Maryland Real Estate Salesperson Exam — All Questions

May a Maryland contract of sale waive the purchaser's rights under the residential property disclosure law?

• a.Yes, if the waiver appears in bold-faced type
• b.No; an attempted waiver in the contract is void✓
• c.Yes, in a sale expressly made as is
• d.Yes, if the purchaser is represented by an attorney

The rights cannot be waived by contract, but they are conclusively waived if the purchaser does not act before closing or occupancy, whichever occurs first. Each contract of sale must carry a conspicuous notice of these rights. Cite: Md. Real Prop. 10-702(k), (l).

Which sale is exempt from Maryland's residential property condition disclosure or disclaimer requirement?

• a.A sale by a lender that took the property by foreclosure✓
• b.A sale of a three-unit dwelling by its owner
• c.A sale of a townhouse that is subject to a ground rent
• d.A sale by an owner who rented the property and never lived in it

The section covers single family residential real property improved by four or fewer single family units, and exempts sheriff's, tax and foreclosure sales, fiduciary transfers in the administration of an estate or trust, unimproved land, and an initial sale of property never occupied or holding a certificate of occupancy issued within the past year. Cite: Md. Real Prop. 10-702(b).

Improved residential property is sold to a first-time Maryland home buyer who will occupy it. What State transfer tax applies?

• a.0.5 percent, split equally between buyer and seller
• b.0.25 percent, split equally between buyer and seller
• c.0.25 percent, paid entirely by the seller✓
• d.None; the sale is exempt from State transfer tax

The ordinary State transfer tax rate is 0.5 percent of the consideration; for a qualifying first-time Maryland home buyer it is halved and assigned to the seller, and each grantee must sign a statement under oath that they have never owned a principal residence in the State. The entire recordation tax and local transfer tax also fall on the seller unless the parties expressly agree otherwise. Cite: Md. Tax-Prop. 13-203; Md. Real Prop. 14-104(c).

Maryland's recordation tax rate is applied to what measure?

• a.Each $100 of consideration
• b.Each $1,000 of assessed value
• c.The full consideration, as a flat percentage rate
• d.Each $500 or fraction of $500 of consideration✓

Counties and Baltimore City set their own rate, which is then applied to each $500 or fraction of $500. Consideration includes any mortgage or deed of trust the grantee assumes but not debt forgiven or no longer secured by the property. Cite: Md. Tax-Prop. 12-103(a), (b).

A Baltimore rowhouse carries a ground rent created in 1995. At what multiple of the annual rent may the leasehold tenant redeem the reversion?

• a.16.66 times the annual rent, a capitalization rate of 6 percent
• b.8.33 times the annual rent, a capitalization rate of 12 percent✓
• c.25 times the annual rent, a capitalization rate of 4 percent
• d.12.5 times the annual rent, a capitalization rate of 8 percent

Ground leases created after July 1, 1982 capitalize at 12 percent, giving the 8.33 multiplier; leases from April 8, 1884 through April 5, 1888 use 25, and those created at any other time use 16.66. A reversion reserved for longer than 15 years is redeemable at the tenant's option after 30 days' notice to the ground lease holder, and no new residential ground rent could be created on or after January 22, 2007. Cite: Md. Real Prop. 8-804(b); 8-803(b).