Real estate agents' fees might rise so commission could pay its way

House bill is similar to one defeated in 2001

January 22, 2004|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Licensing fees for the state's nearly 40,000 real estate agents and brokers likely would increase for the first time in more than a decade under a House bill designed to let the Maryland Real Estate Commission become self-sufficient during a time of rapid growth in the home-selling business.

The bill would allow the commission to set fees based on the costs of existing and expanded services.

Currently, new and renewal license fees, in effect since 1989, are $95 for a real estate broker, $65 for an associate real estate broker and $45 for a real estate salesperson. Applicants must renew their licenses every two years.

Instead of the real estate commission dipping into the state's General Fund, the fees would go to a special fund in the state's Department of Labor, Licensing and Regulation budget earmarked to cover costs of running the commission.

Department officials say the commission has become increasingly underfunded and overwhelmed as the number of licensees has grown during the current housing boom. In six years, licensees have increased from 28,000 to 39,252, with a 13 percent growth in the past year, according to the commission.

But the commission's costs exceed income generated by fees, department officials said. In fiscal 2002, the commission spent about $1.45 million on its work processing licenses, handling complaints and reviewing and approving courses for continuing education. But it took in only $1.32 million. In fiscal year 2003, the commission's fees, excluding any fines collected, raised $1.475 million. Final calculations on costs for the year were not available yesterday.

"Historically, this commission, and most commissions, have been a net cost to the general fund," said Harry Loleas, deputy commissioner in the department's division of occupational and professional licensing.

The commission could use the special fund for purposes such as computer upgrades and hiring additional staff and investigators. Currently, the commission has 12 authorized positions dedicated to it, including an executive director and assistant. But four of the 12 jobs have not been filled because of state budget constraints and hiring freezes, said Elizabeth L. Williams, a spokeswoman for the labor and licensing department.

The legislation, requested by the department and introduced Monday in Annapolis, was modeled after legislation passed last year that created similar "special funds" for the state's five design boards, including the Board of Architects, the Board of Professional Engineers, the Board of Land Surveyors, the Board of Landscape Architects and the Certified Interior Designers, Loleas said.

"Our experience with the design boards was there was an increase in fees just to cover costs, than an additional increase to cover new service," Loleas said. "In this case, the gap between cost and expenses is probably smaller, but there is a demonstrable need for enhanced services."

The nine-member Real Estate Commission, which regulates the state's agents and brokers, would set the budget and fees. Panel members, who said it's not clear to what extent the fees might be changed, have pushed for the legislation and said yesterday that they will lobby for its passage.

Another bill pending this year would create a similar "special fund" for accountants regulated by the Maryland state Board of Public Accountancy, which was introduced Jan. 16.

A 2001 bill that would have made the Real Estate Commission and more than a dozen other commissions self-sufficient was defeated.

The current proposal addresses some of the concerns that arose in the earlier bill, by setting a 12 percent cap, after the fees are initially set, on any fee in any year, and by excluding the costs of administrative hearings as a basis for setting fees, Loleas said.

After hearing a department of labor and licensing review of the bill yesterday, Mark Feinroth, director of legal and regulatory affairs for the Maryland Association of Realtors, said: "It's clear to the association that there are problems with delivering service and the commission has been under funded for quite a long time. In concept, this is an important step forward to solve that problem."

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