Maryland-Real-Estate-Salesperson Maryland Real Estate Salesperson Examination Questions and Answers

When a life estate is measured by the life of a life tenant (Jacob) and the grantor (Janice) specifies that, upon the life tenant’s death, the property passes to a third party, that third party holds a remainder interest (a present, non-possessory future interest). If the property were set to return to the grantor instead, the grantor would hold a reversionary interest.

The Maryland Commission on Civil Rights (MCCR) is the state agency responsible for enforcing fair housing laws within Maryland.

Under the Maryland Fair Housing Act (found in Title 20 of the State Government Article), the MCCR investigates complaints of discrimination in housing based on race, color, religion, sex, familial status, national origin, marital status, sexual orientation, gender identity, and disability.

The MCCR’s duties include:

Receiving and investigating housing discrimination complaints.

Attempting conciliation between parties when possible.

Referring cases to the U.S. Department of Housing and Urban Development (HUD) when they fall under federal jurisdiction.

Enforcing penalties and ensuring compliance with both state and federal fair housing standards.

In the Maryland 60-Hour Principles and Practices of Real Estate Pre-Licensing Course, this information is covered under the “Maryland Fair Housing and Ethics Requirements” module, emphasizing that licensees must understand and comply with both federal Fair Housing Act provisions and Maryland’s additional protected classes enforced by the MCCR.

Reference (Maryland Source):

Maryland 60-Hour Principles and Practices of Real Estate Pre-Licensing Course – “Maryland Fair Housing and Ethics Requirements” Module

Annotated Code of Maryland, State Government Article, Title 20 – Human Relations, §§ 20-701 to 20-711 (Maryland Fair Housing Act).

A package loan (package mortgage) finances both real property and personal property (chattels) together in a single loan—common with new homes that include appliances or furnishings. A blanket loan covers multiple parcels; a wrap-around is junior financing that “wraps” an existing loan; “security” is not a loan type but a general concept.

Escheat is the government’s power to take title to property when someone dies intestate (without a will) and no heirs or creditors can be found. This differs from eminent domain (the government’s power to take private property for public use with just compensation) and from a taking (the act under eminent domain). A life estate is a private freehold interest measured by a person’s lifetime, not a government power. These core definitions are covered in the Real Property and the Law module.

Severance is the act of detaching an item that was part of the realty, thereby converting it into personal property (e.g., removing a built-in fixture). Annexation is the opposite—attaching personal property so it becomes real property (a fixture). Emblements are annual crops treated as personal property by definition, not by a transformation act. A sale does not change the classification of items; it only transfers whatever is included (real or personal) as specified.

In the sales comparison approach, after making market-supported adjustments to comparable sales, the appraiser engages in reconciliation—a professional judgment process that weighs the quality and relevance of each comparable (e.g., similarity, extent and reliability of adjustments, data verification) and does not simply average the indicated values.

Bracketing is a selection technique (choosing comps slightly superior and inferior to the subject), and conformity is an appraisal principle (value is maximized when properties are similar). Neither is the final weighing process.

Maryland law prohibits self-help eviction, which occurs when a landlord takes direct action—such as locking out a tenant or removing their belongings—without a court order.

Only a sheriff or court-appointed officer may evict a tenant following a court judgment for possession.

A landlord who locks out a tenant to recover rent is acting illegally, even if rent is overdue.

This topic is addressed in the Leasing and Property Management module of the pre-licensing course.

Reference (Maryland Source):

– Maryland 60-Hour Principles and Practices Course, Landlord-Tenant Law section.

– Real Property Article §8-216 – Prohibited Acts of Landlord (Self-Help Eviction).

Maryland licensees may fill in blanks on approved contract forms and explain business terms (e.g., common contingencies, offer strategies, earnest money customs). But giving legal advice—interpreting legal consequences, drafting custom legal clauses, or advising on rights/remedies—is considered the unauthorized practice of law unless the licensee is a Maryland attorney. Clients should be referred to legal counsel for legal questions.

References (Maryland Pre-Licensing Core Content):

Maryland 60-Hour Course: “Real Estate Contracts” (use of approved forms; scope of practice; prohibition on legal advice).

Maryland Real Estate Commission guidance (practice limits; unauthorized practice of law).

A promissory note is a borrower’s written promise to repay a specified amount of money under agreed terms.

A mortgage is the security instrument that pledges real property as collateral for that note.

Together, they form the legal and financial foundation for most real estate loans.

If the borrower defaults, the lender may foreclose on the property under the rights granted by the mortgage.

The Maryland 60-Hour Course explains that while some states use deeds of trust instead of mortgages, Maryland primarily uses mortgages and promissory notes in conventional real estate financing.

In a sub-agency relationship, the cooperating licensee (sub-agent) works with a buyer but represents the seller, not the buyer.

Kip, as a sub-agent, owes fiduciary duties of loyalty, obedience, confidentiality, and disclosure to the seller (May), the same client represented by Sheila, the listing agent.

The buyer, Charlie, is treated as a customer, not a client, meaning no fiduciary obligations exist beyond honesty and fair dealing.

This principle is covered in Maryland’s Law of Agency and Brokerage Operations modules.

Reference (Maryland Source):

– Maryland 60-Hour Principles and Practices Course, Agency Relationships and Sub-Agency sections.

– Business Occupations and Professions Article §17-530 – §17-534.

In Maryland, all compensation earned by a licensed salesperson or associate broker must be paid through their supervising broker.

Salespersons are not permitted to receive direct payments from clients, customers, mortgage brokers, or other settlement service providers.

Violations can result in disciplinary action or license suspension.

Agency may be created expressly (by written or oral agreement) or by implication through the conduct of the parties. When a licensee and consumer act as though an agency relationship exists—advice, advocacy, and services consistent with representation—without a signed agreement, this is implied agency. Maryland emphasizes avoiding unintended implied agency by using timely written agreements and required disclosures.

In Maryland, buyers have the right to receive full disclosure of any additions, alterations, or improvements made to a property. This is crucial because such modifications may have required building permits and inspections under state and local building codes.

A buyer wants to know whether permits were obtained to ensure that:

The work was done legally and safely,

It meets local code requirements, and

There are no future liability or resale issues.

Unpermitted work can lead to enforcement actions or costly repairs. The Maryland Property Disclosure and Disclaimer Statement (per Real Property §10-702) requires sellers to disclose known material defects or improvements.

In Maryland, a redeemable ground rent (ground lease) allows the leasehold tenant to redeem (buy out) the ground rent by paying the statutory redemption amount to the ground rent holder, typically with advance written notice (often 30 days) after a minimum period has elapsed. An irredeemable ground rent cannot be bought out by the tenant. The question’s facts—15 years of payments and the tenant giving 30 days’ notice to buy out—match the characteristics of a redeemable ground lease.

In Maryland, when a new salesperson applicant identifies a supervising broker on the license application, the applicant receives an active license.

An inactive license is issued only if no broker is designated.

An active license authorizes the salesperson to conduct real estate activities under the supervision of the sponsoring broker, in compliance with MREC rules.

The Better Business Bureau (BBB) accepts complaints related to false, misleading, or deceptive advertising practices and can investigate, mediate, or forward concerns to regulatory agencies.

The Maryland pre-licensing course advises licensees that maintaining truthful and transparent advertising is an ethical and legal requirement under both Maryland Real Estate Commission regulations and the Federal Trade Commission (FTC) rules.

Consumers may also contact the Maryland Real Estate Commission (MREC) for license law violations, but general deceptive ad complaints typically begin with the BBB.

Reference (Maryland Source):

– Maryland 60-Hour Principles and Practices Course, Ethical Advertising and Consumer Protection section.

– COMAR 09.11.02.01 – Ethical Standards of Advertising.

– Federal Trade Commission Act, 15 U.S.C. §45.

Within “Real Estate Brokerage Operations” (advertising and solicitation compliance), the course emphasizes federal rules governing outreach to consumers:

The Do Not Call Implementation Act (and related FTC/FCC rules) regulates telemarketing, requiring scrubbing against the National Do Not Call Registry, time-of-day restrictions, identification requirements, and record-keeping.

The CAN-SPAM Act governs commercial email, requiring accurate header information, a truthful subject line, clear identification as an advertisement (where applicable), a clear opt-out mechanism, and honoring opt-out requests promptly.

The Junk Fax Prevention Act (amending the TCPA) restricts unsolicited fax advertisements, allowing them only under specific conditions (e.g., established business relationship, proper opt-out notice).

These are the primary federal solicitation rules covered for prospecting; antitrust and fair housing laws are also taught but address different risk areas (competition and discrimination, respectively) rather than direct telemarketing/email/fax solicitation mechanics.

References (Course Outline/Study Topics):

Maryland 60-Hour Principles and Practices of Real Estate Pre-Licensing Course — “Real Estate Brokerage Operations” (Advertising & Solicitation Compliance: Do Not Call rules, CAN-SPAM, Junk Fax Prevention Act; distinctions from antitrust and fair housing requirements).

The escrow agent (often the broker, title company, or attorney) is the fiduciary who receives and holds trust money in a regulated escrow account until contract terms are fulfilled. In Maryland, the broker is responsible for maintaining escrow records and depositing all trust money promptly in accordance with COMAR 09.11.02.19. “Escrow master” and “mortgage agent” are not legal titles under Maryland law, and “special agent” refers to the agency relationship, not handling of funds.

Under Maryland’s Code of Ethics and Professional Conduct, licensees must act with honesty, integrity, and reasonable skill and care.

If a licensee lacks experience in a specialized area, they must disclose that fact to the client and either refer the client or seek assistance from a qualified professional—with the client’s informed consent.

By being transparent and collaborating with an experienced commercial broker, Manny fulfills his ethical obligation of competence and disclosure while protecting his client’s interests.

Reference (Maryland Source):

– Maryland 60-Hour Principles and Practices Course, Ethics and Professional Conduct section.

– COMAR 09.11.02.01 – Code of Ethics for Real Estate Licensees.

– Business Occupations and Professions Article §17-322.

In the buyer representation section, the course contrasts common forms:

Exclusive right to represent: the brokerage is owed compensation if the buyer purchases during the term, regardless of who finds the property.

Exclusive agency: the brokerage is the only broker engaged, but the buyer reserves the right to purchase without the broker and owe no commission if the buyer self-procures the property.

Amortization is the process of systematically paying down a loan balance over time through periodic payments that cover interest and principal, according to an amortization schedule.

Installment refers to a single periodic payment, not the full process.

Loan is the debt itself.

Mortgage is the security instrument (lien) that pledges property as collateral for the loan.

References (Maryland Pre-Licensing Core Content):

Maryland 60-Hour Course: “Real Estate Financing” (amortization schedules; principal vs. interest; fully vs. partially amortized loans).

Basic finance terminology as standardized across pre-licensing materials.

Tenancy by the entirety is a special form of ownership available only to married couples in Maryland. It provides each spouse with an equal, undivided interest and includes the right of survivorship—if one spouse dies, the surviving spouse automatically owns the entire property.

However, when the couple divorces, the marriage relationship—essential for this ownership form—no longer exists. The law automatically converts the ownership to tenancy in common, unless otherwise specified in the divorce decree or a subsequent agreement.

VA loans (for eligible veterans/servicemembers) and USDA Rural Development loans both allow 0% down payment (100% financing), subject to program eligibility and property/location requirements. FHA loans require a minimum down payment (commonly 3.5%) and therefore are not 100% financing.

The Statute of Frauds requires that certain contracts—including those for the sale or transfer of real property—be in writing and include:

The names of the parties,

Identification of the property, and

The essential terms and conditions (such as price and contingencies).This ensures the agreement is legally enforceable in court.

When personal property (chattel) is physically attached to real property in such a way that it becomes part of the real estate, it becomes a fixture. Fixtures transfer with the property upon sale unless specifically excluded in the contract. The determination depends on attachment, adaptation, and intent. Maryland’s course addresses fixtures under “Real Property and the Law,” emphasizing how they affect ownership and conveyance.

An owner’s (buyer’s) title insurance policy provides financial protection to the buyer after closing against covered defects in title (e.g., undisclosed liens, errors in the public record, forgeries) that existed as of the policy date. An abstract of title and a chain of title are historical summaries used in the examination of title but do not provide indemnity. An attorney’s opinion of title is an expert assessment, not an insurance contract, and similarly does not indemnify the buyer against losses from covered defects discovered later.

The course teaches that the title insurance policy itself specifies coverage and exclusions. Coverage basics appear on Schedule A, while Schedule B—Exceptions clearly lists matters excluded from coverage (e.g., specific recorded easements or restrictions, taxes, and other encumbrances identified in the title search). Therefore, to determine what is not covered, parties must review the policy’s schedule of exceptions.

Courts commonly consider (1) method of attachment (annexation), (2) adaptation to the property’s use, and (3) agreement of the parties to determine whether an item is a fixture (real property) or personal property. “Acknowledgement,” “accessory,” and “reimbursement” are not part of the legal fixture tests.

Maryland license law allows the earnest-money deposit (good-faith deposit) to be paid in cash, certified funds, or personal check, provided the terms are disclosed in the sales contract. A post-dated check or promissory note is not considered “good funds” unless all parties agree in writing. Verbal assurances never satisfy the deposit requirement. The broker must promptly deposit the funds in a designated trust (escrow) account.

The agency module explains that agency may be created by express agreement (written or verbal) or by implication through conduct. When parties act as if an agency relationship exists—for example, a licensee regularly advising and assisting buyers without a signed agreement—this can form implied agency. Because no express (written or oral) agreement exists in this scenario, the relationship described is implied agency, created by the parties’ behavior and course of dealings.

Under Maryland Agency Law (Business Occupations and Professions Article, Title 17, Subtitle 5), a listing agent represents the seller and owes the seller the fiduciary duties of loyalty, obedience, disclosure, confidentiality, reasonable care, and accounting.

A primary fiduciary obligation is to promote the interests of the client at all times during the transaction, as outlined in the Maryland Real Estate Commission’s Agency Disclosure materials.

While the listing agent must disclose all material facts to all parties (facts that affect value or desirability), the agent’s duty of loyalty and advocacy is owed to the seller client.

Therefore, the correct answer is that a listing agent must promote the client’s interests throughout the entire transaction.

An option contract gives the optionee (Monique) the exclusive right to purchase a property within a specified period and under specific terms, but not the obligation to do so.

When properly executed and supported by consideration (the option fee), the option is a binding contract on the property owner (Mark) and any subsequent owners who take title with constructive notice of the existing option.

Therefore, when Monique exercises her valid option within the option period, Shelly must honor it—the property must be sold to Monique under the agreed terms.

A listing agreement is a legally binding contract that establishes an agency relationship between the seller (client) and the listing broker (agent).

The agreement authorizes the broker to market the property and represent the seller’s interests in finding a ready, willing, and able buyer.

While the salesperson may work directly with the seller, the contractual relationship exists between the broker and the seller—not the individual licensee.

This principle is emphasized in the Maryland course under “Listing Agreements and Buyer Representation.”

Maryland recognizes dual agency within a brokerage when the brokerage represents both sides of a transaction. With the informed written consent of both parties, the broker (or branch manager) serves as the dual agent, and the broker may appoint separate associated licensees to represent each party; those appointees are called intra-company agents. Each intra-company agent owes undivided fiduciary duties to their respective client, while the broker maintains neutrality as the dual agent. This structure is specific to Maryland’s agency framework.

Brokerage risk management includes cybersecurity best practices to protect client nonpublic information (e.g., transaction documents, IDs, financial data). Licensees are instructed to avoid unsecure/public networks and untrusted or suspicious websites, use secure/encrypted connections, maintain strong passwords and multi-factor authentication, and follow brokerage data security policies. Avoiding unsecure environments reduces exposure to malware, phishing, and interception.

A corporation is a single legal entity, separate from its shareholders. When it holds title to real property, ownership is in severalty, meaning “sole” ownership by one legal person. Unlike joint tenancy or tenancy in common, there are no co-owners in severalty; the corporate entity alone holds all rights of ownership. This principle is highlighted in the ownership portion of the Maryland pre-licensing curriculum.

The course’s antitrust section explains that Sherman Act criminal penalties can reach up to $100 million for corporations and up to $1 million for individuals, plus possible imprisonment for individuals. Real estate examples include price-fixing, market allocation, group boycotts, and tying arrangements—all prohibited.

Informed consent is a legal requirement under Maryland Agency Law when a brokerage represents both a buyer and a seller in the same real estate transaction (dual agency).

In this arrangement, the broker acts as the dual agent, while separate intra-company agents may represent each party.

The client must receive full disclosure of the potential conflicts of interest and consent in writing before dual agency can occur.

Without informed, written consent, dual agency is prohibited under Maryland Real Estate Commission (MREC) regulations.

Under Maryland Real Estate Brokers Act §17-530 and COMAR 09.11.02.08, dual agency is permitted only when informed, written consent is obtained from both buyer and seller. When licensees operate as part of a team, the broker (or office manager acting as the broker’s designee) may appoint intra-company agents (ICAs) from within that team to represent each party.

The broker or manager then acts as the dual agent, overseeing both sides without providing direct representation to either. This structure preserves confidentiality and compliance with Maryland’s agency disclosure requirements.

Under the federal Residential Lead-Based Paint Hazard Reduction Act of 1992 (Title X) and the Maryland Lead Poisoning Prevention Program, sellers and landlords of housing built before 1978 must:

Provide the EPA-approved pamphlet on lead hazards.

Disclose known lead-based paint or hazards and supply any available records.

Allow buyers a 10-day inspection period (unless waived).

A licensee’s duty is to ensure that the sellers comply with these disclosure requirements and to remind them to deliver the proper forms and pamphlet.

The licensee is not responsible for testing or remediation but must ensure all disclosures are completed prior to ratification of the contract.

Reference (Maryland Source):

– Maryland 60-Hour Principles and Practices of Real Estate Pre-Licensing Course, Environmental Issues and Disclosures section.

– 42 U.S.C. §4852d (Residential Lead-Based Paint Hazard Reduction Act).

– COMAR 26.16.02 (Maryland Lead Poisoning Prevention Program).

In real estate, positive (affirmative) misrepresentation occurs when a licensee makes an affirmative statement of fact that is false. When the statement is knowingly false and causes reliance and harm, it rises to fraudulent misrepresentation—but it is still a positive (affirmative) misrepresentation because it is an overt, false assertion (as opposed to concealment/nondisclosure, sometimes called passive misrepresentation).

Option A describes an affirmative false statement that causes harm (i.e., a classic example of positive misrepresentation; intent makes it fraudulent).

Options B and C describe innocent/negligent errors but don’t clearly state an affirmative false statement of material fact.

Option D confuses “positive” with “beneficial outcome,” which is not what the term means.

References (Maryland Pre-Licensing Core Content):

Maryland 60-Hour Course: “Real Estate Brokerage and the Law of Agency” (truthful dealing; material facts; affirmative vs. passive misrepresentation; fraudulent vs. negligent vs. innocent misrepresentation).

COMAR 09.11.02 (standards of practice: honesty, fair dealing, and prohibition against misrepresentation).

An encumbrance is any claim, charge, or liability attached to real property that burdens the title or limits use, including monetary interests (e.g., liens, such as mortgages, tax liens, mechanic’s liens) and non-monetary/physical interests (e.g., easements, encroachments, deed restrictions). Encumbrances do not necessarily prevent transfer, but they run with the land and affect marketability.

Maryland agency law requires that licensees disclose and explain brokerage relationship options and obtain a signed brokerage agreement before providing client-level services. Prior to entering an exclusive right to sell, the licensee must present available forms of representation (e.g., exclusive right to sell vs. exclusive agency) and explain the duties, compensation, and implications of each so the seller can make an informed choice. Listing or marketing cannot lawfully proceed as client-level services without the executed agreement and required disclosures.

Under Maryland license law and the Maryland Code of Ethics (COMAR 09.11.02.33), licensees are expected to cooperate with other licensees when doing so serves their client’s best interest. Cooperation often involves sharing information or coordinating showings, but does not require compensation unless there is a written agreement specifying how commissions will be shared. The client’s interest always takes priority over cooperative obligations.

Within the Agency/Fiduciary Duties portion of the course, self-dealing is identified as a breach of fiduciary duty that occurs when a licensee has a personal interest in a transaction and fails to disclose it fully and obtain informed consent. Examples include purchasing a client’s property for oneself (or through an undisclosed third party), steering a client to a business in which the licensee has a hidden financial stake, or otherwise placing personal gain ahead of the client’s interests without disclosure. Maryland law requires full disclosure of material interests and adherence to fiduciary duties of loyalty, disclosure, and obedience.

Radon is a naturally occurring radioactive gas that results from the decay of uranium found in soil, rock, and groundwater. It is colorless, odorless, and tasteless and can accumulate in enclosed spaces, such as basements and homes.

The U.S. Environmental Protection Agency (EPA) identifies radon exposure as a leading cause of lung cancer among nonsmokers.

In Maryland, the pre-licensing course emphasizes that while radon testing is not mandatory, sellers and licensees have a duty to disclose known environmental hazards to buyers.

Regardless of who pays the commission, the client is the person named in the agency agreement—in this case, Sadie, the property owner.

The Maryland Real Estate Brokers Act defines the client as the party with whom the broker or salesperson has an agency relationship, not necessarily the one providing compensation.

Third-party payments do not alter the contractual relationship or fiduciary duties.

In the Fair Housing and Ethics module, the course emphasizes that unlawful housing discrimination often occurs in subtle or less visible forms, including steering, disparate impact, selective marketing, inconsistent application of qualifiers, and micro-level decision-making that the public may not observe. The fact that discrimination is illegal does not eliminate hidden practices; therefore, practitioners must know the protected classes, recognize subtle violations, and implement consistent, documented, and neutral business practices.

The Multiple Listing Service (MLS) is a cooperative online database used by licensed real estate professionals to share information about properties for sale or lease. It includes active, pending/under-contract, sold, expired, and withdrawn listings. The MLS enhances market transparency and cooperation among brokers, ensuring accurate data and broad property exposure.

Antitrust violations occur when individuals or companies engage in activities that restrict competition in the marketplace and limit consumer choice.

In real estate, this includes price-fixing, group boycotts, market allocation, and tie-in agreements, all of which are prohibited under the Sherman Antitrust Act and Federal Trade Commission Act.

Maryland’s real estate license law reinforces these prohibitions, and the Maryland 60-Hour Course covers antitrust compliance under “Fair Housing and Ethics” to ensure licensees act in the public’s best interest and avoid practices that restrain trade.

In development analysis, costs include impacts that require public or private expenditure—for example, the increased demand on infrastructure (roads, utilities, schools, water/sewer), which necessitates capacity expansions, impact fees, or mitigation measures.

Crime rates and lower unemployment are socio-economic conditions/impacts, not direct development costs.

Local density zoning rules are regulatory constraints (land-use controls), not a cost in themselves (although they can influence costs).

References (Maryland Pre-Licensing Core Content):

Maryland 60-Hour Course: “Land Use Controls and Property Development” (infrastructure capacity, impact fees, concurrency, mitigation of development impacts).

Planning and subdivision concepts taught in Maryland curriculum (infrastructure and service demands as development costs).

Underground storage tanks (USTs), particularly older ones made of steel, may corrode and leak, releasing hazardous substances such as oil or fuel into the soil and groundwater.

Maryland environmental law and the 60-Hour Course emphasize that sellers must disclose known environmental hazards, and buyers should be aware of potential remediation costs.

The Maryland Department of the Environment (MDE) regulates USTs, requiring proper registration, maintenance, and closure procedures to prevent contamination.

The course stresses that licensees must protect a seller’s privacy and personal security when marketing property. Photos that display personal possessions such as firearms, medications, financial documents, or valuables should never be published. Revealing these items can create a safety and liability risk for the seller and may violate professional ethical standards regarding confidentiality.

Therefore, the image showing the owner’s collection of antique guns should not be made public.

Reference (Maryland Source):

– Maryland 60-Hour Principles and Practices of Real Estate Pre-Licensing Course, Listing and Marketing Property section.

– Maryland Code of Ethics for Real Estate Licensees, COMAR 09.11.02.01 et seq.

For pre-1978 residential properties, federal law (Title X) requires disclosure of any known lead-based paint or hazards, provision of the EPA pamphlet, and a 10-day inspection opportunity (unless waived). Licensees must ensure required disclosure forms are completed and disclose known material facts, but they must not state lead exists if they do not actually know. Licensees are not responsible for abatement and must never assist in concealing hazards.

REO stands for Real Estate-Owned. This term refers to properties that have gone through the foreclosure process and are now owned by the lender—usually a bank or mortgage company—because the property did not sell at the foreclosure auction.

These properties become part of the lender’s real estate inventory and are often sold through REO departments or asset managers. The Maryland pre-licensing course includes REO properties under “Real Estate Brokerage Operations,” explaining how real estate professionals handle and market foreclosed or bank-owned properties.

Under the Uniform Commercial Code (UCC) Article 3 principles taught in real estate financing, a negotiable instrument (e.g., a promissory note) must be an unconditional promise or order to pay a fixed amount of money. Thus, if it does not contain an order to pay, it must contain a promise to pay. The amount must be fixed (not “flexible”), and while signatures are required for enforceability, notarization is not a UCC requirement for negotiability.

Personal property (also known as chattel) refers to movable items that are not permanently attached to the land or the improvements on it.

Examples include furniture, vehicles, and trade equipment. In contrast, real property includes land, improvements, and the legal rights associated with ownership.

The distinction between real and personal property is a core principle of real estate law covered early in the Maryland 60-Hour Course under “Real Property and the Law.”

A land trust is a type of living trust in which real property is the only asset placed into the trust.

Under a land trust, the trustee (fiduciary) holds legal title to the property, while the beneficiary retains the rights to control, manage, and receive income or proceeds from the property.

The Maryland pre-licensing course explains that land trusts are commonly used for privacy, estate planning, and avoiding probate, since the property is owned and transferred through the trust rather than by individual deed.

A tax-deferred exchange, also known as a 1031 exchange, allows investors to exchange one qualifying investment or business property for another “like-kind” property and defer payment of capital gains taxes until the new property is sold.

This provision falls under Internal Revenue Code §1031.

In the Maryland pre-licensing curriculum, this is explained under the “Real Estate Financing and Investment” section to show how investors legally postpone capital gains recognition by following IRS guidelines.