WHAT’S IN A BASEMENT? Adventures in Licensing Basement Rentals in Maryland

by LaVonne Torrence Berner on Jan. 29, 2013

Real Estate Landlord-Tenant Real Estate  Land Use & Zoning 

Summary: Adventures in Licensing Basement Rentals in Maryland: Reasons to comply with rental license requirements in Maryland.

Regulatory requirements for basements converted into rental apartments are nothing new.  But, until recently, operating without required government approvals was of little to no consequence.  Non-compliant units existed quietly under the radar of zoning inspectors, and chances of citation for failure to obtain required permits were slim to null so long as the property was kept in good condition.  This is no more.

Landlords are now required to present a valid rental license before using Maryland’s landlord/tenant courts to evict a tenant for failure to pay rent or swear that no license is required.  This requirement effectively shifts the burden of compliance oversight from the government to the property owner.  If the owner wants to reap the benefits of being a landlord (i.e., quick eviction and court ordered payment), then the owner must approach the government for a rental license to ensure compliance, as opposed to the other way around.

What is the Licensing Process?  For most owners who offer an entire townhouse or single-family home for rent, the process of obtaining a rental license is fairly simple.  The process varies from county to county but usually includes submitting the license application and fee, waiting for an inspection to ascertain whether health, safety, welfare, and/or code violations exist, and issuance of either a license or a citation stating required repairs or alterations.  For single family homes or townhomes with separately rented basement apartments, additional legal obstacles may be present.

Licensing and the Special Exception.  Renting a basement apartment to a non-family member converts a single family home into a multi-family home, and such a conversion is unlawful under certain zoning laws unless the conversion is approved by “special exception.”  The process of obtaining a special exception can involve some or all of the following:  a) submitting a request and paying the required fee, b) being prepared to address whether or not the multi-unit home fits with existing and future plans for the community or presents a health, safety, or welfare concern for the community, c) affording the community an opportunity to support or oppose the request, and d) a public hearing on any issues raised by the request.   The special exception process can take from a month or two to over a year.  In the interim, the rental license will not be issued, and failing to comply with zoning laws can result in penalties that range from fines to imprisonment for a misdemeanor offense.

Avoiding Surprise Violations.  Most jurisdictions have a zoning or planning office that can be contacted to determine the requirements for a basement rental.  Taking proactive measures to ensure compliance with licensing and zoning laws before purchasing a home with a basement rental unit and before performing alterations to convert a basement into separate living quarters is the best defense and can save time and money in the long run.  Knowing the property’s status also affords owners an opportunity to make certain that the property presents acceptable value for any proposed financial investment. In sum, the best defense is almost always a good offense.

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