1.1 Maryland Real Estate Commission (MREC)

What MREC Is and Where Its Authority Comes From

The Maryland Real Estate Commission (MREC) is the state body that licenses, regulates, and disciplines real estate brokers, associate brokers, and salespersons. Its authority flows from the Maryland Real Estate Brokers Act, codified as Title 17 of the Business Occupations and Professions Article of the Annotated Code of Maryland. The Act defines who must be licensed, lists prohibited acts, and sets the penalties MREC may impose.

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Structure and Membership

MREC is housed in the Maryland Department of Labor, inside the Division of Occupational and Professional Licensing (DOPL). The Commission itself is composed of nine members appointed by the Governor: five licensed real estate professionals (brokers/associate brokers) and four consumer (public) members who hold no real estate license. Commissioners serve staggered terms, and the Governor designates one member as chair.

What MREC Actually Does

The exam frequently asks you to match a power to the agency. MREC's core functions are:

• Licensing — approves applications, issues and renews licenses, certifies pre-license and continuing-education schools.
• Education oversight — sets the 60-hour salesperson and 135-hour broker requirements and approves course content.
• Enforcement — investigates written consumer complaints and audits broker trust (escrow) accounts for commingling or conversion.
• Discipline — may reprimand, fine up to $5,000 per violation, or deny, suspend, or revoke a license after a hearing.
• Guaranty Fund administration — pays consumers harmed by licensee misconduct.

The Brokers Act and COMAR

The Brokers Act is the statute; COMAR Title 09.11 is the rulebook MREC adopts to carry it out. A common trap: candidates assume the Commission writes the law. It does not — the General Assembly enacts Title 17, and MREC adopts regulations under it. COMAR covers application procedures, advertising standards, trust-account handling, agency disclosure forms, and CE topics.

Exam tip: Effective October 1, 2019, Maryland enacted significant changes to brokerage-relationship disclosures, team advertising, and continuing education. Always assume the current edition of the Act and COMAR governs an exam question.

Who Must Be Licensed — and the Exemptions

The Act requires a license for anyone who, for another and for compensation, lists, sells, buys, leases, or negotiates an interest in real estate, or holds out as doing so. The exam tests the exemptions because they define the boundary of MREC's reach. Persons who do not need a license include: a property owner dealing with their own real estate; an attorney acting in the regular practice of law; a person acting under a court-ordered power (executor, trustee, receiver); and certain salaried employees who simply show or manage an owner's units.

A trap: a salaried apartment manager is exempt, but the moment they negotiate sales for a third party for commission, the exemption ends.

Disciplinary Process and Penalties

MREC enforcement usually begins with a written complaint. The Commission investigates, may subpoena records, and offers the licensee a hearing (governed by the Administrative Procedure Act) before imposing discipline. Sanctions escalate from reprimand to civil penalty to suspension or revocation.

A civil penalty may reach $5,000 per violation, and multiple violations stack. Importantly, MREC can discipline a broker for the acts of an affiliated salesperson the broker failed to supervise — supervisory liability is a recurring exam theme.

The Maryland Real Estate Guaranty Fund

The Real Estate Guaranty Fund reimburses consumers who lose money because of a licensee's fraud, embezzlement, theft, false promise, or misrepresentation committed in a real estate transaction. It is a payer of last resort, funded by a $20 fee every applicant pays at original licensing (renewals do not pay it).

Claim limits and procedure

If two or more claims arise from a single licensee's acts and exceed the Fund's per-licensee aggregate cap, MREC prorates payments. A worked example: a buyer wins a $70,000 judgment against a salesperson who stole an escrow deposit. The Fund pays the $50,000 cap; the remaining $20,000 must be pursued against the licensee personally. The salesperson's license stays suspended until the $50,000 (with interest) is repaid.

What the Fund does NOT cover

• Purchase of limited-partnership interests or syndications marketed by a broker
• Joint ventures or commercial paper promoted as investments
• Attorney fees incurred pursuing the claim
• Commissions owed to a licensee
• Punitive damages or speculative/investment losses

Who cannot file

• The spouse of the licensee who caused the loss
• The licensee's personal representative
• Other licensees acting as principals in the deal

Key point: The Fund pays actual losses only, capped at $50,000. "Up to $50,000, after a judgment, minus attorney fees and commissions" is the phrasing to memorize.