Nearly $2 million has been paid out from the Maryland Real Estate Commission Guaranty Fund over the last eight years to consumers who filed claims seeking to be reimbursed for damages suffered as a result of fraudulent real estate practices.

More than $1 million was paid out in claims ranging from about $104 to $48,000 to more than 225 individual consumers; another $936,354 was paid out to aid more than 1,500 consumers who purchased vacation time-share intervals from Seatime Associates, an Ocean City firm that allegedly marketed time in units it didn't own.

The Guaranty Fund, established in 1971, is designed to reimburse consumers for actual losses sustained because of any action of a Maryland real estate licensee arising out of a Maryland real estate transaction involving money or property embezzled or unlawfully obtained from any person by forgery, fraud, misrepresentation or deceit by the licensee or a licensee's employe.

The fund is supported by fees collected from real estate brokers and salespersons licensed by the State of Maryland. Each broker and salesperson licensed in Maryland--there are currently 33,000--must pay a fee of $20 that is credited to the fund when receiving a license. If the fund falls below $250,000, the commission is authorized to reassess brokers and salesmen and saleswomen to bring it up to that level. As of June 30, there was $330,682 in the fund, and there has been no reassessment to date.

Pauline Masters, assistant director of the Maryland Real Estate Commission, said that any person who feels aggrieved by actions of a Maryland licensed broker or salesperson can file a complaint, and that it's a relatively easy procedure, requiring the consumer to state in writing the alleged facts and the specific amount claimed. The law requires each claim to be reviewed initially by a panel of commission members.

The panel considers the claim and, if it looks to be valid, refers it for investigation to the division of investigative services, a unit of Maryland's Department of Licensing and Regulation. When the report comes back, it is reviewed to see if the complaint can be worked out administratively, Masters said. If it can't, the commission decides whether to hold a hearing, seek a negotiated settlement or refer the complaint to another state agency. A case can be assigned to a hearing examiner, who makes a recommendation to the commission itself.

A hearing of some type is afforded all claimants, according to Maryland Assistant Attorney General Martin M. Kandel.

The law states that the burden of persuasion is on the claimant throughout the proceeding to prove his or her damages. If, in the opinion of the commission or hearing officer, a prima facie case is presented, then the burden of going forward with the evidence shifts to the responding party.

Masters noted that a case moves on two tracks: the case of the consumer seeking the recovery of out-of-pocket losses and the regulatory case the state pursues against the licensee. Under the law, if the commission pays any amount from the fund in settlement of a claim against a licensed real estate broker or salesperson, the license of the broker or salesperson is revoked automatically. The broker or salesperson is ineligible for a new license until the fund has been repaid in full for the settlement, plus interest of 10 percent a year. After the fund is paid back, the former licensee is eligible again for a license, but reinstatement is not assured, Masters said. Very few licenses have been reinstated, she added.

"The primary purpose of the fund has been to protect the consumer," Masters said. Before it was established, licensees had to post a bond from which claims were to be paid, but the insurance companies always bought payouts, she noted. "The consumer was not being protected, the licensees were paying for bonds which were not serving the purpose, and the only ones making out were the attorneys," she said.

A person might have had to spend $800 in attorneys' fees for a claim of $1,000, she noted. "Now there are many successes without attorneys; the forms are simple and easy to understand," she said.

A total of $1.94 million in claims has been paid out since the fund was established, more than half of it in fiscal 1983. According to commission tallies, a total of $1.2 million was paid out in the year ending June 30, with $936,354 of it going to clear the titles for consumers who purchased the Seatime vacation time shares.

According to Kandel, Seatime buyers appointed an owners association to represent them, and it received the money to pay off the encumbrances and liens so the individuals could obtain clear titles to their time-share intervals. Had each individual filed a claim with the commission, the fund would have had to pay out $4 million to return their purchase money, Kandel said.

A law that became effective in July, however, sets up a special fund for claims against time-share developments so that claims against time-share developers no longer will come under the guaranty fund. The new law requires time-share developers to post surety bonds for the protection of buyers of time-share properties.