Maryland Real Estate Salesperson Exam — All Questions

Under Maryland's Residential Property Disclosure Act, the seller of most single-family residential property must deliver to the buyer either:

• a.An appraisal or a survey
• b.A home warranty or a title insurance policy
• c.A property condition disclosure statement or a disclaimer statement✓
• d.A lead certificate or a radon report

Maryland's Residential Property Disclosure and Disclaimer law (Real Property Article §10-702) requires the seller to give the buyer either a disclosure statement describing the condition of the property and known defects, or a disclaimer statement selling the property 'as is.' Even a seller who disclaims must still disclose known latent defects that could pose a risk to occupants.

Deposit money a Maryland salesperson receives from a buyer must be:

• a.Promptly delivered to the broker for deposit in the broker's trust (escrow) account✓
• b.Deposited in the salesperson's personal account and repaid at closing
• c.Kept by the salesperson until the seller accepts the offer
• d.Forwarded directly to the Real Estate Commission

Client deposit money must be handled through the broker's trust or escrow account. A salesperson who receives a deposit must promptly turn it over to the broker, who must keep it separate from business and personal funds. Commingling or misusing trust money is a serious violation of the Maryland Real Estate Brokers Act.

How soon after both parties accept a contract of sale must a Maryland broker deposit the trust money?

• a.By the close of the next business day
• b.Not more than 3 business days after the acceptance
• c.Not more than 10 banking days after the acceptance
• d.Not more than 7 business days after the acceptance✓

The salesperson or associate broker who receives trust money must submit it to the broker promptly, and the broker has that 7 business day outside limit unless written directions authorized by the statute say otherwise. Cite: Md. Bus. Occ. & Prof. 17-502.

Where must a Maryland broker deposit trust money?

• a.In an insured financial institution located in this State✓
• b.In any federally insured institution in the United States
• c.In the settlement company's escrow account
• d.In an institution the buyer selects

The institution must be located in Maryland and insured by the FDIC, the National Credit Union Administration, or one of the other funds the statute names. Cite: Md. Bus. Occ. & Prof. 17-503.

Unless the owner and beneficial owner instruct otherwise in writing, what kind of account holds Maryland trust money?

• a.An interest-bearing account with interest credited to the seller
• b.The broker's general operating account
• c.A non-interest-bearing account designated as funds held for others✓
• d.An attorney's client trust account

The broker may use a non-interest-bearing checking account, a non-interest-bearing savings account, or a combination, and the regulation requires the account to be clearly designated as containing funds held for others. Cite: Md. Bus. Occ. & Prof. 17-504; COMAR 09.11.01.06.

Who may sign checks drawn on a Maryland broker's escrow account?

• a.Only the broker, personally
• b.The broker, or a designated alternate who is a licensee✓
• c.Any office employee whom the broker authorizes in writing
• d.Any party to the transaction the funds belong to

The broker must be a signator or one of the signators at all times. A nonlicensed person may be a cosignator only if every check is also cosigned by a designated licensee. Cite: COMAR 09.11.01.17.

A Maryland broker moves the escrow account to a different bank. Within what time must the Commission be notified in writing?

• a.5 days after the action
• b.30 days after the action
• c.At the next license renewal
• d.10 days after the action✓

The same 10-day written notice applies when the broker establishes another non-interest-bearing or special escrow account or changes the escrow account number, and the bank's name and account number must be reported as soon as trust monies are received. Cite: COMAR 09.11.01.07A.

A Maryland broker gives the statutory notice of intent to distribute disputed deposit money. How long does a party have to protest?

• a.10 days from the date the notice was delivered or mailed
• b.15 days from the date the notice was delivered or mailed
• c.30 days from the date the notice was delivered or mailed✓
• d.60 days from the date the notice was delivered or mailed

A written protest, hand delivered or sent by certified and regular mail, forces the broker back to the ordinary routes: consummation or termination, written instructions from both parties, or a court order on interpleader. With no protest, the broker distributes according to the notice. Cite: Md. Bus. Occ. & Prof. 17-505(b).

A Maryland buyer receives the residential property condition disclosure statement only after signing the contract. What may the buyer do?

• a.Rescind within 5 days after receiving the statement✓
• b.Rescind within 3 days following receipt of the statement
• c.Rescind within 10 days following receipt of the statement
• d.Nothing; the right to rescind ends at signing

The buyer may rescind at any time before receiving the statement or within 5 days after receiving it, and is entitled to the immediate return of deposits. The right terminates on a written mortgage application where the lender has given the prescribed warning. Cite: Md. Real Prop. 10-702(h).

A Maryland seller delivers the disclaimer statement rather than the condition disclosure. What must the seller still do?

• a.Complete the full condition disclosure anyway
• b.Furnish a home inspection report at the seller's expense
• c.Nothing further; the property is sold entirely as is
• d.Disclose latent defects actually known to the seller✓

Latent defects are material defects a purchaser would not reasonably discover by careful visual inspection and that pose a direct threat to the health or safety of the purchaser or an occupant. Apart from those, the disclaimer states that the vendor makes no representations and the property is taken as is, with all defects. Cite: Md. Real Prop. 10-702(a), (d).

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).