Residential Property - Service Agreement - Defunct Service Providers
Summary
SB814 addresses residential property service agreements, with a focus on agreements tied to service providers that later become defunct or lose good standing with the State Department of Assessments and Taxation. The bill keeps the existing rule that service agreements entered into on or after June 1, 2023, cannot last more than one year and cannot run with the land, create a lien or security interest, or be transferred without consent. It then adds a new section for older agreements entered into before June 1, 2023, but only when the service provider has forfeited the right to do business in Maryland and, on or after June 1, 2026, is considered not in good standing.
For those older agreements, SB814 limits them to a maximum of two years and makes any agreement that violates those limits void and unenforceable. It also authorizes a property owner or other interested person to bring an action in circuit court if a recorded agreement creates a lien arising from the service agreement, and allows recovery of compensatory damages plus reasonable attorney’s fees and costs. The bill takes effect June 1, 2026.
The bill’s impact is to amend the Real Property Article by creating a targeted remedy for homeowners and other interested parties affected by service agreements from providers that have become defunct. It expands the subtitle’s reach beyond the current post-June 1, 2023 agreements to cover certain preexisting agreements with failing or inactive providers, and it gives courts express authority to declare those agreements void and unenforceable.
The overall sentiment appears strongly favorable and noncontroversial. The bill received unanimous third-reading votes in both chambers, passing the Senate 42-0 and the House 128-0, and the committee report was favorable. That voting record suggests broad agreement that the bill protects residential property owners from lingering obligations tied to companies that are no longer operating properly in the state.
No notable opposition is reflected in the available materials, but the bill’s main policy point is the treatment of older service agreements and the circumstances under which they become void. The key issue is balancing contract enforcement against consumer and property protections when a service provider has become defunct or lost good standing, especially where recorded agreements may cloud title or create lien-like effects.
Impact
SB814 amends the Real Property Article to add a new section governing certain residential property service agreements involving service providers that have forfeited the right to do business in Maryland and are not in good standing with SDAT. It voids and makes unenforceable certain pre-June 1, 2023 agreements that exceed a two-year limit or otherwise attempt to run with the land, create a lien or security interest, or permit assignment without consent, and it authorizes court actions for declaratory relief, damages, and attorney’s fees. The bill also creates an exception to the subtitle’s general applicability date so these older agreements can be reached by the new rule.
Sentiment
The bill appears to have been received positively and without significant controversy. It was reported favorably from committee and passed both chambers unanimously, indicating broad bipartisan support for the consumer and property-owner protections it provides. The voting history suggests legislators viewed the measure as a narrow corrective aimed at defunct service providers rather than a broader change to residential property law.
Contention
No direct opposition is shown in the available record, but the bill’s main area of potential contention is its retroactive effect on service agreements entered into before June 1, 2023. The legislation limits those older agreements only when the provider has become defunct and not in good standing, which suggests concern about protecting homeowners from stale or burdensome recorded obligations while preserving ordinary contract expectations for active providers. Any debate would likely center on the scope of voiding existing agreements and the availability of damages and attorney’s fees.