More rules in '95 for buyers, sellers, agents

January 01, 1995|By Daniel B. Wroblewski | Daniel B. Wroblewski,Real Estate Editor

You finally understand the seller disclosure law. So what happens?

The state, city and counties come out with another set of rules for the new year, confusing buyers, sellers and agents anew.

The most far-reaching of these is the "dual agency" law, which will change the way every agent deals with buyers. The law requires greater disclosure to buyers about whom their agent represents and sets rules for companies that wish to represent both the buyer and seller in a transaction -- known as dual agency.

Traditionally, all agents, directly or indirectly, worked for the seller. Even an agent who worked with a buyer, known as a co-op agent, still owed allegiance to the seller.

Many buyers were unaware of this relationship, so the state started to require the co-op agent to disclose it in writing. In addition, many buyers started working with "buyer's agents," who represented only them.

The law, passed by the legislature last year, makes these changes:

* Agents must not only disclose for whom they work but also must list and explain the different types of agents available: listing agent, who signs a contract with the seller to market a property; co-op agent, who works with a buyer but owes allegiance to the seller; buyer's agent, who represents the buyer; and dual agent, whose company represents both buyer and seller.

4 The disclosure must also be given to the seller.

"If I'm out there, looking for a house to buy, it's really important what the agent's duties are and who he represents," said Joel Rozner, a lobbyist for the Maryland Association of Realtors who pushed for the law. "It's also important what alternatives I have."

Agents and real estate experts predict that the law will promote the use of buyer's agents.

"As people hear their choices, more people will begin to choose buyer's agents," said Nancy Hubble, an agent for W. H. C. Wilson & Co. in Roland Park.

Ms. Hubble estimates that only about 25 percent of buyers in the Baltimore market have their own agents. In Northern Virginia, by contrast, the number is closer to 85 percent, according to Susan Horwitch, an attorney for Long & Foster Real Estate Inc. in Fairfax, Va.

* The law also creates rules for companies that, by chance, end up representing both the buyer and seller. This occurs when a buyer, represented by a buyer's agent, wants to buy a house listed by a seller's agent who works for the same company as the buyer's agent.

If this happens, both the buyer and seller must be notified and given a disclosure form -- which explains dual agency. The company can act as a dual agent only if both parties agree.

Ms. Hubble, former president of the Greater Baltimore Board of Realtors, said she expects some confusion among buyers, especially when a seller's agent finds a buyer for his own listing. In such a case, the listing agent would also be a co-op agent and, therefore, the rules for dual agency would not apply.

Baltimore City

All buyers now can reduce their closing costs by electing to pay property taxes semiannually.

The option has been open to first-time homebuyers since the spring.

Previously, most buyers were required to pay a year's worth of taxes at settlement. But by paying taxes twice a year, the amount in escrow accounts can be reduced and less money is needed at closing.

On a $70,000 home in Baltimore -- the median price in November -- a year's taxes would be about $1,700. By paying taxes semiannual, the buyer could reduce closing costs by about $850.

The city charges a fee for the privilege, equal to 3 percent of the annual tax bill, or in this case about $50.

Starting Jan. 15, homeowners who make improvements will not have to immediately pay the added property tax from a higher assessment due to the improvements. The first year the additional tax will be waived; the second year 20 percent will be due; and 20 percent more will be due each year until the fifth year, when the entire tax would be due.

In addition, a bill to give new homes special tax treatment has been passed by the City Council but has not been signed by the mayor. The bill would allow new-home buyers in the city to pay only 50 percent of the normal tax bill. Each year the amount would jump by 10 percentage points. After five years, the homeowner would no longer get a discount.

For more information, call the city's Department of Finance at 396-3974.

Baltimore Co. new homes

Baltimore County now requires builders to disclose to buyers information about the "presence on the property of hazardous or regulated material" -- or, instead, sign a disclaimer saying the property is being sold "as is."

Among other environmental hazards, the disclosure must deal with radon, landfills and underground storage tanks.

The disclosure must be made at or before a contract signing. If it isn't, the buyer can back out of the deal within five days after receiving the disclosure.

Lead paint

By Oct. 1, 1995, Maryland landlords of housing built before 1950 must notify tenants of the presence of lead paint in their units.

The lead paint law, signed into law last year, requires landlords to pay a $10 annual fee per unit -- to pay for public education about lead paint, tracking poisoning cases in children and overseeing compliance with the law.

Each of these units must have been registered with the state Department of the Environment by yesterday.

Landlords must reduce lead poisoning hazards -- such as by removing flaking lead paint -- by the time a new tenant leases the unit. They must also pay up to $9,500 to relocate tenants who suffer lead poisoning and up to $7,500 in medical expenses.

For more information, call the Department of the Environment at 631-3000.

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