Rental licenses are no longer a suggestion in many Maryland jurisdictions.

Ethan W Seitz

We are coming up to the first anniversary of Maryland’s vast expansion of tenant’s rights. Effective October 1, 2023, a landlord, whose property is unable to pass a licensing inspection, will be unlikely to succeed in a number of repossessions claims under the Maryland Real Property Title.[1] In order for a landlord to apprise themselves of the expedited repossession remedies under the Real Property Title, they must now comply with the rental licensing requirements of their jurisdiction.

Rental licenses are a form of regulation on anyone operating a rental dwelling as a landlord. Depending on jurisdiction, a landlord cannot rent out a residential unit without subjecting the rental property to inspection by the licensing authority of the property’s jurisdiction. Rental licenses allow a jurisdiction to control the habitability of the rental properties within that jurisdiction while protecting the rental industry from unlicensed competition.

Md. Code Ann., Real Prop. §8-406 was added as the prime mover in the licensing requirement. This new section enumerates the pleading and proving requirements for licensing requirements. Importantly, the rental licensing requirement only applies if the county, municipality, or other jurisdiction where the rental dwelling is located requires a rental license.[2] Baltimore City requires a landlord obtain a rental license from the housing authority in order for a landlord to rent a property or even collect rent on that property.[3] Not all jurisdictions in Maryland require a rental license.[4] In order for a landlord to obtain a rental license, they are usually required to file with their local jurisdiction and submit their property to an inspection by the licensing authority.[5]

This rental license requirement applies to any repossession action under Md Real Prop. §8-401 (Nonpayment of rent), §8-402 (Tenant holding over), and §8-402.1 (Proceedings upon breach of lease).[6] Actions under these titles are used landlords to seek repossession of the premises from the tenant following a breakdown of the landlord-tenant relationship.

If a landlord is operating an unlicensed rental dwelling, they could still bring an action for repossession if they are exempt[7] or qualify for one of the three statutorily prescribed exceptions to the statute.[8] Exemptions under the title are reserved for any local rule of the jurisdiction that specifically exempts a certain class of landlord from that jurisdiction’s licensing requirement. For example, the Housing Authority of Baltimore City is not required to have a license to operate a rental dwelling in Baltimore City.[9] The exemption provision allows for local jurisdictions to hold out particular landlord’s from the burden of licensing requirements.

The three statutorily prescribed exceptions to the law lay out three common scenarios where the landlord’s lack of licensure is acceptable in the eyes of the legislature. Each of these three scenarios contemplate situations where the landlord is not entirely at fault for the lack of rental license.

In the first scenario, the landlord is excepted from the licensing requirement if they can prove that some “wrongful act” by the tenant caused the local “licensing authority to suspend, revoke, or refuse to grant or renew the rental license.”[10] As the statute is newly created as of October 2023, there is little case law as to the extent and scope of the alleged wrongful act causing a lack of license. Hypothetically, a tenant who moved into an unlicensed property can do nothing to cause the license to be revoked, as there was already no license to begin with. In this scenario, any act by the tenant could not have caused the lack of license, as the lack of license was already a condition of the property before the tenant moved onto the property. More likely, any act by the tenant to materially degrade the livability of the property or prevent the rejuvenation of the property would be enough to satisfy this exception. A tenant cannot refuse to allow a landlord entry into the property to make repairs. A tenant cannot breed a colony of rats and release them into the property. The exact contours of this exception are not yet clearly defined, and thus are ripe for adjudication.

In the next scenario, the landlord is exempt from the licensing requirement if they can plead and prove that their lack of licensure was the result of an “administrative error or omission by the licensing authority.”[11] This provision acknowledges that administrative failures do happen, but this provision is limited to only the administrative errors of licensing authority, not of the landlord.

The final scenario is reserved for multi-unit properties that share a single rental license. Multi-unit properties include apartment buildings or converted single family homes that are split into multiple apartments. These properties usually share a single license for multiple units.[12] If the license is revoked due to a condition affecting another unit, but not the unit in question in the complaint nor the common area of the whole property, the landlord can seek an exception to the licensing requirement.[13] The unit in question and common area of the property must be able to pass the licensing inspection and be free of any health and safety defects.[14] The landlord must take all “necessary steps” to obtain a license but fail do so to the conditions of another unit that is not the unit in question.[15] A unique aspect of multiunit properties is that they are in close proximity. If one unit in a given building has rodents, insects, or mold, it is not unlikely that other units in that same building have a similar health hazard.

This new licensing requirement will require landlords comply with additional regulations on their business in order to be fully protected under the law of Maryland. In effect, most landlords will not notice a substantive change. For example, in Baltimore, a landlord is not legally entitled to rent a property nor collect rent from that property if they are not licensed by the city.[16] Most professional landlords are likely already licensed to operate rental dwellings as required by their jurisdiction. This law targets unlicensed landlords who often maintain poor or dangerous conditions in their properties. By removing several rights of repossession, the Maryland legislature has made it clear the State will not support the exploitation of uninformed renters by unlicensed and noncompliant landlords. Overtime, this law is likely to lose importance, as more and more landlords would be motivated to come into compliance with the licensing requirement of their jurisdiction. In the meantime, tenants now have an additional protection from noncompliant landlords who refuse to bring their rental dwellings up to code.

[1] Md. Code ann.,Real Prop. §8-406.

[2] Id. at (a)(1).

[3] Balt. City Code art. 13 §5-4(a).

[4] https://www.peoples-law.org/rental-license-maryland-county-city-municipality-town-search (Containing a running list of jurisdictional licensing requirements in Maryland).

[5] https://cels.baltimorehousing.org/reg/Reg_MFD_Search.aspx (containing a database of Baltimore city rental licenses, searchable by street address).

[6] MD. CODE ANN.,REAL PROP. §8-406(b).

[7] Id. at (b)(2).

[8] Id. at (b)(3).

[9] Balt. City Code art. 13 §5-4(b).

[10]Md. Code ann.,Real Prop. § 8-406(c)(1)(iii).

[11]Id. at (c)(1)(iv).

[12]Id. at (c)(1)(v)(1).

[13]Id. at (c)(1)(v)(2).

[14]Id. at (c)(1)(v)(2)(A-B).

[15]Md. Code ann.,Real Prop. § 8-406(c)(1)(v)(3).

[16]Balt. City Code art. 13 §5-4.