What is the Maryland SDAT and why do I care?

SDAT OVERVIEW FOR MARYLAND BUSINESSES

Anyone doing or planning to do business in Maryland should be familiar with the State Department of Assessments & Taxation ("SDAT").  As a broad overview, SDAT governs business formation and taxation.  The SDAT website,  http://www.dat.maryland.gov, provides a wealth of information and many forms and required filing information may be found there.

Register, Change, Revive or Dissolve a Business

SDAT filing services include filing forms to register a business in Maryland. These can include: Maryland Limited Liability Company, Foreign (Non-Maryland) Limited Liability Company, Stock Corporation, Tax-Exempt Nonstock Corporation, Close Corporation, and Foreign (Non-Maryland) Corporation.  SDAT also has forms to change, revive, or dissolve a business. However, a business owner should be cautioned that many considerations go into what type of business to register and what the tax and other legal ramifications are. SDAT does not provide legal advice on these issues. Instead, an experienced business attorney can offer such advice.

Look for an Existing Business or Find Out if a Business Name

 is Taken for Your New Business

SDAT also provides a search engine for business name availability. You can search to see if any other company has registered a company name you want to use. If not, you can.register the name. You can also register a trade name which is commonly known as a t/a or d/b/a name. This name is different from the actual registered entity name but one that the SDAT authorizes you to use. (For example, my business is registered as Katherine L. Taylor, P.A., but the trade name is registered as Taylor Legal.)

Obtain Information About a Business

The status of a business can be checked through SDAT. SDAT can provide certified copies of Articles of Organization or Incorporation.  It lists the "Resident Agent," (person authorized to receive service of process for a Maryland business) and the legal status of a business (whether the charter is active or forfeited). In addition, SDAT can provide specific information about a business. For instance, you may want to see if a business is legally registered in Maryland, whether it is a close corporation or a stock corporation, the purpose of the business, or if it is in good standing or forfeited.

File Personal Property Tax Returns

SDAT has forms for filing personal property tax returns. SDAT administers the valuation of annual property taxes based on the value of a business' personal property.  SDAT automatically registers corporations, limited liability companies, limited partnerships, and limited liability partnerships for this type of tax and once your business is registered, you will receive notice that you are required to file property tax returns. However, sole proprietorships and general partnerships, which are not registered with the SDAT, must obtain an SDAT registration number and file an annual business personal property form for this assessment.

Learn How the SDAT Website Can Help You!

The website is easy to navigate but can be overwhelming, content wise, for someone not familiar with the intricacies of business requirements in Maryland. While attorney advice is recommended, it is a good idea to check out and become familiar with all SDAT has to offer.

CAN SOMEONE CLAIM MY LAND BY ADVERSE POSSESSION?

                                                           ADVERSE POSSESSION

            Adverse possession seems to be a particularly unusual legal right. In simple terms, it

provides that a person who does not have legal title to a property can obtain it under

specified circumstances. The legal requirements to obtain adverse possession include:

(1) actual or constructive possession of the property, (2) under color of title or claim of right, and

for 20 years uninterrupted.

            Actual possession means just what it sounds like - that the person claiming adverse

possession is in actual peaceable possession of the property. Constructive possession means

possession under "color of title" or "claim of right." Color of title applies when

someone erroneously thought they owned the property but did not legally, perhaps because of

an improperly worded or recorded deed. Claim of right applies, for example, when a person

makes a legal claim that they own the property by reason of a predecessor's adverse possession.

Maryland cases have used the terms "hostile," "actual," "open," and "notorious" to explain the

type of ownership required for adverse possession. This does not necessarily mean

asserting ownership in the ordinary meaning of "hostile," which brings up ideas of malice or ill

will. Instead, the goal is that the asserted ownership is made clear, thereby giving notice to an

actual or purported owner that possession and ownership is asserted. Thus, property owners

are admonished not to "sleep on their rights."

            The 20 year requirement supports the public policy of promoting land development and

rewarding productive use and ownership of property. It also aims to deter an owner's neglect of

his or her property rights.

            Under what circumstances might an adverse possession claim arise? There are many

possible scenarios. A common one is a boundary dispute, perhaps between neighbors regarding   

a strip of land between properties. Another could be when someone abandoned a property and an

adverse possessor stakes a claim and meets the legal requirements above.  Or maybe an

owner has a defective deed, and never legally owned the area in question. Yet another scenario

could be where there is an "easement," or allowed use of part of a property without a transfer of

ownership, such as a shared driveway or road that a person is able to use to access their property.

            How and when does an adverse possession claim come before a court? A person who is

not in possession of property, but who claims title, may bring an action against the person in

possession of the property. This is called an action to  "quiet title." The legal standard or "burden

of proof" falls on the adverse possessor. Thereafter, the burden of proof shifts to the who claims

to be the owner.

            The court, hearing an adverse possession claim, will decide who has legal ownership of

the property.

            Adverse possession claims are, by nature, complicated. They are very fact specific.

Each element of an adverse possession or claim of rightful ownership must be proven.  Adverse

possession cases may require experts, factual witnesses, surveyors, title examiners, and others to

support a claim or defense to a claim. It is advisable to retain an attorney regardless of what side

you are on should one of these cases arise. It is also important, if you believe that someone may be adversely possessing your land, that you take action immediately to remove the possibility that a claim can be made. Katherine Taylor and Andrea LeWinter have represented many clients on both sides of adverse possession claims. 

RECORDING A DEED IN MARYLAND

RECORDING A DEED IN MARYLAND

            There are a series of steps involved in recording a deed in Maryland. While the overall

process is uniform, counties can differ in the technical requirements and costs. A deed to

be recorded can be prepared by an attorney licensed in Maryland or by one of the parties named in the deed. It is critical that each step is followed precisely and that the wording of the dead is accurate. Otherwise, an intended deed transfer may not be effective. If improperly done, a deed may not transfer legal title, resulting in complicated and expensive legal issues later on.

            First, what is a deed? A deed is a legal document that changes or transfers ownership of real

property in Maryland. This is done through a "conveyance." For example, upon the sale of a

home, a prior owner would convey new ownership and legal title to the purchaser through a

properly written and recorded new deed. Or a property owner may wish to gift a property to

someone without any "consideration," or payment. Nevertheless, this too must be properly

recorded in a new deed that states that no consideration was paid. A new deed may also be

required to show a change of name.

            A deed must specify the type of ownership interest that is being conveyed. This is

done through important and precise language in a "habendum clause." There are different types

of property ownership in Maryland. If not worded correctly, the attempted transfer of legal title

may not be effective.

            Once you have a properly drafted deed, the next step is recording the deed. Deeds

are recorded in the Land Records Department in each Circuit Court where the property is

situated.  While you should consult specific requirements for each county, what follows

is a general description of the process.

            1. A deed must include a "certificate of preparation," stating that the deed was either

prepared by an attorney or by a party.

            2. A deed must be notarized (signed in person before a notary public).

            3.  A "lien certificate" must be attached, if required. This will show any unpaid

taxes or liens on the property which must be paid before property can be deeded or transferred.

            4. A "State of Maryland Land Instrument Intake Sheet" must be filled out. This Sheet

will be used to determine any required transfer or recording taxes. These must be paid before

the deed will be recorded. Certain transfers may be exempt from transfer and recording taxes.

            5.  A deed can be recorded after steps 1-4 have been done. A deed, along with the above-

referenced documents will be filed by the court Clerk.  There are fees to record a deed.

Once the Clerk has recorded the deed, ownership transfers. However, if a deed

was recorded with inaccuracies in the wording or transfer language, though recorded, the deed  

may not transfer legal title.  Beware that Court Clerks cannot and will not advise you if your

deed is legally sufficient or effective to accomplish your goals.

            It is impermissible to include a social security number or driver's licenses in a deed.

            Court Clerks make and maintain a full and complete alphabetical general index of every

deed, in both the names of each grantor, donor, mortgagor and assignor, and each grantee, donee,

mortgagee, or assignee. In addition, the Clerks make a microfilm picture or other copy of every

recorded document, which is sent to the State Archivist annually.

            Recording a deed in Maryland is a multi-step exacting process. Before recording a deed,

take care to examine your intent and be sure to comply with each step of Maryland law. This

can avoid errors in ownership and deeds, which can be difficult to correct, and can cause of host

of unintended legal problems later on.

            

EMINENT DOMAIN PROCEDURES IN MARYLAND

EMINENT DOMAIN PROCEDURES IN MARYLAND

Eminent domain occurs when the state takes an owner's real property for public use. The process is called condemnation. This seems unusual to many. Why, they ask, can the government take my property? It's not that simple and there are safeguards in place to protect an owner facing condemnation.

A brief history of this process is helpful. The U.S. Constitution provides safeguards against government taking our property.

• The Fifth Amendment states that the Federal Government cannot deprive individuals of "life, liberty, or property," without due process of law.
• The Fourteenth Amendment forbids states from denying any person "life, liberty or property, without due process of law."

Article 3, Section 40 of Maryland's Constitution also includes safeguards:

•   there is no taking of private property for public use without just compensation,
•   the private property must be appraised and the fair market value determined,
•  these matters may be submitted to a jury, and
•   there can be an immediate taking for certain needs such as roads and right of ways.

   With this brief overview, you can see how complicated eminent domain and condemnation cases are. Many questions arise. What is a "public use?" Who determines the "fair market value?" How does an "immediate taking" work? Should an owner contest a proposed condemnation? How much will it cost? Can the state take only part of the property? What if there is a lease in effect? What does "due process" require? Should an owner settle or fight a proposed condemnation? Will a displaced owner be paid relocation expenses or reimbursed for financial losses incurred because of a condemnation?

 Each case in unique and factually specific. This article does not attempt to and cannot provide absolute answers to the many possible scenarios. However, the following tips can be helpful for a property owner dealing with this situation.

  First, the state can establish the "public use" requirement, making this difficult to challenge. Nevertheless, a property owner in this situation should beware of the following potential issues, among others:

1.     A property owner must be given proper notice of the proposed condemnation. This includes advance notice (except in cases of immediate condemnation noted above).

2.     Except for immediate condemnation cases, an owner has a right to request a jury trial. For example, a jury trial may be requested on specific issues such as fair market value. Owners also have appeal rights.

3.     Once a property has been condemned, an owner is entitled to damages. Damages can be awarded for the taking of an entire tract of land or where part of a tract is taken, for the fair market value of the part taken.

4.     The value of condemned property is critical to an owner. The state must provide evidence, including a written appraisal of the fair market value of the property performed by a qualified impartial appraiser. An owner can also present appraisal evidence or can rely on the assessed value of the property as determined by the State Department of Assessment and Taxation.

5.     There are special considerations if the property being condemned is a dwelling. An owner or occupant of a dwelling may be entitled to additional compensation for the reasonable cost of a replacement dwelling, or other increased interest costs and other debt service costs a person is required to pay for financing any comparable replacement dwelling.  Also, moving and relocation expenses must be paid to a displaced person.

6.     If the property owner prevails, the state must pay courts costs in a condemnation proceeding, including an allowance for reasonable legal, appraisal, and engineering fees. In addition, the owner may be entitled to interest on damages at the rate of 6% per annum. An owner is also entitled to receive a credit for taxes paid before the property was condemned.

7.     An action for condemnation must be brought within 4 years of the authorization to administratively or legislatively acquire the property. This period can be renewed by a new authorization.

An owner facing condemnation is wise to retain an attorney at the inception of the proceeding to help with the complicated issues along the way. Experienced counsel can untangle the complicated issues and focus on maximizing an owner's damages. This can make the whole process, which is understandably something most people would rather not face, more successful.

RECORDING A FOREIGN JUDGMENT IN A MARYLAND COURT

RECORDING A FOREIGN JUDGMENT IN MARYLAND

                Did you know that you can record a judgment from another state in Maryland? Through a simple procedure a recorded out of state judgment becomes legally enforceable in Maryland, increasing your options for collection and satisfaction of a judgment.

                To record a final judgment from another state, you need a  certified copy of the judgment from the jurisdiction where it was entered. You can then file the certified copy in any county in Maryland, after giving proper notice to the debtor, and it becomes a valid judgment ripe for collection here. A final judgment can be recorded in any county. Each county charges a filing/recording fee.

                So, if you have a foreign judgment from another state when should you think about recording it in Maryland and in which county? It makes sense to record the judgment in a county where the debtor lives, works, or has any property or assets, because you can move to attach them.

                What can you do with a recorded final judgment? It automatically becomes a lien from the date of entry on the debtor's interest in land located in that county. In addition, it enables you to do various forms of "discovery," such as Interrogatories in Aid of Execution or a Deposition, to learn specifics about a debtor's finances, including attachable assets. It also opens up a variety of potential collection avenues, including bank account and wage garnishment, and attachment and sale of property.

                The procedure to record a foreign judgment may be a cost effective option to obtain payment on a judgment. 

HELP - I RECEIVED A HOWARD COUNTY ZONING VIOLATION NOTICE!

HOWARD COUNTY ZONING VIOLATIONS

            What should you do if you get a zoning violation notice in Howard County?  First, some background on the Howard County Department of Planning and Zoning ("DPZ") is useful. DPZ's stated mission is: "To create collaborative, innovative plans and implement strategies that effectively address growth and redevelopment challenges. DPZ seeks to enhance Howard County's high quality of life, prosperity and stewardship of natural and cultural resources." As part of this mission, DPZ issues various zoning regulations contained in the Code of Ordinances and Municipal Code. These can be found online at  www.howardcounty.gov.  The Howard County Planning Commission, Board of Zoning Appeals and their delegates are designated to enforce these zoning regulations.  If you received a zoning violation notice, the complaint could have been made by these zoning  authorities or by a private citizen, even anonymously.

            Once a complaint is made, it will be investigated by county zoning authorities. Action

may or may not be taken, depending on what the investigation shows. Investigations can

result in inspections of property, emergency remedies, and denial of access to property. The 

DPZ, upon becoming aware of a zoning violation, may institute an injunction, mandamus (court

order to correct a public record or title), abatement, or any other action to prevent or stop the

violation.  A notice may be issued ordering a stop to the violation within 10 days or within a

reasonable time specified. Such notice must be served personally or by registered mail. If the

violation is not timely remedied, DPZ can take whatever action is necessary to end the violation.

DPZ may enforce zoning regulations by issuing citations. These citations can be heard in court or

in administrative proceedings.

            If a violation notice is not issued, an aggrieved person may request that DPZ issue

a written notice, fairly describing the property and alleged violation. This must be done within

60 days of receiving the written request. If no notice is issued during this time period, it means

DPZ has decided that the violation does not exist. Thereafter, the complainant has appeal rights.

If an appeal is taken, DPZ must send a copy of the appeal to the owner and occupant of the

premises where the alleged violation exists.  

            

            If a violation is found, failure to remedy the violation is a misdemeanor with a monetary

fine of up to $500 per day that the violation continues. There are also other civil penalties and

enforcement remedies available to DPZ under the Howard County Code.

            There are many types of potential zoning violations including for example prohibited

placement of a structure, sign, improvement, or change of land use; failure to obtain a permit for

improvements or land use; or prohibited use of land. Zoning violations and hearings are often

complicated and time consuming. An attorney can be help a person facing an alleged zoning 

violation navigate this process. Katherine Taylor and Andrea LeWinter have assisted many clients who have received zoning violation notices, and those who sought to ensure that violation notices were issued to other landowners who were violating the zoning regulations. 

ABLE or SNT? How Can I Save for My Child with Special Needs?

While many parents are very responsible and do their best to provide for their kids, many families also depend on government benefits which can be very helpful to a family – even a family with adequate resources – especially where there are other children, and when the parents have retirement and college accounts to fund. Most of the time when a child with special needs is in the family, parents (very responsibly) fund UTMA accounts for all of their kids, including the child with special needs.

Many parents, however, actually end up doing their child a disservice, because funds in the name of a child who is seeking government benefits can prevent a child from qualifying for certain government aid. Accounts in the name of the child (UTMA funds become the property of the child when the child reaches the age of either 18 or 21 – depending on how the account is set up) are considered to be owned by the child, even if the parent funded the account (the funds are deemed to be gifts to the child).  In some cases, when a child turns 18, (s)he may be eligible for SSI (Social Security Income and other benefits such as Medicare) as a result of a disability. However, for many programs he or she will NOT be considered fully eligible until all of his or her other assets are exhausted. If the potential recipient has funds in his or her name, the potential recipient may have to “spend down” those funds before becoming eligible to receive benefits.

Therefore, the parent is between a rock and a hard place. Do the parents start saving now in the name of the child, or do the parents opt NOT to put funds in the name of the special needs child? If the parent opts to NOT put funds in the name of the child, they can put the funds in the name of a third person with instructions to use that money for the benefit of the special needs child, but many times the parents do not know someone who can be relied on to care for the child if the parents are no longer able to.

Until very recently, the only safe way for families to plan in advance to both (1) provide for their child, and (2) arrange the child’s finances so that the child upon becoming an adult (age 18) will be eligible to receive government benefits in addition to funds set aside by the parents, was to set up a Special Needs Trust, also called a Supplemental Needs Trust (SNT).   After the SNT is created, the parents (or others) can add money to the SNT as gifts to the child (up to the maximum amount per year that is exempt from gift tax). That trust would also be in existence throughout the life of the child to accept any death benefits payable to the child, should either of the parents or grandparents pass away and leave funds to the special needs child.

If set up properly, the funds in the Parent SNT do NOT disqualify the child for government benefits (because the trust, not the child, “owns” the funds and the funds are distributed by a trustee strictly in accordance with the terms of the trust). The main thrust of the SNT is that the trustee (the parents or any successor) can only use the funds in the trust to pay for any supplemental needs not covered by government benefits. Thus, the child gets the benefit of government help AND other supplemental needs met (such as recreation, education, etc.) from the funds set aside for the child’s benefit. While a SNT trust is a good idea, it cannot be funded with funds that are already considered to be owned by the child (UTMA account in existence), so it is important for parents to set up an SNT as soon as they realize the need for one.

Recently, Congress passed a law that will provide another alternative to parents wishing to save for special needs children, or for persons with disabilities to save for themselves.  In late 2014, the president signed the Achieving a Better Life Experience Act, or ABLE Act. This new law, which is modeled after 529 college savings plans, will allow people with disabilities (or others on their behalves) to open special accounts where they can save up to $100,000 without risking eligibility for Social Security and other government programs. While contributions to the accounts are not tax deductible, interest earned on savings will be tax-free. Funds accrued in the accounts can be used to pay for “qualified disability expenses” which is any expense related to the designated beneficiary as a result of living a life with disabilities and includes education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services education, health care, transportation, housing and other expenses. To be eligible, a person has to have a “significant disability” with an age of onset of disability before turning 26 years of age.

As of now, the total annual contributions to an ABLE account by all participating individuals, including family and friends, is $14,000. There are other limitations, including maximum amounts that can accrue in an ABLE account and limitations on the amount that is exempted from the resource limits for certain government benefits. For example, the first $100,000 in ABLE accounts would be exempted from the SSI $2,000 individual resource limit, but if the amount in an ABLE account exceeds $100,000, the beneficiary would be suspended from eligibility for SSI benefits and no longer receive that monthly income. However, the beneficiary would continue to be eligible for Medicaid, but states would be able to recoup some expenses through Medicaid upon the death of the beneficiary.

The US Treasury Department, through regulations that are likely in process of being written and that will hopefully be completed in 2015, will publish more details explaining what a “significant” disability is and how to set up and qualify for ABLE accounts. In addition, each state also put its own regulations in place — much as they have done for 529 plans — so that financial institutions can make the new accounts available.

While the addition of the ABLE account will provide more choice and control for the family of a person with disability, the ABLE account will not replace the SNT entirely. The cost of establishing an ABLE account will be considerably less than a Special Needs Trust, because an ABLE account will be able to be opened with a bank or financial advisor (a SNT can be costly to set up, as it generally requires the services of a lawyer). Further, with an ABLE account, account owners will have the ability to control their own funds (rather than having the trustee of a SNT control the funds) and, if circumstances change, the account owner will still have other options available to them.  However, the ABLE account can only be opened by someone with a “significant” disability (to be defined in regulations) and, because of the likely monetary and qualification limitations that will be imposed on ABLE accounts, a SNT may be more advantageous for some families. Determining which option is the best for any family or person will depend upon individual circumstances.

* “Special Needs” in this article refers to a condition or disability that will likely prevent a person from supporting himself or herself fully.