A Reputation to Uphold: Maryland Courts and the Continued Development of REIT Law

Spencer C. Ebach

Just as Delaware is known for articles of incorporation, Maryland is known for Real Estate Investment Trusts (“REIT” or, collectively, “REITs”). REITs are entities that own income producing properties—of which eighty percent of the public-traded variation are based in Maryland— and they offer investors the ability to invest in tax-favored diversified portfolios of real estate assets that provide returns historically competitive with stock indices.5 Critical to Delaware’s reputation, the Court of Chancery—the State’s court of equity specializing in corporate litigation—has provided a rich and detailed body of case law that has helped the state bolster and maintain its status as the preferred state in which to incorporate new businesses. As the nation’s leader in REIT formation, Maryland plays an essential role in the development of legal rules and standards for REIT management and administration. Though the state’s reputation in the REIT field is based in the state’s statutory law, to maintain that role and lead the development and administration of REIT laws across the country, Maryland needs a strong and experienced judicial mechanism. In the mold of Delaware’s Court of Chancery, Maryland should sanction a REIT-specific judicial body of expertise within the state’s court system. This judicial body should exercise exclusive jurisdiction over REIT litigation to centralize the state’s case law and influence for posterity. Though the procedures and structure of such a judicial body may bear little resemblance to the world’s foremost corporate-centric judiciary, the profound and long-lasting influence the Court of Chancery has wielded in Delaware provides a blueprint that Maryland should aspire to emulate.