Bill goes to Gov. Hogan – Effective date is July 1, 2017

For many years, Potomac resident and Washington, DC attorney Randy A. Weiss became very frustrated each time a property owner, owning real estate in his/her one name, wanted to change the ownership to a “single purpose limited liability company” solely owned by the owner. According to Weiss, “I would say that, at least a dozen times each year, Maryland clients want to transfer ownership to a new LLC owned by the client – there are many good business reasons for doing this – but because there was no tax exemption, the client would have to pay an onerous 2.5% tax on the fair market value of the property. Because the taxes are so onerous, no one would end up doing this and the property owner suffers as a result.” Weiss said “the law isn’t fair – partnerships are given the exemption and can use the LLC without paying the tax – why not individuals?” Weiss is indeed correct. The reasoning seems to be in the fact that when the original exemptions were written in the early 1990s, LLCs had to be owned by 2 or more people – so, since “single person LLC ownership” was not permitted, there was no exemption granted. However, in the later part of the 1990’s State law then allowed single person LLCs – unfortunately, the exemption statute didn’t follow and single owners were treated unfairly. Weiss also emphasized that “It just makes good business sense for property owners to own property in an LLC – you can segregate your assets without cross liability with other assets, lenders will look favorably upon set-up and if one wants to bring in investors, it’s so much easier.” Weiss noted that “…every State surrounding Maryland have given similar exemptions to property owners – it just makes good practical sense for the State to give small business this kind of flexibility.”

So in 2015, Weiss met with his state delegate, Del. Aruna Miller (D-Montgomery, District 15) and she was quickly convinced. After testimony was heard and the bill vetted by the State House, it passed unanimously last March, 2016. Unfortunately, with time constraints, the State Senate was unable to complete its work on the bill. Del. Miller reintroduced an essentially similar bill this year and it quickly drew co-sponsors (Delegates Chang, Ebersole, Jalisi, Kramer, Krebs, Lam, Mautz, West and Karen Young. On the Senate side, the bill also drew support from well-regarded State Senator Nathaniel McFadden (D- Baltimore City) as a Senate sponsor. Sen. McFadden steered the bill through the State Senate to a unanimous approval on February 13th. Del. Miller did her job by ensuring approval by the State House on March 7th. With unanimous approval of both chambers, all indications are that Governor Hogan will sign the bill. The bill takes effect on July 1st of this year. Weiss also commented that this identical obstacle faces property owners in the District of Columbia now -- he is seeking guidance from the DC City Council. He has had an initial positive read from a DC Councilmember who is now reviewing proposed legislation with his colleagues at the at the DC Council. Weiss said, “I know that the DC Council spending a great deal of time looking at this matter – I hope the entire Council will grant help to property owners to help maintain DC as a business-friendly place to do business.”