maine law exam prep

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Maine Law Exam Prep

Copyright 2020 by The Real Estate Learning Group

Here is the content outline on the Pearson VUE Maine Law exam. See the Candidate Handbook

for complete information about the Pearson VUE exam.

https://home.pearsonvue.com/getattachment/abeb9965-3ffb-4f7b-98b4-57be2f2618e5/Maine%20Real%20Estate%20Candidate%20Handbook.aspx

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IMPORTANT INFORMATION: Forms copyrighted by the Maine Association of

REALTORS® are for educational purposes only. Language taken in full or in part may not be reprinted or reused for any personal or business purposes other than by members of the Maine Association of REALTORS® authorized to use these forms.

These documents are copyrighted material, owned by the Maine Association of REALTORS® and used by The Real Estate Learning Group with permission.

Real Estate Brokerage Relationships Form

Working with the Seller

Working with the Buyer Client

Working with the Buyer Customer

Offers/Counteroffers

Maine Real Estate Commission

Activities Requiring a License

Maine Landlord Tenant Act

Property Ownership and Transfer

Maine Condominium Law

Miscellaneous Items

Land Use Law

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FIDUCIARY DUTIES

Obedience

Loyalty

Disclosure

Confidentiality

Accounting

Reasonable Care

Diligence

Real Estate Brokerage Agency

Designated Broker

Associate

Broker

licensees Broker

licensees

Sales

Agent

licensees

A Designated Broker must hold a

Broker license.

If you hold an active broker license

in a state other than Maine, you

will apply for the Maine Broker

license.

If you have any license other than

a broker license in a state other

than Maine, you will apply for the

Maine Associate Broker license.

Associate Broker and Broker

licensees must complete 21 hours

of Maine-approved continuing

education every two years (3 hours

of which are the current Core

Course).

Confidentiality and Accounting

survive the closing or other

termination of the agency

relationship.

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Agency Relationship

Non-Agency Relationship

Agent of the seller

Agent of the buyer

Subagent

Disclosed Dual Agent

Transaction Broker

A client must give informed written consent to disclosed

dual agency. This consent must include a description of

the transactions in which the agency will serve as a

disclosed dual agent, and a statement that says the

agency will be representing two clients whose interests

are adverse.

Information may be disclosed to either party except:

• The willingness or the ability of the seller to accept less than the asking price

• The willingness or the ability of the buyer to pay more than has been offered

• Confidential negotiating strategy not disclosed in the sales offer as terms of the sale

• The motivation of the seller for selling and the motivation of the buyer for buying

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Appointed Agency

Designated Broker

With appointed agency, one affiliated licensee represents

the client to the exclusion of all other affiliated licensees of

the brokerage agency.

Let’s assume that Sunshine Realty has a company policy

to practice appointed agency. Edith and Archie are

affiliated licensees of Sunshine Realty.

Edith is the appointed agent for buyer client, Mrs. White,

who makes an offer on Mr. Green’s property. Mr. Green

is a seller client of Sunshine Realty whose appointed

agent is Archie.

There is no disclosed dual agency created in the

transaction since Edith and Archie are appointed agents

for their respective clients.

Let’s look at another scenario with the same brokerage

agency. Fred is a busy licensee. He is the appointed

agent for many clients, both buyers and sellers. One of

his buyer clients, Mr. Smith, wants to make an offer on

property owned by Mrs. Jones. Fred is also the appointed

agent for Mrs. Jones. To proceed in this transaction, both

Mr. Smith and Mrs. Jones must have given informed,

written consent for disclosed dual agency at the time of

listing with Sunshine Realty.

What if Sunshine Realty’s office policy does not allow

disclosed dual agency? Then probably Fred will refer one

of his two clients (Mr. Smith or Mrs. Jones) to another

affiliated licensee of Sunshine Realty. This second

licensee will then become the client’s appointed agent.

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Real Estate Brokerage Relationships Form

The Real Estate Brokerage Relationships Form is commonly referred to as Form #3. It is

located on the Maine Real Estate Commission web site at

http://www.maine.gov/pfr/professionallicensing/professions/real_estate/pdf/RECform3.pdf .This

form must be provided to the consumer at the first substantive communication regarding a real

estate transaction involving a residential one to four unit dwelling. This substantive

communication may be face-to-face, in writing, via e-mail or by any other electronic

communication. The Maine Real Estate Commission does not require the consumer’s signature

on this form.

This form is not required for “land only” or commercial transactions.

No Appointed Agency

Designated Broker

Although appointed agency is perhaps the most

common office policy in Maine, there are many

brokerage agencies which do not choose to practice

appointed agency.

Let’s move across town to Moonbeam Realty. This

company chooses not to practice appointed agency.

This means that all licensees of Moonbeam Realty

represent all clients of Moonbeam Realty.

William and Mary are both affiliated licensees of

Moonbeam Agency. Moonbeam Agency represents a

buyer, Mr. High, who wants to make an offer on Mrs.

Low’s property. Mrs. Low is also a client of

Moonbeam Agency. To proceed in this transaction,

both Mr. High and Mrs. Low must have given

informed, written consent for disclosed dual agency at

the time of listing with Moonbeam Realty.

In fact if any buyer client of Moonbeam Agency wants

to buy a property listed by Moonbeam Agency,

disclosed dual agency arises.

http://www.maine.gov/pfr/professionallicensing/professions/real_estate/pdf/RECform3.pdf

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Information that must be included on a brokerage contract with a seller

A brokerage agreement between an agency and client must be in writing and, at a minimum,

include the following:

• The signature of the client to be charged

• The terms and conditions of the brokerage services to be provided

• The method or amount of compensation to be paid

• The date upon which the agreement will expire

• A statement that the agreement creates an agency-client relationship

Carryover clause

A brokerage agreement may not be enforced against any client who in good faith subsequently

engages the services of another real estate brokerage agency following the expiration date of

the first brokerage agreement. Any brokerage agreement provision extending a real estate

brokerage agency’s right to a fee following expiration of the brokerage agreement may not

extend that right beyond 6 months.

Exclusive Right to Sell listing agreement

See the next few pages for a sample Exclusive Right to Sell listing agreement.

Working with the Seller

By the end of this section you will be able to:

• List the information that must be included on a brokerage contract with a seller

• Explain the use of the carryover clause

• Review an Exclusive right to Sell listing agreement with a client

• Discuss usual sources of information

• Provide mandated Maine-specific property disclosure

• Advertise in accordance with Maine rules

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Usual sources of information

• County Registry of Deeds

o Deed

o Easements

o Liens

o Plats for subdivisions

o Mortgages and discharges

• City/Town Hall

o Property tax information including exemptions

o Property card with assessor’s information

o Building permits

o Zoning

o Septic permits

o Code enforcement records

Mandated Maine-specific property disclosure

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Advertising

Advertising includes anything done by mail, telephone, internet, web site, business cards, signs,

magazines, newspapers, television, or radio.

• Ads must be done in the name of the trade name of the agency; it must be prominently

displayed.

• The owner of a property must give written permission for the property to be advertised.

• Advertising must be free from deception and not misrepresent the condition of the real

estate or your real estate brokerage services.

• You need the consent of your Designated Broker to register a domain name for a web

site or to develop or upload to the internet information that promotes real estate

brokerage services or the sale or purchase of real estate.

Information that must be included on a brokerage contract with a buyer

A brokerage agreement between an agency and client must be in writing and, at a minimum,

include the following:

• The signature of the client to be charged

• The terms and conditions of the brokerage services to be provided

• The method or amount of compensation to be paid

• The date upon which the agreement will expire

• A statement that the agreement creates an agency-client relationship

Carryover clause

A brokerage agreement may not be enforced against any client who in good faith subsequently

engages the services of another real estate brokerage agency following the expiration date of

the first brokerage agreement. Any brokerage agreement provision extending a real estate

brokerage agency’s right to a fee following expiration of the brokerage agreement may not

extend that right beyond 6 months.

Buyer Representation Agreement

See the next few pages for a sample of a Buyer Representation Agreement.

Working with the Buyer Client


• List the information that must be included on a brokerage contract with a buyer

• Explain the use of the carryover clause

• Review a Buyer Representation Agreement with a client

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Presumption of transaction brokerage

In Maine there is a presumption of transaction brokerage. The presumption of transaction

brokerage begins when services are provided with the expectation of payment without a written

agreement. Note that Maine law does not require a written agreement with a customer.

Level of service that is permitted as well as prohibited

A licensee is not presumed a transaction broker when soliciting a listing. Licensees may perform

one Comparative Market Analysis (CMA) in order to solicit the business of a seller. If the

consumer does not sign a brokerage agency agreement and you choose to work with the

consumer as his or her transaction broker, you may not provide further advice regarding market

value. However, you may provide the consumer with “comparable market data” as a ministerial

act. This is raw data that you have not analyzed for the consumer.

Transaction Broker may…. Transaction Broker may not….

Account for money received

Disclose material defects of a property

Comply with laws and rules of the Maine

Real Estate Commission

Comply with federal, state or local laws

(e.g. Fair Housing, civil rights)

Treat all parties honestly and not

knowingly give false information

Perform ministerial acts

Conduct an inspection, investigation or

analysis of a property for the benefit of any

party

Verify the accuracy or completeness of

oral or written statements made by the

seller or buyer or any third party

Promote the interests of either party to a

transaction

Working with the Buyer Customer


• Cite that in Maine there is a presumption of transaction brokerage and that a written

agreement between the brokerage agency and a customer is not required by Maine

law

• Discuss the level of service that is permitted as well as prohibited in your role as a

Transaction Broker

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Purchase and Sale Agreement

See the next few pages for a sample Purchase and Sale agreement.

Offer/Counteroffers


• Review with your client each paragraph on a typical Purchase and Sale Agreement

• Comply with Maine rules for earnest money deposits

• State the purpose and requirements of a trust account

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Earnest money deposits

• Earnest money is money held for clients or other persons related to a real estate brokerage transaction. Rental receipts may not be held in the trust account. Earnest money may not be commingled with funds belonging to the real estate brokerage agency.

• Earnest money must be deposited within 5 business days of acceptance of the offer. Business days do not include Saturdays, Sundays or holidays recognized by federal or Maine government.

Trust Account A real estate brokerage agency must have a trust account for the handling of money received by agency for the parties to a real estate transaction.

• A trust account may be a savings or checking account, and may include up to $500 of the agency’s money for the purpose of maintaining the account.

• Trust account records must be kept for at least 3 years.

• Checks drawn on the trust account must have the following four words imprinted on the check: Real Estate Trust Account.

Purpose of the Maine Real Estate Commission

The purpose of the Maine Real Estate Commission is to promote public understanding and

confidence in the business of real estate brokerage.

Structure and powers of the Commission and its staff

The Commission is composed of 4 industry members and 2 public members.

The Commission adopts rules to establish:

• Standards of practice for licensees

Maine Real Estate Commission


• State the purpose of the Maine Real Estate Commission

• Describes the structure and powers of the Commission and its staff

• State the sanctions that may be imposed by the Commission

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• Qualifications for licensure

• Requirements for pre-license and continuing education

• Duties of Designated Brokers for the supervision of employees and independent

contractors

The Director of the Commission:

• Manages the day-to-day business of the Commission

• Is an employee, not a member, of the Commission

• Investigates complaints about licensees

• Recommends dismissal, consent agreement, or disciplinary hearing before the

Commission

• Attends Commission hearings along with party bringing the action and the licensee

against whom the allegation is made

• May have his/her decision regarding licensing or renewal of license appealed to the

Commission

Sanctions

The Commission may impose disciplinary sanctions including:

• Reprimand

• Compliance with terms and conditions such as a cease and desist order

• Suspension of license

• Revocation of license

• Fine of no more than $2000 per violation plus amount of compensation received in the

subject transaction

• Referral to attorney general or district attorney

Activities for which one needs a Maine real estate license to perform

Real estate brokerage includes the following activities conducted on behalf of another for

compensation or the expectation of receiving compensation:

Activities Requiring a License


• List the real estate activities for which one needs a Maine real estate license to

perform

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• Listing real estate for sale or exchange

• Promoting the purchase, sale or exchange of real estate

• Procuring of prospects calculated to result in the purchase, sale or exchange of real

estate

• Advertising or holding oneself out as offering any services described in this subsection

• Negotiating the purchase, sale or exchange of real estate

• Buying options on real estate or selling real estate options or the real estate under option

• Acting as a finder to facilitate the purchase, sale or exchange of real estate

• Buying, selling or exchanging real estate


Although rentals and leasing are not a licensed activity in Maine, you might be listing or selling

investment property. To better represent your client, you should know the following information.

• The landlord cannot charge more than two times the monthly rent as a security deposit. The money must be held in a Security Deposit Escrow Account. If the real estate is sold (or passes to a new owner for any reason), the landlord must give the security deposit to the new owner or give it back to the tenant. If he gives it to the new owner, he must mail the tenant a notice with that person's name and address and how much money was passed on to the new owner.

• A payment of rent is considered late if it is not made within 15 days of its due date. The landlord may assess a late fee of no more than 4% of the amount of a month's rent.

• Except in a case of emergency, the landlord must give the tenant at least 24 hours' notice before entering the premises.

• If the tenant owes back rent or has damaged the property, the landlord may deduct those costs from the security deposit. If the tenant owes the landlord more than the amount of the security deposit, the landlord may sue the tenant in court.

• If the tenant is at will (no written lease), the tenant must give the landlord a 30 day written notice if the tenant will be leaving.

• If the landlord asks the tenant at will to leave “with cause” the tenant must vacate the premises in seven days. If the tenant doesn’t comply, the landlord may file a Forcible Entry and Detainer action (law suit).

• Landlords are required to provide working smoke detectors and carbon monoxide detectors at the time a property or unit is rented.



• Cite pertinent requirements from the Maine Landlord Tenant Act related to security

deposits, late fees, notice before entering premises, notice, Forcible Entry and Detainer

law suit, smoke detectors, and carbon monoxide detectors.

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Types of ownership

Sole Ownership

Tenancy (or Estate) in severalty

• One party is the owner

• One name is on the deed o This party can be a person, or it can be a business entity such as a

corporation.

Co-Ownership

Joint tenancy

• Two or more parties are the owner o They do not have to be married. It could be a group of five friends, for

example.

• Two or more names are on the same deed

• The joint tenants share the four unities of: o Time

▪ They take title to the property at the same time. o Title

▪ They have one title. All their names are on the same deed (the same piece of paper).

o Interest ▪ Joint tenants own equal shares in the property, without

exception. If there are four co-tenants, each owns 25% of the property. If there are ten co-tenants, each owns 10%.

o Possession ▪ They all have the right to possession of the entire property.

(It’s not that party #1 possesses the first floor, party #2

Property Ownership and Transfer


• Define types of ownership common in Maine

• Discuss methods of transfer of property

• List requirements for making claim of adverse possession in Maine

• State the recording method used in Maine

• Calculate the Maine Transfer tax

• Calculate the Maine Non-resident Withholding tax

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possesses the second floor, and party #3 possesses the third floor.)

• There is a right to Survivorship. o Joint tenants enjoy rights of survivorship. When on of the joint tenants

dies, all his interests and rights pass to the surviving joint tenant(s). This has nothing to do with wills or heirs or inheritance. It is solely due to the fact that they are joint tenants. Joint tenants do not have the ability to will their interest to parties outside of the tenancy.

• Transfer of interest o A joint tenant may transfer his interest in the property to an outside

party, but only as a tenancy in common interest. Whoever acquires the interest becomes a co-owner of the property as a tenant in common with the remaining joint tenants (who remain joint tenants with one another because they continue to share the four unities of time, title, interest and possession).

• Termination of joint tenancy o By partition suit (a legal action brought by one of the parties to be

released from the joint ownership), foreclosure, or bankruptcy

Tenancy in common

• Two or more parties are the owners

• The parties may acquire their ownership at different times o A new owner may enter into the joint ownership at any time

• The parties may own unequal shares o Party #1 owns 25%, Party #2 owns 35%, Party #3 owns 40%)

• No right of survivorship o Each party may sell or will his interest to an outside party

Tenancy by the entireties (Does NOT exist in Maine)

• Tenancy by the entireties is a form of ownership reserved exclusively for husband and wife.

• On the death of husband or wife, the decedent's interest passes automatically to the other spouse.

• Each spouse owns the estate as if there were only one owner. Fractional interests cannot be transferred. Interest may be conveyed, but only with the consent and signatures of both parties.

• The estate is subject to foreclosure only for jointly incurred debt

• The estate may be terminated by mutual agreement, death, or divorce

Community property (Does NOT exist in Maine)

Some states have established a community property form of ownership. This

type of ownership defines property rights of legal spouses before, during, and

after their marriage, as well as after the death of either spouse. Upon the death

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of either spouse, half of the deceased's community property passes to the

surviving spouse, and the other half passes to the decedent's heirs.

Tenancy in partnership

Grants business partners equal rights to all partners, however the property must

be used in connection with the partnership's business. Individual rights are not

assignable.

Condominium

• Condominium is a form of ownership, not a style of living unit!

• The condominium is created by the declaration of the developer with a master deed recorded at the registry of deeds

• A unit owner generally owns “from the walls in”(the airspace) within his own unit

• The association made up of all the owners owns everything else as tenants in common

• Some elements are “common elements” (swimming pool, laundry room, sidewalks, main hallways, unreserved parking) while other elements are “limited common elements” that are owned by everyone but restricted in use to certain unit owners (reserved parking spot, deck outside the walls of each unit, front porch, etc.)

• A unit owner may get a mortgage or be foreclosed on without it affecting any of the other unit owners

• There is usually a homeowners’ association that enforces the bylaws and covenants of the association

Cooperative

Individuals own shares in a corporation that owns the building(s). Note that the

individuals do not own real estate; they own person property (shares of stock).

The corporation grants a proprietary lease to the individual that specifies which

unit the individual may occupy.

Time Share (Interval Ownership) (Note- In Maine, time shares are not included under

real estate license law.)

A group of people are Tenants in Common with ownership of a living unit. Rules

govern when the individuals may occupy the unit (generally in one week

intervals).

Transfer of Property

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The purpose of the deed is to transfer title.

Grantor – The giver of the deed. This is usually the seller, but it is anyone authorized to transfer

the property such as the personal representative of an estate of a deceased person.

Grantee – The receiver of the deed. This is usually the buyer, but it could be another person,

such as someone receiving the deed by a gift.

General Warranty Deed (also known as Warranty Deed)

The majority of all real estate transactions transfer with a general warranty deed.

This type of deed contains five covenants (warranties) and creates the most liability for the

grantor and is considered the best deed for the grantee to receive.

The covenants (promises) made by the seller extend back in time to cover the ownership of all

prior owners. Before title insurance became a robust part of the real estate industry, these

guarantees on the part of the seller were very important. Today, if there is a problem with the

title, a new owner who has an insurance policy will file a claim with the title insurance company

rather than contact the previous owner.

In a warranty deed, the grantor warrants/guarantees:

1. Covenant of seisen: The grantor is the owner of the property and has the right to sell

it.

2. Covenant against encumbrances: The grantor guarantees that there are no

undisclosed known encumbrances outstanding on the title to the property.

3. Covenant of quiet enjoyment: The grantor guarantees that there will be no claims

against the title of the grantee.

4. Covenant of warranty forever: The grantor will bear any expense of defending the title

and will compensate the grantee for any loss if the title is found defective in the future.

5. Covenant of further assurances: The grantor will do anything necessary to defend or

perfect the title.

Words of Conveyance Used in a General Warranty Deed

“I, John Doe, convey and warrant…”

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Special Warranty Deed (also known as Limited Warranty Deed)

From time to time, a seller will not want to guarantee title for all previous owners and will convey

title with a special warranty deed. This may be found in commercial transactions. In this type of

deed, the grantor is providing the grantee with the two warranties that cover the period of

ownership of the grantor only.

The grantor is saying, in effect, “I know that during the time that I owned the property, no

encumbrances or other interests have arisen in this property. So, my guarantee is for any claims

that arise during the period of my ownership. I don’t know what happened to the property during

the ownership of prior owners, so I am not taking on the responsibility of guaranteeing title when

I did not own it.”

Bargain and Sale Deed

A bargain and sale deed implies ownership and possession of the property but it does not

contain any warranties. It may be used by the lender at foreclosures and tax sales. The

mortgage gave the lender the right to sell the property should the borrower default, but the

lender does not own it. The defaulted borrower still owns it. This is an example of why we

recommend that buyers purchase title insurance.

Words of Conveyance Used in a Special Warranty Deed

“I, Jane Doe, remise, release, alienate and convey

by through and under the grantor, but no other…”

Words of Conveyance Used in a Bargain and Sale Deed

“I, Mary Doe, grant, bargain, and sell…”

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Quitclaim Deed

A quitclaim deed is used to transfer title or release interests in a property. The grantor grants

whatever interest he has in the property at the time of the conveyance but makes no warranties

about the title. This form of deed is often used where a married couple is getting a divorce and,

as part of the settlement, one party’s interest is conveyed to the other spouse who will then be

the sole owner of the property.

Personal Representatives Deed (Also known as Trustee's Deed)

At the time of death, a person might own real estate. Where this is the case, the title to the real

estate becomes part of the deceased’s estate. The Personal Representative, who is the person

responsible for the settlement of the decedent's estate, may be called on to sell the real estate

either to raise money to pay taxes or creditors or because the heirs prefer cash rather than real

estate. In this case, the conveyance to the grantee is done with a Personal Representative or

Trustee's deed. The Personal Representative deed gives no warranties. Since the Personal

Representative has been appointed for the convenience of settling the affairs of the deceased,

there is no reason for him to take on the additional liability of guaranteeing of title.

When selling the property in an estate, the Personal Representative must give a notice to all the

heirs before conveying the property. Since the property is not going to the heirs of the estate

this notice allows for an heir to object to the sale, but he or she has to do so within the

timeframe required by law. If the Personal Representative does not sell the real estate but

conveys it to the heirs, the conveyance is done with a Deed of Distribution.

Adverse Possession

Adverse possession in Maine is established from the nature of a trespasser’s possession and

the length of time the person possesses the land.

A trespasser’s possession must be:

• Hostile, meaning against the right of the true owner and without permission

• Actual, meaning that the trespasser exercised control over the property

• Exclusive, meaning no one other than the trespasser used the property

Words of Conveyance Used in a Quitclaim Deed

“I, Jim Doe, remise, release, and quitclaim …”

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• Open and notorious, meaning that the trespasser the property as a real owner would

without hiding the use

• Continuous for the statutory period of 20 years

Recording Method Used in Maine

Maine is a “Race Notice” state. This is a statute about recording at the Registry of Deeds that

gives priority of title to the party that records first, but only if the party also lacked notice of prior

unrecorded claims on the same property.

Maine Transfer Tax

The first concept to master is how to “round up” to the next highest whole number.

Forget everything you learned in fifth grade about rounding numbers to the nearest whole

number! In order to accurately calculate the Maine Transfer Tax, you need to know how to

“round up.”

What digit appears to the right of the decimal point? If the digit is anything other than zero,

round up to the next highest whole number.

14.8 rounds up to 15




If the digit to the right of the decimal point is zero, the number remains the same.

217.0 remains 217

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6345.0 remains 6345

Steps Instructions EXAMPLE FOR SALES

PRICE OF $293,600

Step 1 Divide the sales price of the property by 500 $293,600 ÷ 500 = 587.2

Step 2 Round the answer up to the next highest whole

number


Step 3 Multiple the answer by 2.20 588 x 2.20 = 1293.60

Step 4 The answer is the total tax. Half is owned by

the seller, and half is owned by the buyer.

The total tax is $1293.60.

The seller owes $646.80, and

the buyer owes $646.80.

Maine Nonresident Withholding Tax

The Maine Real Estate Withholding Tax is a withholding of a portion of the proceeds of the sale

of Maine real property by a nonresident individual, estate or trust or by a business not domiciled

in Maine. The withholding is done at the time of the property closing and is claimed as an

estimated Maine income tax payment on the seller’s Maine income tax return. The buyer, at the

time of the sale, is responsible for the withholding.

The rate of withholding is 2 ½% of the total consideration (total sales price) unless the State Tax

Assessor has approved a reduced rate.

At the request of the seller or the buyer, the withholding may be reduced. If the capital gain

realized on the sale of Maine property times 7.15 % is less than 2 ½ % of the sales price, that

lower amount may be allowed as withholding. If there will be no capital gain, the seller may

apply for an exemption from withholding.

All requests for exemptions and reductions must be completed and submitted at least 5

business days prior to the closing date.

The real estate withholding tax is withheld by the closing agent at the time of the property

transfer and remitted to Maine Revenue Services with Form REW-1. Once Maine Revenue

Services receives the funds, no refunds are made until the related income tax returns are filed

for the year of sale.

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Steps Instructions Example for sales price

of $300,000 with gain of

$30,000

Step 1 Is the sales price $100,000 or more? If no,

there is no tax. If yes, go to next step.

Yes

Step 2 Multiply .025 times the sales price

.025 x 300000 = 7500

Step 3 Multiply .0715 times the gain

.0715 x 30000 = 2145

Step 4 The lesser of the two answers calculated in

steps 2 and 3 is the tax.

$2145

Declaration of Condominium

In Maine, the developer is called the declarant. The declarant must file a "Declaration

of Condominium" at the registry of deeds.

Resale of Condominiums

For condominium resales, the unit owner must furnish to a purchaser before execution of any

contract for sale of a unit, or otherwise before conveyance, a copy of:

• the declaration of condominium recorded by the developer at the registry of deeds

• the bylaws

• the rules or regulations of the association

• a reasonably current certificate containing statements about: o Existence of right of first refusal o Monthly common expense assessment

Condominium Law


• State what party records the declaration of condominium

• Comply with requirements for resale of condominium

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o Unpaid common expense or special assessment currently due and payable from the selling unit owner

o Any other fees payable by unit owners o Expected capital expenditures o Reserves for capital expenditures o Balance sheet and income and expense statement, if any, of the association o Current operating budget of the association o Judgments and pending suits against the association o Insurance coverage provided for the benefit of unit owners o Known current violations (such as unapproved alterations to a unit) o Known violations of the health or building codes o Remaining term of any leasehold estate affecting the condominium and the

provisions governing any extensions or renewal thereof

Within 10 days after a request by a unit owner, the association must furnish a certificate

containing the information necessary to enable the unit owner to comply with this act.

A purchaser is not liable for any unpaid assessment or fee greater than the amount set forth in

the certificate prepared by the association.

A unit owner is not liable to a purchaser for the failure or delay of the association to provide the

certificate in a timely manner, but the purchase contract is voidable by the purchaser until the

certificate has been provided and for 5 days thereafter or until conveyance, whichever first

occurs.

Designated Broker review of Sales Agent licensee

The Designated Broker must review and initial all contracts, property data sheets, disclosure forms, market analyses and other relevant information prepared by a Sales Agent licensee (not Associate Broker or Broker licensees) for the first 90 days that the Sales Agent is with the agency. If the Sales Agent moves to another agency, the clock starts ticking again for the Designated Broker at the second brokerage agency.

Miscellaneous Items


• State the time frame during which the Designated Broker must review and initial

documents prepared by a Sales Agent licensee

• Describe exemptions from and requirement for licensure for attorneys and

auctioneers

• Comply with requirements for BPOs (Broker Price Opinions)

• Provide appropriate disclosure when you have a self-interest in a real estate

transaction

• Comply with requirements when converting a seasonal dwelling to year-round use

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Exemptions from and requirement for licensure for attorneys and auctioneers

If an attorney conducts real estate transactions as part of his/her duties as an attorney (such as to settle an estate or conduct an intra-family transfer of title), no real estate license is required. However, if an attorney is regularly engaged in real estate brokerage, that attorney needs a real estate license.

A person licensed as an auctioneer may call bids at a real estate auction. However, if the auctioneer fills out the Purchase and Sale Agreement or takes possession of earnest money, that auctioneer needs a real estate license.

Requirements for BPOs (Broker Price Opinions)

Sales Agent licensees may not provide BPOs for a fee. Associate Broker and Broker licensees

may provide BPOs for a fee.

Any opinion or appraisal of market value must contain the following language:

“This opinion or appraisal was prepared solely for the client, for the purpose and function stated

in this report and is not intended for subsequent use. It was not prepared by a licensed or

certified appraiser and may not comply with the appraisal standards of the uniform standards of

professional appraisal practice.”

A Broker or Associate Broker may not knowingly provide or offer an appraisal or opinion of

market value on real estate in a transaction where the Broker or Associate Broker, or any other

licensee licensed with the agency, is to receive a fee on that transaction.

Disclosure when you have a self-interest in a real estate transaction

You must disclose in the offer to purchase that you are a real estate licensee:

• When buying real estate not listed with a real estate brokerage agency

• When buying real estate listed with the licensee’s real estate brokerage agency

• When buying real estate and sharing in the brokerage fee resulting from the sale of such

• real estate

Converting a seasonal dwelling to year-round use

Before converting a seasonal dwelling that has a onsite sewage disposal system located in the shoreland zone to a year-round or principal dwelling, a seasonal conversion permit must be obtained from the local plumbing inspector.

Exempt from this rule are:

• Dwellings that will be occupied seasonally

• Dwellings that are in the shoreland zone, however the disposal system for that dwelling is located outside the shoreland zone

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Seasonal conversion permits for structures within unorganized areas of the state are issued by:

• the local plumbing inspector; or • Department of Human Services, Bureau of Health, Division of Health Engineering in

coordination with the Department of Conservation, Land Use Regulation Commission.

A seasonal conversion permit will not be approved if a holding tank is used as a means of waste water disposal or storage.

Subdivision

Reference: (30-A MRSA §§4401-4408)

"Subdivision" means the division of a tract or parcel of land into 3 or more lots within any 5-year period.

This definition applies whether the division is accomplished by sale, lease, development, building or otherwise. The term "subdivision" also includes the division of a new structure or structures on a tract or parcel of land into 3 or more dwelling units within a 5-year period, the construction or placement of 3 or more dwelling units on a single tract or parcel of land and the division of an existing structure or structures previously used for commercial or industrial use into 3 or more dwelling units within a 5-year period. In determining whether a tract or parcel of land is divided into 3 or more lots, the first dividing of the tract or parcel is considered to create the first 2 lots and the next dividing of either of these first 2 lots, by whomever accomplished, is considered to create a 3rd lot.

Land Use Law


• State the purpose/provisions for each of the following:

o Subdivision

o Mandatory Shoreland Zoning

o Site Location of Development

o Underground Oil Storage Tanks

o Minimum Lot Size

o Land Use Planning Commission

o Department of Environment Protection

o Open Space Tax Law

o Tree Growth Tax Law

o Protection of Natural Resources

o Transfers of Shoreland Property

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It is NOT considered a “dividing” if:

• Both dividings are accomplished by a subdivider who has retained one of the lots for the subdivider's own use as a single-family residence that has been the subdivider's principal residence for a period of at least 5 years immediately preceding the 2nd division

• A division is accomplished by devise (i.e. by a will) • A division is accomplished by condemnation (i.e. government taking) • A division is accomplished by order of court • A division is accomplished by gift to a person related to the donor of an interest in

property held by the donor for a continuous period of 5 years prior to the division by gift does not create a lot or lots for the purposes of this definition, unless the intent of the transferor is to avoid the objectives of this law. "Person related to the donor" means a spouse, parent, grandparent, brother, sister, child or grandchild related by blood, marriage or adoption. A gift under this paragraph cannot be given for consideration that is more than 1/2 the assessed value of the real estate.

• A division is accomplished by a gift to a municipality • A division is accomplished by the transfer of any interest in land to the owners of land

abutting that land that does not create a separate lot does not create a lot or lots for the purposes of this definition, unless the intent of the transferor is to avoid the objectives of this subchapter

Mandatory Shoreland Zoning

Reference: (38 MRSA §§435-449)

Most land uses within 250 feet of Maine's rivers, wetlands, lakes, the ocean, and within 75 feet of certain streams are subject to the regulation of Maine's Mandatory Shoreland Zoning Act. The law protects water quality, limits erosion, conserves wildlife and vegetation, and preserves the natural beauty of Maine's shoreland area.

The Mandatory Shoreland Zoning Act applies to the “shoreland zone”, which, by law, includes all land within:

• 250 feet of the normal high-water line of any great pond (natural pond over 10 acres), any river that drains at least 25 square miles, and all tidal waters and saltwater marshes;

• 250 feet of a freshwater wetland over 10 acres (except “forested” wetlands); and

• 75 feet of a stream. Only outlet streams of great ponds, and streams below the confluence of two perennial streams depicted on a USGS topographic map are required to be zoned.

The Shoreland Zoning law requires that municipalities protect shoreland areas through adopting shoreland zoning maps and ordinances. Zoning ordinances provide for what types of activities can occur in certain areas. For example, they address building size and setbacks, and the establishment of resource protection, general development, residential, and other zones.

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The law is primarily administered through each municipality, and the local code enforcement officer is usually the first point of contact on shoreland zoning issues.

Site location of development


This law requires review of developments that may have a substantial effect upon the environment. These include developments such as projects occupying more than 20 acres, metallic mineral and advanced exploration projects, large structures and subdivisions, and oil terminal facilities. A permit is issued if the project meets applicable standards addressing areas such as storm water management, groundwater protection, infrastructure, wildlife and fisheries, noise, and unusual natural areas.

Underground oil storage tanks

Reference: (38 MRSA §§561-570M)

There are over 5,000 registered underground oil storage tanks located at approximately 3,000 underground oil storage facilities in the State of Maine. The Maine Department of Environmental Protection’s underground oil storage tank program is responsible for protecting public health and the environment, in particular groundwater, by preventing oil discharges to the greatest extent possible. The staff provides technical expertise, training, and outreach to underground oil storage facility owners and operators.

The owner or operator of an underground oil storage facility must file an amended registration form with the commissioner immediately upon any change of ownership. The board may establish, by rule, a late registration period not to exceed 10 business days in duration.

Minimum lot size

Reference: (12 MRSA §§4807 – 4807G)

If a single-family residential property has a subsurface waste disposal system (e.g. septic system, cess pool), then the property must contain at least 20,000 square feet.

If the lot abuts a lake, pond, stream, river or tidal area, it must also have a minimum frontage of 100 feet on the body of water.

Land Use Planning Commission (“LUPC”)


The Maine Land Use Planning Commission (the LUPC or Commission) serves as the planning and zoning authority for the unorganized and deorganized areas of the State, including townships and plantations. These areas either have no local government or have chosen not to administer land use controls at the local level.

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Along with carrying out its planning and zoning responsibilities, the LUPC issues permits for smaller development projects, such as home constructions and camp renovations. For larger development projects requiring Department of Environmental Protection review under the Site Location of Development Law, the LUPC certifies that proposed land uses are allowed and that proposed development activities comply with applicable LUPC land use standards.

The responsibility of serving the unorganized and deorganized areas of Maine and helping guide land use in these areas represents a unique challenge. These areas cover over half the State, encompassing more than 10.4 million acres and include the largest contiguous undeveloped area in the northeast. The unorganized and deorganized areas include several coastal islands and portions of downeast Maine, and stretch across the western mountains and up to the Canadian border. These areas are important to the vitality of both the State and local economies, are home to many Mainers, and are enjoyed by Maine residents and visitors in pursuit of outdoor recreation activities, including hunting, fishing, boating, hiking and camping.

The Legislature created the Commission to extend principles of sound planning, zoning and development to the unorganized and deorganized areas of the State to:

• Preserve public health, safety and general welfare; • Support and encourage Maine's natural resource-based economy and strong

environmental protections; • Encourage appropriate residential, recreational, commercial and industrial land uses; • Honor the rights and participation of residents and property owners in the unorganized

and deorganized areas while recognizing the unique value of these lands and waters to the State;

• Prevent residential, recreational, commercial and industrial uses detrimental to the long-term health, use and value of these areas and to Maine's natural resource-based economy;

• Discourage the intermixing of incompatible industrial, commercial, residential and recreational activities;

• Prevent the development in these areas of substandard structures or structures located unduly proximate to waters or roads;

• Prevent the despoliation, pollution and detrimental uses of the water in these areas; and • Conserve ecological and natural values.

Department of Environmental Protection (“DEP”)

Reference: (38 MRSA §§341-A – 358)

The Department of Environmental Protection provides informed, independent and timely decisions on the interpretation, administration and enforcement of the laws relating to environmental protection and provides credible, fair and responsible public participation in department decisions.

Open Space Tax Law

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Maine believes that is in the public interest to encourage the preservation of farmland and open

space land in order to maintain a readily available source of food and farm products close to the

metropolitan areas of the state and to conserve the state's natural resources. Therefore the

state provides a reduction of property taxes for owners of farmland and open space. This is

accomplished by assessing the value of such land as its “current use” rather than its most

certainly higher value were it developed.

a. open space land is eligible for a reduction of 20%. b. permanently protected open space land is eligible for an additional 30%. c. forever wild open space land is eligible for an additional 20%. d. public access open space land is eligible for the applicable reduction set in paragraph A,

B or C and an additional 25%.

Tree Growth Tax Law

It is the policy of the state that the public interest would be best served by encouraging forest

landowners to retain and improve their holdings of forest lands, and to promote better forest

management. The state, therefore, enacted tax measures protect this unique economic and

recreational resource.

The valuation of land that has been classified as forestland is on the basis of productivity value,

rather than on fair market value.

A landowner may place his land in “tree growth” status if:

• The land is 10 acres or more

• The landowner files a forest management and harvest plan prepared by a licensed professional forester every 10 years with the town tax assessor (or state tax assessor for land in unorganized territories)

When land taxed under this law is transferred to a new owner, within one year of the date of

transfer the new landowner must file with the town tax assessor or the state tax assessor for land

in the unorganized territory one of the following:

• A sworn statement indicating that a new forest management and harvest plan has been prepared; or

• A statement from a licensed professional forester that the land is being managed in accordance with the plan prepared for the previous landowner.

Protection of Natural Resources

Reference: (38 MRSA §§480A – 480-HH)

The Act applies to the following protected natural resources: coastal wetlands and sand dunes; freshwater wetlands; great ponds; rivers, streams and brooks; fragile mountain areas, and significant wildlife habitat.

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Permits are required for certain activities that occur in, on, or over any protected natural resource area or on land adjacent to any great pond, river, stream or brook, coastal wetland and some freshwater wetlands. Generally, you will need a permit if you are working within 75 feet of a protected natural resource.

Activities requiring a permit include:

• dredging, bulldozing, removing, or displacing soil, sand, vegetation, or other materials • draining or otherwise dewatering • filling, including adding sand or other material to a beach or sand dune • constructing, repairing or altering any permanent structure (A permanent structure is one

placed or constructed in a fixed location for a period exceeding 7 months of the year).

Transfers of shoreland property

Reference: (30-A §4216)

1. Shoreland areas. Any person transferring property on which a subsurface waste water disposal system is located within a shoreland area, as described in Title 38, section 435, shall provide the transferee with a written statement by the transferor as to whether the system has malfunctioned during the 180 days preceding the date of transfer.

2. Additional requirements; shoreland areas. In addition to the requirements of subsection 1, the following provisions apply to the transfer of property within a shoreland area as described in Title 38, section 435.

A. A person purchasing property on which a subsurface waste water disposal system is located within a shoreland area, as described in Title 38, section 435, shall prior to purchase have the system inspected by a person certified by the department except that if it is impossible due to weather conditions to perform an inspection of the system prior to the purchase, the inspection must be performed within 9 months after transfer of the property. If the inspection finds that the system is malfunctioning, the system must be repaired or replaced within one year after transfer of the property. For purposes of this paragraph only, indications of a malfunctioning system are limited to the indications specified in the definition of "malfunctioning system" in the department's rules regulating subsurface waste water disposal that are in effect on the effective date of this paragraph. B. A subsurface waste water disposal system that has been installed pursuant to section 4211 and rules adopted under Title 22, section 42 within 3 years prior to the closing date of the transfer of property is not subject to the inspection requirements of paragraph A. C. If the seller of the shoreland property has a written inspection report for an inspection of the subsurface waste water disposal system that was performed within 3 years prior to the date of the transfer of property by a person certified by the department, then the seller shall provide the inspection results to the purchaser, and the purchaser is not required to have the system inspected pursuant to paragraph A.

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D. The inspection described in paragraph A is not required if the purchaser certifies to the local plumbing inspector that the purchaser will replace the subsurface waste water disposal system within one year of the transfer of property.

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