VIII - 4.00 POLICY ON ACQUISITION, DISPOSITION, AND LEASING OF
(Approved by the Board of Regents, February 1, 1989; Amended,
March 1, 1989, Amended December 13, 1996; Amended on
February 9, 2001)
1. Pursuant to Sections 12-104(b)(6), 12-104(g)(1), and 12-
104(h) of the Education Article, the Board of Regents
("Board") may acquire, hold, lease, use, encumber, purchase,
sell, transfer, exchange, or otherwise dispose of real
property on behalf of the University System of Maryland
("System") and any of its Institutions. (As used in this
Policy, "Institution" means a constituent institution, CES,
UMBI, or the University System of Maryland Office
2. For purposes of this Policy, an "Acquisition" is a
conveyance of real property or an interest therein to the
State of Maryland for the use of the System or an
Institution. Acquisition of real property may occur by
gift, purchase, exchange, or other grant or transfer.
Acquisition may be accomplished by deed, easement, Capital
Lease, (as defined in Paragraph 4), right-of-way, right-of-
entry, contract (other than a Lease as defined in Paragraph
5.) giving the System a right of first refusal or option to
purchase, or the exercise of any such right or option. If a
transaction conveys to the System or an Institution an
interest in real property, the transaction is an Acquisition
regardless of the title given the document(s), unless this
Policy provides otherwise, and provided that "Acquisition"
does not include entering into a Lease as defined in
Paragraph 5 of this policy.
3. For purposes of this Policy, a "Disposition" is a conveyance
of real property or an interest therein from the State of
Maryland for the use of the System or an Institution.
Disposition of real property may occur by gift, sale,
exchange, or other grant or transfer. Disposition may be
accomplished by deed, Capital Lease (as defined in paragraph
4), easement, right-of-way, right-of-entry, restrictive
covenant, or contract giving another party a right of first
refusal or an option to purchase. If a transaction conveys
from the System or an Institution an interest in real
property, the transaction is a Disposition subject to this
Policy regardless of the title given the document(s), unless
this Policy provides otherwise, and provided that
"Disposition" does not include entering into a Lease as
defined in Paragraph 5 of this policy.
4. For purposes of this Policy, a "Capital Lease" is a lease-
lease back, sale-lease back, ground lease, or any other method of
acquiring, disposing of, and/or financing real property
(including improvements) that creates System or State debt. Any
Lease that must be approved by the Board shall be reviewed by the
Vice Chancellor for Administration and Finance ("VCAF") to
determine whether or not it is a Capital Lease. Capital Leases
- a lease pursuant to which the present value of all of the
rent payments thereunder is equal to or greater than 90% of the
fair market value of the leased property (at the inception of the
- a lease in which the term of the tenancy equals or
exceeds 75% of the estimated economic life of the
- a lease in which a bargain purchase option is given to
- a lease that provides for title to the property to pass to
the lessee without further payment at the end of the lease term;
- any other transaction with a structure consistent with the
definition of Capital Lease in this Policy.
The VCAF shall determine what transactions are Capital
Leases. System financing policies shall apply to the
financing of Capital Leases.
5. For purposes of this Policy, a "Lease" is an agreement, in
which the System or an Institution either grants or receives
the exclusive right to use, occupy, or possess real property
for a certain, limited period of time in exchange for the
payment of money or other consideration provided in such
agreement. Capital Leases are not Leases under this Policy.
Subleases, and Lease assignments to, and Lease assumptions
by, the System or an Institution are Leases covered by this
Policy. A Lease that includes a provision giving the System
or an Institution an option to purchase or right of first
refusal to purchase is nevertheless a Lease under this
Policy. Any transaction in which the System or an
Institution gives an option to purchase or right of first
refusal to another party is a Disposition under this policy.
6. When the System or an Institution is the lessee of real
property, the System or Institution involved shall
ascertain, by application of appropriate due diligence, that
the cost is reasonable and consistent with market values of
any comparable leased properties that may be available.
Competitive proposals shall be sought if practicable.
7. All Acquisitions and Dispositions shall be reviewed and
approved by the Board unless specifically exempted or
delegated in this Policy or Board-approved Procedures for
the Acquisition and Disposition of Real Property.
8. Board review and approval shall be required for the
(a) Leases in which the System or an Institution is lessee and
(i) the consideration is expected to exceed $500,000 in any year,
or (ii) the initial term exceeds ten years and the aggregate rent
exceeds $2 million;
(b) Leases in which the System or an Institution is lessor
and (i) the consideration is expected to exceed
$500,000 in any year, or (ii) the term (including
renewal options) exceeds ten years.
9. Leases not requiring Board approval shall be approved and
signed (i) by the Chancellor, if for the System or the
Office, or (ii) by the President of the Institution
10. Upon approval of an Acquisition, Disposition, or Lease by
the Board, it may delegate to the Chancellor the authority to
negotiate such terms and conditions as are necessary and
appropriate to implement such approval consistent with the action
of the Board, and sign all documents required following review
and approval for form and legal sufficiency by the Office of the
11. The Board delegates to the Chancellor the authority to (i)
grant or accept easements, rights-of-way, and rights of entry
without review and approval by the Board, if in the Chancellor's
judgment, the proposed agreement is not of such significance as
to warrant Board review, and (ii) enter into agreements giving
the System or an Institution options and rights of first refusal
to acquire real property. In addition, the Board delegates to
the Presidents of Institutions the authority to enter into
agreements giving their respective Institutions options or rights
of first refusal to the extent provided for in Section B.5 of the
Procedures for the Acquisition and Disposition of Real Property.
12. The Chancellor may, except as otherwise provided by the
Board, delegate to other System or Institution officials any duty
or responsibility of the Chancellor under this Policy..
13. Pursuant to Section 12-104(g)(2) of the Education Article,
the System may use the proceeds from the sale of its real
property only to purchase or improve real property and
14. This Policy does not apply to naming rights or similar
sponsorship agreements, signage agreements, student housing
agreements, revocable or temporary licenses, or inter-Institution
15. Implementation of this Policy shall be consistent with Board-
approved "Procedures for the Acquisition and Disposition of Real
Property" and "Procedures for Leasing of Real Property."
16. The Chancellor or the Board may require System institutions
to provide reports on Acquisitions, Dispositions, and/or Leases
at times and in formats determined by the Chancellor or the
17. The Chancellor shall establish due diligence practices
appropriate to the execution of this policy.
18. This Policy shall be effective upon its approval by the
Board and replaces any preceding policy under this Board