Business Regulation - Collection Agencies and Property Managers
Summary
SB589 creates a specific exemption from Maryland’s collection agency licensing requirements for certain property managers. Under the bill, a property manager who collects rent, utilities, or fees from a residential tenant on behalf of a property owner would not be treated as a collection agency, so long as the payments are collected only during the lease term or a holdover period and debt collection is not the property manager’s primary purpose with respect to the property. The bill also defines “property manager” in the Business Regulation Article to include activities such as finding tenants, collecting rent and fees, paying expenses and taxes, maintaining utilities and systems, and taking other necessary actions to manage real property.
Impact
The bill amends Title 7 of the Business Regulation Article, which governs collection agencies, by adding property managers to the list of entities exempt from licensure when they are performing ordinary property-management collection functions. It also adds a new definition of “property manager” and directs that Title 7 may not be enforced against a property manager until the resolution of the referenced court case, including any appeal. As a result, property managers handling residential rent and related charges for owners would be shielded from collection-agency licensing requirements in the circumstances described, narrowing the reach of the State Collection Agency Licensing Board over this category of activity.
Sentiment
The bill appears to have been broadly supported in the Senate, passing third reading by a vote of 43-2, and the committee report was favorable with amendments. That vote pattern suggests strong overall agreement with the bill’s core policy of clarifying that ordinary property-management rent collection should not be regulated as debt collection. The absence of recorded committee transcript discussion limits insight into detailed debate, but the final action indicates the measure was not highly controversial at the chamber level.
Contention
The main point of contention is the boundary between property management and debt collection. Opponents or skeptics likely focused on whether collecting rent, utilities, and fees from tenants should ever trigger collection-agency regulation, especially where collection activity may resemble debt collection. The bill addresses that concern by limiting the exemption to residential tenant collections during the lease or holdover period and only where debt collection is not the property manager’s primary purpose. The temporary non-enforcement language tied to a specific court case also suggests the bill was intended to respond to ongoing litigation, which may have been a source of dispute over how existing law should apply before the courts resolve the issue.