describe or govern a relationship with the Maryland Real Estate Commission (MREC). Licensees essentially do not have a formal relationship with the Commission through the ethical code.

• Defining Ethics: Ethics is defined as doing the right thing and maintaining honesty in all transactions. This includes not attempting to "steal" clients belonging to other licensees.

Supervision Requirements for Brokers and Leadership

• General Supervision: Brokers are mandated to provide reasonable and adequate supervision over all licensees affiliated with them. Branch managers must provide the same level of supervision for licensees at their specific branch office. Team leaders are responsible for the reasonable and adequate supervision of all team members and team employees.

• Operational Requirements:     * Policies and Procedures: The broker must maintain a policies and procedures manual and actively enforce those policies.     * Education: The broker is required to hold training or education sessions at least once every $2$ months. A record of attendance for these sessions must be maintained.     * Staffing: The broker must employ experienced supervisory staff tasked with reviewing contracts, listing agreements, buyer representation agreements, and all advertising material.

License Maintenance: Renewal, Reactivation, and Reinstatement

• Renewal: Licenses must be renewed every $2$ years from the date of issue upon payment of the renewal fee.

• Reactivation: A license can be reactivated within $3$ years of being placed on inactive status. This requires paying the license fee plus an additional reactivation fee of $\$50$.

• Reinstatement: Reinstatement is possible within $3$ years of license expiration, suspension, or revocation. This requires paying the licensee fee plus an additional reinstatement fee of $\$150$.

• Changes in License: Any change (name, address, or transferring brokerages) requires returning the license and pocket card to the Commission and paying a fee for a new license.

• Display and Possession: The license certificate must be displayed at the broker's office at all times. The license pocket card must be kept on the individual's person while they are conducting real estate activities.

Continuing Education (CE) Requirements

• Salespersons and Associate Brokers: Must complete $15$ total hours of CE. This is divided into $10.5$ hours of mandatory courses and $4.5$ hours of electives. Mandatory courses include:     * Legislative Update: $3$ hours.     * Ethics: $3$ hours.     * Fair Housing: $1.5$ hours.     * MREC Agency: $3$ hours.

• Brokers, Branch Managers, and Team Leaders: Must complete $15$ total hours. This is divided into $13.5$ mandatory hours and $1.5$ elective hours. The mandatory portion includes everything required for salespersons, plus an additional $3$ hours of MREC Broker Supervision.

• Supervision Course Deadline: A Broker, Branch Manager, or Team Leader must take the MREC Broker Supervision course within $90$ days of achieving that position.

Business Conduct and Infrastructure

• Partnerships and Corporations: Salespersons and associate brokers combined are prohibited from owning more than $50\%$ of a real estate company.

• Place of Business: A brokerage must be a physical location and must feature a sign identifying the business with terms the public associates with real estate services, such as "Realty" or "Realtor."

• Advertising Rules: All advertisements must include the brokerage name exactly as it appears on the license, along with the brokerage phone number. While the phone number is mandatory, the brokerage address is not required in ads. All advertisements must be factual and true.

Handling of Documents and Client Funds

• Document Copies: Licensees must provide copies of documents to parties who have signed them within a reasonable timeframe from the moment of signing.

• Record Retention: Copies of all documents must be kept for a period of $5$ years starting from the date of the last activity on the file.

• Earnest Money Deposits (EMD): EMDs must be submitted along with the contract.

• Banking Requirements: Funds must be deposited in a bank located within the state of Maryland. This deposit must occur within $7$ business days of ratification.

• Account Labeling: Accounts holding client funds must be explicitly labeled as "Trust Account" or "Escrow Account."

• Prohibited Financial Practices:     * Co-mingling: Mixing business or personal funds with trust funds is strictly prohibited.     * Borrowing: Licensees cannot "borrow" trust funds or substitute them with a money order at the time of settlement.     * Signatures: Any check drawn on an escrow account must be signed by a licensee.

Marketing Inducements and Fair Housing Laws

• Unfair Inducements: If offering an inducement (via flyers or mailers) to generate business, the consumer must receive the item if they meet the specified criteria. "Bait and switch" tactics are prohibited.     * Prohibited Chance Elements: Lotteries, contests, raffles, drawings, and essay contests (anything involving an element of chance) are forbidden.     * Coupons: If a coupon is offered, it must clearly state the requirements for redemption and include a specific expiration date.

• Fair Housing Protections: Discriminating in property transactions is illegal based on race, color, religion, sex, national origin, familial status, source of income, and disability.     * MREC Additions: The Commission added "creed" as a protected class for licensees.     * Maryland Legislative Additions: In $2001$, the state added sexual orientation and marital status. In $2014$, gender identity was added as a protected class.

Federal Real Estate Legislation and Major Violations

• Chronological Federal Laws:     * $1866$ Civil Rights Act: Prohibits all discrimination based on race with no exceptions.     * $1968$ Fair Housing Law: Prohibits discrimination based on race, color, religion, and national origin.     * $1968$ Supreme Court Decision (Jones vs. Mayer): This ruling upheld the $1866$ Civil Rights Act.     * $1974$ Sex and Community Development Act: Added sex as a protected class.     * $1988$ Fair Housing Amendment: Added familial status and disability as protected classes.

• Major Violations Defined:     * Blockbusting: Also known as inducing panic selling. This involves instilling fear in homeowners with phrases like: "uh oh… here they come," "there goes the neighborhood," "the school system is going down," "crime is going up, you'll be putting up bars on the windows soon," or "better get out while the getting's good."     * Steering: This occurs when a licensee decides where a client should live based on protected characteristics rather than the client's choice (e.g., refusing to show homes in a certain area because the agent believes the client wouldn't fit in).