Maryland Legal Alert for Financial Services
Maryland Regulation of Shared Appreciation Agreements
As reported in our Maryland Laws Update in 2023, effective on July 1, 2023, certain “shared appreciation agreements” became subject to the Maryland Mortgage Lender provisions regulating extensions of residential closed-end and open-end credit. Under the 2023 law, a “shared appreciation agreement” includes a transaction, option, future, or other derivative between a person and a consumer, where the consumer receives funds or other value in exchange for an interest or future interest in a dwelling or residential real estate, or a future obligation to repay a sum on the occurrence of certain events (e.g., transfer of ownership, a specified maturity date, the death of the consumer, or any other trigger event in the related writing). On July 15, 2024, the Maryland Commissioner of Financial Regulation issued a notice of proposed regulation to implement the 2023 law change. The proposed regulation addresses differences between traditional mortgage loans and shared appreciation agreements by adding definitions for certain terms frequently used in shared appreciation agreements, describes the required disclosures in shared appreciation agreements, includes procedures for calculating property values, and includes ability to repay standards. The proposed regulation is out for comment until August 12, 2024.
For questions concerning this topic, please contact Christopher R. Rahl.
Contact Christopher R. Rahl | 410-576-4222