Tuesday, September 21, 2010

New Maryland Power of Attorney Changes Effective October 1st, 2010

On May 20, 2010, Governor O’Malley signed into law Chapter 689, HB 659 which repeals Estates and Trusts Sections 13–601 through 13–603 (Powers of Attorney) and adds Estates and Trusts Sections 17–101 through 17–204 under the new title “Maryland General and Limited Power of Attorney Act.” The Act takes effect on October 1, 2010.

Among the many changes are two distinct provisions which Maryland real estate practitioners should be aware of: (1) New execution requirements and (2) new statutory forms.

New Execution Requirements

In addition to the pre-existing requirements for properly executing a power of attorney (POA), a POA executed after September 30th must be attested and signed by two or more adult witnesses who sign in the presence of the principal and in the presence of each other (one of the witnesses can be the notary). Signature blocks for these new requirements are a part of the new statutory form.

New Statutory Forms

The Act creates, among others, two forms which real estate professionals should be aware of. The first is the Maryland Statutory Form Limited Power of Attorney. While the statutory doesn't have to be used, if it is it cannot be refused on the basis of the content of the form alone.

A Maryland real estate professional will also see a Certification as to the Validity of Power of Attorney and Agent’s Authority used in conjunction with a POA. This form must be executed before a notary and recorded along with the POA in every transaction. In the absence of fraud, such certification is “conclusive proof of the nonrevocation . . . of the power at that time.”

As a reminder, a POA should only be used when principal(s) absolutely cannot sign or be present at a closing. They have been tools for fraud and real estate related scams. As a title company, we will always inquire as to why one is being used, so if your buyer or seller is using one, please be prepared for questions!

Saturday, September 18, 2010

Maryland Ground Rents After September 30th

On May 8, 2007, Governor O’Malley signed House Bill 580 - “Ground Rents – Registry of Properties Subject to Ground Leases” - which became Chapter 290 of the Laws of 2007. The law provided for the creation of an on-line registry of properties that are subject to ground rents and required that all ground rent owners must register every ground rent owned by the owner with the State Department of Assessments and Taxation (SDAT) and pay a fee by September 30, 2010 or else risk having said ground rent interest extinguished.

Now that September 30th is fast approaching, what's going to change?

According to at least one of our underwriters, Fidelity National Title Group, absolutely nothing. This is because there is a pending lawsuit [Charles Muskin vs. State Department of Assessments and Taxation (Case Number 24C10004437)] which if successful will deem the ground rent legislation as unconstitutional and will bar its enforcement. So long as this case is active, Fidelity tells us, we are to treat ground rents as we always have and will not render a ground rent as extinguished just because it fails to appear in the registry.

Note that this just one underwriter's position, but we fully expect the other major title insurance companies to follow suit in the coming days. We will continue to update you on what other title insurance companies are doing as well as the status of the case and how it affects this legislation. Stay tuned!

UPDATE: On September 24th, another one of our underwriters, First American, sent us a memo with substantially the same information as the earlier Fidelity notice. This is now the second underwriter who has told us "business as usual" with respect to ground rents.

Friday, September 10, 2010

Fraud Alert: Canadian Checks

It was reported as early as June of this year that some real estate agents were being approached by clients via email (and in many cases through Trulia) to facilitate the purchase of a home. The fact pattern went something like this:

"Buyer" contacts agent through Trulia's "Voices" channel, offering to purchase a certain house for $XXX,XXX.00. The individual is very clear about (1) being foreign (often he is an Asian individual living in Canada); and (2) having cash to purchase the property. He is particular about using Docusign, and once agreement is signed sends the checks (often written from a Canadian bank) for EMD + additional deposits to either brokerage or title company. The problem is that the checks they provide for closing funds are counterfeit. Shortly after the checks are received, the "buyer" cancels contract and demands the funds be wired back to them. If the scam is successful, the funds are wired back before it is determined the checks are counterfeit.

Some online examples of this fraud can be found here, here and here.

Note that a Maryland agent has been approached with a similar offer as recently as today. Should you be approached by someone with a similar fact pattern, tread lightly. Feel free to contact us, and we'll go through the specifics with our underwriting counsel. Under no circumstances should you wire funds out of any accounts until you are 100% sure they are in your account and under your control.