Bulletin: MD2024004

Dear Associates:

On October 1, 2024, the Renters Rights and Stabilization Act of 2024 (the “Act”) becomes effective. The statute amends Maryland Real Property Code Sec 8-119. The provisions of the Act directly affect renters and landlords.

HIGHLIGHTS:

• The Act gives tenants the right to purchase a residential rental property before it is sold to someone else.
• This right applies to tenants of residential properties with three or fewer units.
• If the owner receives an offer from a third party that is at least 10% lower than a previous offer made to the tenant, or if the owner receives an offer without first listing the property for sale the right of first refusal applies.
• The owner must notify the tenant of their right of first refusal, and the tenant can then match the offer made by the third party.
• If the tenant does not match the offer, the owner can sell the property to the third party or someone else.
• The right of first refusal does not apply to situations where:

a) the property has four or more units,
b) when the property is transferred to a business entity, fiduciary, or in lieu of foreclosure.

• If the owner violates the law, they can be fined up to $500 for each offense and may be considered guilty of a misdemeanor.
• A tenant can also ask the court to issue an injunction to stop the transaction.

Title Commitments:

All Title Commitments issued in connection with the sale of Maryland land improved with 1-3 family residential units must contain a requirement substantively similar to the following:

Requirement:

The Company must be furnished proof that no portion of the Property is leased for residential purposes. If any portion of the Property is leased for residential purposes, Company must be furnished proof that the requirements of The Renters Right and Stabilization Act of 2024 have been complied with and proof that Company's applicable requirements for the removal of an exception for the Tenants Right of First Refusal have been complied with.

If it is determined that any portion of the property has been leased for residential purposes, the Title Policy (both owner and lender) must contain an exception substantively similar to the following (unless underwriter approval is given for its removal):

Exception:

Rights of Tenants under The Renters Right and Stabilization Act of 2024 and regulations thereunder.

This bulletin is subject to change once the Office of Tenant and Landlord Affairs has established final guidelines.

Please have the affidavit signed by seller at closing. You can find the affidavit attached here.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

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