Understanding landlord-tenant laws in Maryland is critical not only for landlords and tenants, but also for prospective rental property investors. Bill HB693, which will be effective in Maryland as of October 1st, 2024, makes some significant changes to the responsibilities of landlords and the rights of tenants.
Most notably, this legislation gives tenants the right of first refusal if the landlord offers the property for sale or receives an unsolicited offer, in properties consisting of 3 or fewer units. In other words, a landlord's existing tenants have will have the first opportunity to purchase the property they are inhabiting.
Who is effected by Maryland's Renters' Rights and Stabilization Act of 2024?
The act applies to Maryland tenants in buildings of 3 or fewer units and their landlords.
Do tenants in Maryland have the right of first refusal?
Yes, as of October 1st, 2024.
When a landlord decides to list their property for sale (properties of 4 or more units are exempted), they must give their tenants written notice of a solicitation of an offer to purchase with the terms (price, settlement date, etc) that the landlord will accept.
The tenant(s) have 30 days to respond to the notice, and if they match the terms that the landlord is requesting, the landlord must accept the offer.
Can tenants in Maryland negotiate purchase terms with their landlord?
If a tenant responds to the landlord's notice within 30 days with an offer that differs from the terms of the notice, the landlord must respond with a counter offer within 5 days of receipt of the tenant's offer.
While the landlord must respond with a counteroffer, they are not obligated to lower their offer terms.
When does a Maryland landlord have to notify their tenants that they are selling?
Maryland landlords must send a "notice of solicitation of an offer" to their tenant(s) when they seek to offer their property for sale, or when they receive an unsolicited offer for purchase that they intend to accept.
In both scenarios, the tenant has 30 days to respond to the notice and match the terms of the existing offer.
In the case of an unsolicited offer, if the tenant matches or exceeds the offer's terms, the landlord must accept their offer.
What are the tenant's rights if they fail to negotiate an offer with the landlord?
If the landlord and tenant(s) fail to agree on the terms of the sale, and the landlord subsequently receives an offer from a third party that is at least 10% less than the price previously offered to the tenant, the tenant will be granted an additional 30-day period to match the third-party offer.
What properties are exempt from HB 693 in Maryland?
This law does not apply to residential properties with 4 or more units.
What types of property transactions are exempt from HB 693?
The below types of transfers are not affected by this law:
- Transfers to family members. This includes current/former spouses, children/stepchildren,
siblings/stepsiblings, parents/stepparents, grandparents/step-grandparents,
grandchildren/step-grandchildren, or in-laws/step-in-laws (children and parents). - Court-ordered settlements or transfers. These include tax sales and foreclosures.
- Transfer by a fiduciary during the administration of an estate, conservatorship, guardianship, or
or through a trust or inheritance. - Transfers to a non-profit, state or local government, or a public housing authority.
- Transfers to a wholly owned business entity
How does this law change the maximum security deposit for Maryland tenants?
A landlord may not require a security deposit in excess of 1 month's rent except in the following scenarios, which allow for a maximum of 2 month's rent:
- The tenant is eligible and has qualified for utility assistance through the Department of Human Services
- The least agreement requires that the tenant make payments for utility services directly to the landlord
- The tenant and landlord agree in writing to the amount of the security deposit.
How does the Renter's Rights and Stabilization Act affect Maryland real estate investors?
Maryland real estate investors who are looking to purchase rental properties of 1-3 units should allow for up to an additional 30 day period to close on a property, to account for the 30-day window that tenants are given to exercise their right of first refusal.
Investors would also be wise to make sure that the property owners are following the proper procedures as far as notifying the tenants and submitting the proper documentation to the Maryland Office of Tenant and Landlord affairs to avoid any disputes or delays after the property is under contract.