Title and settlement in Columbia, MD

Settling in Columbia: the short version

Columbia is a planned community, not an incorporated city. There is no city property tax and no city transfer tax: a home here pays Howard County and Maryland rates. What sets many Columbia homes apart is a second yearly bill that has nothing to do with the county: the Columbia Association (CA) annual charge.

So a buyer of a home on CA land should plan for three kinds of cost: the one-time taxes paid when the deed is recorded, the yearly county tax bill and the CA charge. A townhouse or condo may add a fourth, its own association fee. This guide takes them in turn, then covers the timeline, recording and the local title checks that matter here.

The Columbia Association annual charge

Columbia property owners also pay the Columbia Association annual charge, billed by CA: 68 cents per $100 of half the SDAT assessed value, and, in CA's words, 'increases are capped at 3.5%'. Settlement has to account for it.

To estimate the charge on a home, look it up on the SDAT Real Property Data Search, take half of the current assessed value and apply the rate above. Your actual bill comes from CA.

What matters when you buy or sell:

• It is a separate bill. CA, not Howard County, sends the invoice once a year. Payment is due by the deadline CA sets, and CA charges interest on late balances.
• Your lender may or may not escrow it. CA says many lenders, but not all, pay the charge from the escrow account. Ask your loan officer before settlement so the bill does not reach you as a surprise.
• The first year can cost more. CA says it does not apply its cap in the first year after a purchase. It uses the state’s phase-in value instead, which may be higher than the value the seller paid on. The seller’s last bill is not a reliable guide to yours.
• Tax credits need a yearly request. CA says that if you get a property tax credit from Howard County, such as a senior, homeowners’ or veterans’ credit, you can ask CA for a proportionate credit on the annual charge, in writing, every year. Homestead credits do not count for this.
• The covenants decide it. CA says the annual charge applies to land covered by its covenants. Our title search shows whether those covenants apply to the lot.

At the settlement table. Before settlement we ask CA for the account status and the current year’s bill. Your sales contract decides how the charge is divided between buyer and seller. We follow its terms and show any adjustment on the settlement statement, next to the county tax adjustment.

After settlement. CA says it gets ownership updates from SDAT each month and changes its records only once the deed is recorded and the state’s records show the new owner. Until then CA’s bill can still go to the seller, so if one arrives after settlement, call us before anyone pays it.

Village covenants and the Letter of Compliance

Columbia’s village associations enforce architectural guidelines under the covenants. Most changes to the outside of a home, such as additions, fences, decks and sheds, need approval before they are built. Buyers should get the village resale packet with the covenants and guidelines. Long Reach and Oakland Mills, for example, let you download theirs free.

Village offices also issue a Letter of Compliance. The village inspects the outside of the home and says in writing whether it found any covenant violations, and what must be done to fix them. Long Reach describes it as not required by law but highly recommended. Fees and timing differ from village to village, and the letter can take several weeks, so ask your village office as soon as you decide to sell. Some village sites also say that a violation left uncorrected becomes the buyer’s responsibility after the sale.

Townhouse and condo associations come on top. Neither CA nor the village holds these documents. The seller gets them from the HOA or condo association, usually through its management company. Maryland law sets out what these disclosures must contain, and if a buyer receives them late, the law gives the buyer a short time to cancel the contract in writing. The rules for HOAs and condos differ, so read the papers as soon as they arrive and ask your agent or attorney about any deadline. We ask the association for a statement of dues paid and any transfer fee, and show them on the settlement statement.

One-time taxes at a Columbia settlement

Three government taxes are due at recording: the state transfer tax of 0.5%, the Howard County transfer tax of 1.25%, and recordation tax of $2.50 per $500 of the price, about 0.50%. On the county median price of $640,500 they total $14,411.25. The calculator on our Howard County page breaks that down and lets you type in your own price, with a first-time-buyer switch.

The signed contract decides who pays. Where it says nothing, Maryland law presumes all three taxes are shared equally. A sale to first-time Maryland buyers who will live in the home changes the split, as described above.

Howard County has no general first-time buyer break on its own transfer tax. Its program for individual buyers is for people in a few local public-safety and teaching jobs: Howard County police officers, deputy sheriffs, fire and rescue members and Board of Education teachers. Their first Howard County purchase is exempt, whether or not they have owned a home elsewhere, and different rules apply to a later purchase. The buyer has to live in the home and keep the job for three years or repay the waived tax. The employer completes the form before the deed is presented, so a Columbia buyer who might qualify should tell us when the contract is signed. For more, read the first-time buyer exemption guide and the Howard County closing costs guide.

Two more points. A mortgage used to buy the home is generally not subject to recordation tax when it is recorded with the deed. And a seller who lives outside Maryland will usually have Maryland income tax withheld at settlement. For an individual the rate is 8.75% of the total payment to the seller, meaning the net proceeds actually paid to the seller (nonresident individuals). It does not apply in some cases, such as a seller who certifies that the home is their principal residence, so if you are selling a rental home and now live out of state, tell us early.

None of these figures include title insurance, the settlement fee, lender charges, recording fees or the tax, CA and HOA adjustments. An owner’s title policy is optional in Maryland; if you choose one, its premium is paid once, at settlement. Our instant quote gives the full picture.

The yearly county tax bill

Howard County’s bill has several lines: the county rate of $1.044 per $100 of assessed value, a fire tax, an ad valorem charge for homes in the Metropolitan District, the state rate and a trash fee. Our Howard County page lists each one. The current year’s bill is usually adjusted between buyer and seller as of the settlement date, as the contract provides.

The seller’s homestead credit, which limits yearly taxable increases on a main residence to 5% a year, does not pass to the buyer. You get a copy of the application at settlement; send it in once the home is your main residence. Our homestead credit guide explains the timing.

Title points specific to Columbia

Contract notices. Howard County has no Chesapeake Bay critical area land and is exempt from the military installation contract notice. Every Maryland sales contract still carries the critical area notice, and the notice’s own wording names Howard among the counties with no critical area land.

Open space behind the lot. CA’s open space and pathways run behind many Columbia lots, and fences, sheds and gardens sometimes creep past the lot line. A survey is the way to find this out. An owner’s policy issued without a survey usually leaves boundary and encroachment matters out of its coverage.

Estates and long ownership. If the owner has died, someone needs legal authority to sell the home, usually the personal representative of the estate. Opening an estate takes time, so start well before you set a settlement date. Long ownership can also turn up mortgages and home equity lines that were paid off but never released; we work to get those released before settlement. For inherited homes, see our deeds and family transfers service.

How Maryland First Title helps

We have handled title and settlement work across Maryland since 1994, and we are led by attorneys. We can meet you in Columbia at no extra cost, at your home or your agent’s office, or you can come to our office at 306 Crain Hwy N in Glen Burnie. Weekend and after-hours settlements are available by appointment. We order the CA and association figures, search and insure the title, hold the escrow money and record the deed.

If you are buying or selling with an agent, start with residential title and settlement. Selling on your own, see for sale by owner support; buying without an agent, see purchase without agent support. To see what an owner’s policy protects, read why title insurance.