What is Real Estate Brokering In The State of Maryland?

⚠️ Disclaimer – This is legal information not legal advice. For legal advice contact an attorney in your area. ⚠️

Md. BUSINESS OCCUPATIONS AND PROFESSIONS Code Ann. § 17, better known as The Maryland Real Estate Brokers Act defines real estate brokering as seven* specific activities. Thus, an individual need to be a real estate broker in order to perform any of these activities, unless they qualify for an exception. Be sure to check the exceptions section towards the end of the post before concluding that a certain activity is prohibited.

*Technically six activities I just think it’s easier to explain this way

In addition, in no way is this post or the downloadable cheat sheet a substitute for having an attorney examine your business activities. Feel free to contact me for a legal consultation for a professional opinion on your businesses activities.

But first, here is my quick explanation for why I’m writing this post. Many people misunderstand what it means to broker real estate. One one hand, many people believe that real estate brokers are required for real estate transactions that they are not required for. On the other hand, there are many that are performing activities that require a license but they don’t know it.

Without further ado, here is my plain language interpretation of the seven activities that constitute real estate brokering in the state of Maryland.

In Maryland, “to broker real estate” means (i) to provide any of the following services (ii) for value:

Note #1 – Here is Md. BUSINESS OCCUPATIONS AND PROFESSIONS Code Ann. § 17-101 on real estate brokering in MD if you want to read it yourself.

1. Selling, buying, managing or leasing any real estate.
2. Collecting rent for the use of any real estate.
3. Helping a person buy/sell or lease any residential real estate.
4. Engaging regularly in a business of dealing in real estate or leases or options on real estate.
5. Engaging in a business the primary purpose of which is promoting the sale of real estate through a listing publication issued primarily for the promotion of real estate sales.
6. Engaging in a business that subdivides land that is located in any state and sells divided lots.
7. Serving as a consultant regarding any activity above.

Note #2 – This is based on the rules as of June 18, 2018. The rules will change in the future.

1. Selling, buying, exchanging or leasing any real estate.

This one is very straightforward. Individuals that help people buy, sell, or lease real estate need to be licensees.

2. Collecting rent for the use of any real estate.

Collecting rent. (See exceptions for property manager exception).

3. Helping a person buy/sell or lease any residential real estate.

I think this rule is more confusing than it is helpful. These activities are already covered by rule #1. It just throws in the word “residential”. Which could mislead one to think that it’s not real estate brokering to assist another in a commercial or industrial deal. But all real estate is accounted for in rule #1.

4. Engaging regularly in a business of dealing in real estate or leases or options on real estate.

I interpret this rule to mean if one’s business is regularly helping others do real estate deals for value then they need to be a licensee.

5. Engaging in a business the primary purpose of which is promoting the sale of real estate through a listing publication issued primarily for the promotion of real estate sales.

If a business’s primary purpose is to acquire inventory to put on a listing service, they need to be licensees. I find the “primary” language very interesting. So, is it not brokering if the secondary or tertiary purpose of my business is to acquire inventory to list on the MLS?

6. Engaging in a business that subdivides land that is located in any state and sells divided lots.

So, if a business is buying and subdividing land to sell the divided lots it needs a licensee on board. What makes this interesting is that it says land located in any state. So Marylanders are required to be MD licensees even if they conduct this business in VA.

7. Serving as a consultant regarding any of the above activities.

A person who gets paid to consult on any of the above activities needs to be a real estate licensee.

What is Real Estate Brokering in Maryland Part 2 – Exceptions!

Note #3 – to see the code itself check out Md. BUSINESS OCCUPATIONS AND PROFESSIONS Code Ann. § 17-102

Even if one performs any of the above activities a license is not required in these scenarios:

1. A person acting under a judgment order of a court.
2. A public officer while performing duties of the office.
3. A person while engaging in a single transaction that involves the sale or lease of any real estate under a power of attorney executed by the owner of the real estate.
4. A licensed auctioneer while selling any real estate at a public auction.
5. An owner or lessor of any real estate while managing, leasing, or selling the real estate, unless the primary business of the owner or lessor is providing real estate brokerage services.
6. A person while acting in the capacity of (i) receiver, (ii) trustee, (iii) personal representative, (iv) guardian.

Explanations

1. A person acting under a judgment order of a court.

Pretty straightforward. If a broker orders one to assist someone in buying or selling a home they do not need to be a licensee. In practice, attorneys get ordered to sell homes to resolve disputes.

2. A public officer while performing duties of the office.

I can’t think of any examples here. But apparently, some public officers help people buy and sell homes.

3. A person while engaging in a single transaction that involves the sale or lease of any real estate under a power of attorney executed by the owner of the real estate.

The owner can grant their power of attorney the power to help them in an isolated transaction.

4. A licensed auctioneer while selling any real estate at a public auction.

Licensed auctioneers don’t need to be licensed when doing public auctions.

5. An owner or lessor of any real estate while managing, leasing, or selling the real estate, unless the primary business of the owner or lessor is providing real estate brokerage services.

Owners of real estate do not need to be real estate licensees when buying, selling, leasing, or managing their own real estate. Neither do property managers because if they are authorized by the owner to lease then they are considered a “lessor.” However, licenses are required for property managers and owners whose primary business is brokering real estate.

6. A person while acting in the capacity of (i) receiver, (ii) trustee, (iii) personal representative, (iv) guardian.

People with any of the above legal statuses do not need to be licensed to manage the real estate affairs of their beneficiary/appointee/ward, etc.

Need Help Determining Whether or Not You Need a Real Estate License or Clarification as to What a Licensee Can or Cannot Do?

Do not hesitate to contact The Pendergraft Firm. We can evaluate your real estate business activities and provide you with a legal opinion as to your compliance with the Maryland Real Estate Broker’s Act.