Maryland Corporate Risk Policies That Protect Property Deals

Maryland commercial real estate transactions move faster and more predictably when your organization applies clear, repeatable risk controls. The policies below are practical starting points and should be adapted to your company’s size, asset type, financing profile, and risk tolerance.

Why Risk Policies Matter in Maryland Property Deals

Transactions involve multiple risk points—authority to sign, title issues, lien exposures, environmental conditions, insurance gaps, and closing/escrow procedures. Written policies help your team vet counterparties, document approvals, reduce fraud exposure, and preserve remedies if something goes wrong.

Entity Formation, Authority, and Good Standing

• Verify existence and status for your entity and counterparties using the Maryland SDAT Business Entity Search to confirm names, status, and registered agents.
• Maintain signing authority rules and require evidence of authorization (e.g., board/manager resolutions, incumbency certificates).
• For borrowing or granting security, obtain written approvals consistent with organizational documents and tie each closing document to its authorizing action via a checklist.

Counterparty Diligence and Conflicts

• Standardize a diligence checklist: exact legal name (matching SDAT or formation records), formation jurisdiction, registered agent, and—where appropriate—beneficial ownership representations.
• Run litigation and lien searches proportionate to deal size.
• Identify and manage conflicts of interest; use independent approvals for related-party transactions as needed.

Title, Survey, and Real Property Records

• Obtain a title commitment with endorsements appropriate to the asset and deal structure.
• Order an updated survey aligned to the title commitment and legal description.
• Review recorded easements, covenants, restrictions, and prior deeds using Maryland land records and cure title objections before closing.

Use SDAT and Land Records for Verification

Train your team to use SDAT’s online search to confirm entity status and the Maryland Judiciary’s MDLANDREC portal to review recorded property documents (free registration may be required). Save confirmations to the deal file and pause closing if issues arise.

Environmental and Zoning Safeguards

• Right-size environmental diligence (e.g., Phase I ESA, and Phase II if indicated) based on property type and history.
• Confirm zoning compliance, permitted uses, parking, and nonconformities with the local jurisdiction.
• Seek seller disclosures, indemnities, or escrows when environmental conditions are known or suspected.

Insurance Requirements Tailored to Maryland Risks

• Consider setting minimum standards for property, general liability, business interruption, and, where applicable, builder’s risk, pollution legal liability, professional liability, and cyber.
• For title risk, procure owner’s and lender’s title policies and negotiate endorsements appropriate to the transaction.
• Collect certificates of insurance and require additional insured and waiver of subrogation provisions where appropriate.

Financing, Liens, and UCC Procedures

• Run lien, judgment, tax, and UCC searches for relevant parties.
• For secured transactions, confirm borrower authority and file UCC financing statements in the correct jurisdiction under Article 9 to perfect interests; confirm indexing and coordinate with title to ensure priority.
• Calendar continuations and maturities; reconcile payoff letters and obtain releases at or after closing.

Escrow, Closings, and Funds Control

• Use written escrow instructions with a reputable title/escrow agent.
• Implement wire verification and callback protocols using independently verified phone numbers to mitigate fraud.
• Balance the settlement statement, collect executed originals, confirm recordings, and verify issuance of final title policies.
• Maintain a post-closing checklist for deliveries, estoppels, and covenant tracking.

Contract Protections and Remedies

• Standardize representations and warranties, diligence periods, access rights, estoppels for leased assets, indemnities, and appropriate limitations of liability.
• Include Maryland governing law and venue clauses where appropriate.
• For development deals, address permitting milestones, security for performance, and force majeure.

Corporate Governance and Documentation Hygiene

• Keep organizational documents current and accessible.
• Centralize resolutions, incumbency certificates, and signing authority matrices.
• Adopt a retention policy for closing files, title policies, environmental reports, surveys, and key correspondence.

Vendor Management and Professional Advisors

• Prequalify title companies, surveyors, environmental consultants, appraisers, and contractors.
• Use engagement letters defining scope, deliverables, reliance rights, and insurance requirements.
• Periodically evaluate performance and potential conflicts.

Cybersecurity and Wire Fraud Prevention

• Use multi-factor authentication and secure file sharing for all deal materials.
• Train staff to detect spoofing and phishing; never change wire instructions based solely on email.
• Require verbal callbacks using independently verified numbers before releasing funds.

Internal Controls and Approvals

• Set thresholds for deals requiring additional internal approvals, third-party valuation, or board-level review.
• Use deal memos summarizing key risks, exceptions to policy, and mitigation plans.
• Require legal review for material deviations from policy.

Compliance With Maryland Recording and Tax Practices

Include a checklist covering Maryland transfer and recordation practices, county surtaxes, required affidavits, and entity certifications. Coordinate with title and counsel to confirm forms and tax amounts based on county and deal structure.

Monitoring, Auditing, and Continuous Improvement

Audit closed transactions to test adherence to policy, track claims or near misses, and update procedures when Maryland statutes, local practices, or market standards evolve.

When to Consult Counsel

Engage Maryland real estate and corporate counsel early for complex structures, environmental issues, title defects, ground leases, or public-private transactions. Counsel can align deal mechanics with Maryland-specific requirements and reduce post-closing risk. If you need guidance, contact our team.

FAQs

What is SDAT and why does it matter?

The Maryland State Department of Assessments and Taxation provides public records on entity status and registered agents. Verifying good standing and exact legal names reduces authority and counterparty risk.

How do I access Maryland land records?

Register for the Judiciary’s MDLANDREC portal to search recorded deeds, easements, and other instruments statewide.

Do I need both owner’s and lender’s title policies?

Yes, they cover different insureds and risks. Owner’s policies protect buyers; lender’s policies protect secured lenders. Endorsements should be tailored to the asset and deal structure.

How can I reduce wire fraud risk at closing?

Use multi-factor authentication, secure portals, and mandatory phone callbacks using independently verified numbers before sending funds. Never accept wire changes by email alone.

When should I call Maryland counsel?

Early, if you face complex title issues, environmental concerns, development entitlements, ground leases, or public-private structures.

Where can I get help now?

Speak with a Maryland real estate attorney about your transaction.

Key Maryland resources

• SDAT Business Entity Search — verify entity information and status.
• Maryland Judiciary — MDLANDREC — access recorded land records (free registration may be required).

Ready to protect your next deal? Contact us for a Maryland-focused risk review and checklist customization.

Disclaimer: This blog is for general informational purposes only and is not legal advice. Reading it does not create an attorney-client relationship. Policies and deadlines vary by transaction and jurisdiction; consult qualified Maryland counsel about your specific situation.