The Code of Maryland Regulations (COMAR) governs the sale of State owned land. In addition, in each of the Transportation Modes, the sale of land is guided by a different part of the Code. Some modes also employ policy and procedure for the purpose of meeting the law.
The vast majority of MDOT excess parcels belong to State Highway Administration, and COMAR regulations governing the sale of SHA parcels are the most complex. Therefore, we offer the following timeline for the clearing, marketing and selling of a State Highway Administration parcel of property.
If you are identifying a property that is not featured as “In Process,” we recommend that you begin at the top. If the parcel enjoys a “In Process” status, we suggest that you skip ahead in the timeline to step #7:
- A State owned parcel is identified by the private sector or at the staff level as a good candidate for disposition. You, as our customer, may identify such a property via our Property Information Form (PIF) when visiting the map or query portion of the Web site, or through a separate email, phone call, or letter directed to the Office of Real Estate.
- Staff will examine the status of the property to determine if the property has been purchased for a future project or if there are clear and over-riding reasons for the State to retain ownership. We anticipate responding to our customer within two weeks as to whether the property is a candidate for clearance.
- If the property is a candidate for clearance, the parcel information will be distributed to the engineering and planning staff within the modal administration to determine if there is a more subtle but compelling reason for the property to be retained. The review process will take approximately four weeks. The result of the review could be a decision to retain the property or to allow it to advance to the next stage.
- A parcel that has been recommended for disposition by the modal administration will have three possible scenarios.
- Non-stand-alone parcels can enter into a negotiated sale with an adjoining property owner for the value determined by an appraisal commissioned by the State.
- Parcels under 3.0 acres can proceed to step #6 below and can be offered for sale back to the original owner.
- Parcels over 3.0 acres will advance to the State Clearinghouse Process.
5. The State Clearinghouse Process is controlled by the Maryland Department of Planning (MDP). MDP is responsible for distributing parcels in excess of 3.0 acres to fellow State agencies, County Governments, and local jurisdictions for the purpose of offering the property to them for sale. These agencies have the right to purchase the property based on a formula (versus fair market value) with the covenant that the property will be put to a public purpose; otherwise, the property reverts to State ownership. This process is being examined for its potential to be Web-enabled. Currently, the process functions through the mail, and those jurisdictions indicating an interest are bound by no formal time limits to respond. Staff makes every effort to accomplish this phase of the process within four weeks.
6. A property emerging from the State Clearinghouse Process as available for sale to the private sector must next be offered to the original owner, heirs, or assigns in most cases. In many cases, the original owner, heirs, and/or assigns cannot be located, and the State is compelled to advertise and post the property in the hope of achieving awareness of this opportunity to repurchase. By statute, the original owner has eight months to respond before the State may declare that every effort to locate the original owner has been made. Staff takes many creative investigative techniques to locate the original owner, and in many cases this process is accomplished within three months.
7. Once the State is satisfied that the original owner`s right to repurchase has either passed or been declined, the property is “In Process,” and the Office of Real Estate proceeds to market the property for the purpose of generating interest in a forthcoming auction. Depending on the property`s size and visibility, the Office of Real Estate reserves judgment to market the property for between 60 and 90 days prior to the auction. This is done in a multi-faceted approach that includes print media, Web site advertising, direct solicitation, and road signage.
8. Policy dictates that the auction will take place on the property that is made available for sale. The auction is not a final commitment on the part of the State to sell the property to the prevailing bidder at the high bid. Requirements for participation include presentation of a cashier`s check as indicated in the auction notice. The bidder must register with the auctioneer prior to the bidding. Some time will be allowed for questions and answers about the property, just prior to the bidding process, but it is advisable that auction candidates arrive in time to walk the property and talk with disposition agents prior to the formal auction. The auctioneer will begin the bidding at a value lower than an acceptable level and continue in pre-determined increments above a minimum threshold for the auction to be deemed “successful.” If the auction finishes at a value lower than the threshold, the auction will end with no bid that can be recommended for acceptance.
9. Auction “success” is based upon the bid price reaching a value that exceeds the threshold by a qualified bidder. That bid is presented to the Modal Administrator for approval. Acceptance is at the complete discretion of the Administrator. Proceed to step 12 for details associated with an acceptable bid price.
10. If the auction fails to meet the threshold amount OR the Modal Administrator rejects the prevailing bid, a second auction on the property will be conducted. The second auction generally takes place within six months of the first auction, and the same rules apply. The threshold amount for “success” will be re-evaluated but not necessarily adjusted.
11. If the outcome of the second auction is also a failure, the State is at liberty to enter into a negotiated transaction with a buyer. There are no guidelines as to an acceptable price or terms, since every situation is different. However, the negotiated transaction must be presented to the Board of Public Works for approval despite the best efforts of the staff to arrive at a meeting of the minds.
12. If the outcome of either the first or second auction is favorable, the expectation is that the high bidder will provide the cashier`s check required to participate. Within approximately four business days (indicated on the auction notice), the balance of 10% of the bid amount will be due and payable. Once the Administrator has signed off on the transaction, staff will proceed to ratify the plat and draft a deed of sale. It is anticipated that the transaction will be complete with the balance due and payable within 90 days of the deed being drafted.