OLR Research Report

December 22, 2008




By: Veronica Rose, Principal Analyst

You asked for background information on programs in Maryland, Nevada, and Pennsylvania that allow homeowners to raffle their houses. We were unable to find any information on Nevada and Pennsylvania. This report describes Maryland's laws and regulations governing such raffles.


Under Maryland law, only bona fide, state-registered charitable organizations may raffle real property, and they may do so only if they hold or are able to convey title to the property being raffled. Thus, a Maryland homeowner wanting to raffle a home must execute a contract transferring title to a charitable organization, which conducts the raffle. When a winner is selected, the homeowner receives raffle ticket proceeds equal to the home's fair market value; the organization keeps any proceeds over that amount.

Real estate raffles are subject to the secretary of state's regulations. Among other things, an organization must (1) before advertising or conducting a raffle, file a disclosure statement with the secretary of state with certain information on the organization and raffle; (2) get any required permit from the county where the raffle will be conducted and the counties where tickets will be sold; and (3) submit an income and expense report after selecting a winner.

If an organization cancels a raffle, it must refund any money it received from ticket sales, except for one percent for administrative costs.


Maryland Law  

Maryland law allows bona fide charitable organizations to conduct up to two raffles involving real property in a calendar year (Md. Code Ann. Crim. Law 12-106). A “bona fide charitable organization” is an organization (1) established for “benevolent, charitable, educational, eleemosynary, humane, patriotic, philanthropic, or religious purposes” and (2) either registered with the secretary of state or exempt from registration.

The organization conducting the raffle must own “at least equitable title to the real property to be raffled.” (“Equitable title” is the interest held by someone who has agreed to purchase but has not yet closed the transaction.) If the organization has obtained or will obtain equitable or other title under a sales agreement or other arrangement contingent on the actual holding or outcome of the raffle, the price it pays or will pay for the property cannot (1) exceed the fair market value as determined by a bona fide independent appraisal made within 90 days before the drawing or (2) be conditioned on the amount of raffle proceeds.

Required Permits and Filings

The organization must do the following before it advertises or raffles real property:

1. obtain any applicable license or permit from the county in which the property is located and counties where tickets will be sold;

2. file a notarized disclosure statement with the secretary of state at least 10 business days before advertising or selling tickets (see Disclosure Statement for Raffles of Real Property); and

3. satisfy the requirements for any previous raffles before submitting a new disclosure statement.

The disclosure statement must include the following information:

1. the organization's name and address;

2. the address and a brief description of the property;

3. date and time when a winner will be selected;

4. the location of the drawing;

5. the cost and a photocopy or sample of the tickets;

6. a good faith estimate of the current fair market value of the property and, if applicable, a photocopy of the required appraisal;

7. the amount and nature of any property liens or encumbrances that will remain the winner's responsibility when the property is transferred;

8. a good faith estimate of the amount of any closing costs that the winner will have to pay to acquire title to the property;

9. the name, business and home addresses, and business and home telephone numbers of an authorized representative of the organization;

10. a photocopy of all agreements between the organization and party that sold or is selling the property, showing the organization's title to the property and the price it paid or will pay for it;

11. the conditions, if any, under which the organization reserves the right to cancel the raffle; and

12. a description of the method for refunding money if the raffle is cancelled (Md. Regs. Code tit. 01 02.07.03).

Receipts and Notices

The organization must give ticket buyers a written receipt, which includes:

1. the organization's name and Maryland address;

2. the address and a brief description of the property;

3. the ticket price;

4. the date, time, and place of the drawing;

5. a notice that a free, complete disclosure statement is available, on request, from the organization;

6. a notice that the winner is responsible for any liens, encumbrances, closing costs, and applicable taxes unless otherwise provided in the disclosure statement; and

7. if needed, a notice that if the raffle is cancelled, the organization may retain a percentage of the ticket price for administrative costs (Md. Regs. Code tit. 01 02.07.05).

Prize Award

Within 90 days after selecting a winner, the organization must transfer legal title of the property to him or her, as evidenced by a recording of the transfer in the land records for the county where the property is located (Md. Regs. Code tit. 01 02.07.06).

Cancelled Raffles and Refunds

If an organization cancels a raffle, it must refund any money it collected from ticket sales. It may retain up to one percent of the ticket price for administrative costs, provided it gave buyers the required notice (Md. Regs. Code tit. 01 02.07.10). (In practice, organizations set a minimum number of tickets that must be sold within certain deadlines. If they do not reach the goal within the deadlines or any extensions, they usually cancel the raffles. According to the Secretary of State's Office, of the nine real estate applications it approved in the last 18 months, only one raffle has succeeded. Five were cancelled because of low sales; two scheduled for December will probably be cancelled because of low sales. One is scheduled to take place in March.)

Income and Expense Report

Within 90 days after selecting the winner, the organization must file a report with the secretary of state showing receipts and expenditures associated with the raffle (Md. Regs. Code tit. 01 02.07.07).