2015 Maryland Legislative Session Ends With No New Community Governance Laws

 

The 2015 legislative session of the Maryland General Assembly ended April 13 after lots of talk but not much action on bills concerning condos, coops and homeowner associations.

Legislation to extend resale disclosure requirements to homeowner associations and cap the fees which may be charged by condos and HOAs died in the final hours of the legislative session.  As passed by the House of Delegates, the bill would also have limited the liability of a condo or HOA for issuing an incorrect resale disclosure statement. The Senate approved the fee cap but did not agree to the liability limits. Therefore, the legislation was not enacted.

A bill to prevent developers from limiting condominium statutory warranty rights was withdrawn; and a bill to require access to common areas for political candidates was rejected on initial review by a House legislative committee.

A proposal  to eliminate a 3-month waiting period before a housing coop can initiate legal action to evict a coop member for not paying assessments was referred for further study.  Legislation to regulate community association managers was not considered this year for the first time in several years

Although not limited to community associations, several other bills would have made it more difficult to collect assessments from delinquent owners.  One bill would have restricted the ability to collect court judgments by increasing the amount  exempt from garnishment.  Several other bills proposed to bar residential foreclosures through February 2016.

These topics may get another look next year.  But for 2015, the General Assembly session had lots of talk—but no new laws regarding governance of condos, coops and HOAs.

 

Association Assessments Linked to Rental License

A new law in Montgomery County, Maryland requires that the owner of property in a condo, coop or HOA must be current in payment of association assessments in order to obtain a County rental license to lease the property.  As part of the application for a rental license beginning June 16, 2015, an owner must certify that the assessments are no more than 30 days past due.

Additionally, the County may deny, suspend, revoke or refuse to renew a housing rental license if the board of directors of the condo, coop or HOA submits a recorded statement of lien or unpaid court judgment as proof of unpaid association assessments.

Ron Bolt–an attorney with Thomas Schild Law Group and co-chair of the Maryland Legislative Committee of the Washington Metro Chapter of the Community Associations Institute–submitted recommendations to the County Council  to strengthen the legislation to aid community associations in collecting assessment from delinquent owners.

Prince George’s County and Howard County have similar laws linking payment of association assessments to the issuance and revocation of a rental license.

2015 Legal Update Program for Maryland Community Associations

 

Ronald M. Bolt–an attorney with Thomas Schild Law Group–co-presented the Maryland Legislative and Legal Update program at the Annual Conference and Expo of the Washington Metro Chapter of the Community Associations Institute (WMCCAI) held on March 7, 2015 at the Washington D.C. Convention Center.  The Update covered new laws, court decisions and rulings of the Montgomery County Commission on Common Ownership Communities (CCOC).

Topics covered included Maryland legislation of interest to community associations adopted during the 2014 Maryland Legislative Session.  One new law establishes governance procedures for housing cooperatives, such as providing housing coop members with greater rights to obtain coop records and attend board meetings.   Also passed in 2014 was a new law to limit the liability of property owners for injuries caused by dogs which occur on the owner’s property.  This legislation overturned a 2012 decision of the Maryland Court of Appeals which ruled that property owners are strictly liable for injuries caused by pit bull dogs which occur on the owner’s property.

The 2015 Maryland Legislative and Legal Update program also included discussion of new Montgomery County laws  concerning training of association board members and linking rental licenses for property in condos, HOAs and coops to payment of association assessments.

As co-chair of the WMCCAI Maryland Legislative Committee, Ron Bolt also discussed recent Maryland appeals court decisions concerning covenant enforcement and assessment collection as well as recent rulings of the Montgomery County CCOC regarding homeowner fines and towing vehicles from common area parking lots for non-payment of assessments.

10 Tips for Condos and HOAs to Stay Out of Court

Tom Schild co-presents 10 Tips for Staying Out of Court at the Annual Conference and Expo of the Community Associations Institute’s Washington Metropolitan Chapter on Saturday March 7, 2015.

Those attending the program will learn how court litigation can usually be avoided if board members of condos, HOAs and coops have a basic understanding of the duties and responsibilities for governing their community.

The Number 1 Tip is that board members must read the association declaration, bylaws and other governing documents for their community. The governing documents lay out the authority of the board to impose and collect assessments, spend funds, maintain and repair common areas, and enforce use restrictions.

Other tips for staying out of court include inspect the common areas; avoid ambiguous contracts; be reasonable and consistent in enforcing rules; and document board actions.

Community association boards of directors should plan ahead to avoid litigation by following governance procedures, complying with fair housing requirements; and acting promptly to collect assessments.  In addition, board members should stay informed of laws and court rulings which affect association governance.

The CAI Washington Metro Chapter’s Annual Conference and Expo at the Convention Center in Washington D.C. features speakers on a wide range of topics and over a hundred exhibitors who provide goods and services to community associations.

Condo Insurance Claims Soar as Temperatures Plummet

by Tom Schild

As arctic temperatures blanket Maryland and much of the eastern United States, frozen pipe breaks are causing havoc for homeowners.

Typically, the cost of repairing a burst pipe is not covered by property insurance but repair costs for the related water damage to the building is covered.  For condominium owners, there are special challenges in sorting out whether the condo association–or the individual unit owner–pays to repair damage to walls, floors, carpet and other portions of the building.

In Maryland, the Condominium Act requires the condo association to have property insurance for both the common elements and the individual units. Repair costs in excess of the insurance deductible amount will be paid for by the insurance company.

However, who pays the first $5,000 of repair costs depends on whether the broken pipe is a common element or part of the unit.  Under Section 11-114 of  Maryland Condominium Act, the entire insurance deductible amount is paid for by the condo association if the cause of the damage originates in a common element pipe.  But, if the frozen pipe is a unit pipe, the owner of the unit where the cause of the damage occurs must pay up to $5,000 of the repair cost not paid by the insurance company.

The individual unit owner is also responsible for the cost of repairing or replacing any upgrades or additions to the unit–commonly referred to as “betterments and improvements”  in insurance jargon–beyond what was in the unit as originally constructed.

To cover up to $5,000 of the condo association insurance deductible and the cost to repair or replace betterments and improvements, unit owners can obtain their own individual unit insurance known as an HO-6 policy.  This insurance also covers damage to an owner’s furniture and other personal property.   The deductible amount to be paid by the unit owner in individual insurance policies can be as little as $250.

Yet, many condo owners do not have individual HO-6 coverage and are not able to pay the first $5,000 to repair their unit, other units and the common elements when the broken pipe is part of the unit.  This can leave other unit owners or the condo association to make repairs and then seek reimbursement from the owner of the unit where the cause of the damage originated.

To avoid surprises and disputes over payment of the first $5,000 of repair costs, each condominium association is required by the Condo Act to provide annual written notice of the amount of the deductible in the condominium master insurance policy and the unit owner’s responsibility for the property insurance deductible.  Additionally, the condo bylaws can require each unit owner to maintain an individual condominium unit insurance policy.  Existing bylaws can be amended to require unit owner insurance with approval of 51 percent of the unit owners.

Water damage can occur year round.  But, the arctic temperatures of the winter of 2015 will gladly soon be a blast from the past.

 

 

2015 Maryland Legislative Session Heats Up

by Tom Schild

Despite the recent arctic air sweeping through Maryland, the 2015 Maryland legislative session is heating up.

After a slow start in January with many new legislators and a new Governor taking office, a rush of bills were introduced in February.  Among the bills concerning governance of Maryland condos, coops and HOAs are proposals to (1) prevent developers from limiting condominium statutory warranty rights; (2) require access to common areas for political candidates; and (3) require homeowner associations to provide resale disclosure information and cap the fee charged by condos and HOAs for providing resale disclosure information.

A proposal to change the housing cooperative law adopted in 2014 would eliminate a 3-month waiting period before a housing coop could initiate legal action to evict a coop member for not paying assessments.

Other legislation under review would restrict the ability to collect court judgments for delinquent assessments. Although not limited to condos, coops and HOAs, the bill would make it more difficult to obtain money in bank accounts and sell property to pay a person’s debts.

Legislation regarding licensing of community association managers (which had been considered the past several years) has not been introduced in 2015.

The 90-day legislative session of the Maryland General Assembly runs until April 13, 2015.

Maryland County Law To Require Board Member Education

by Tom Schild

Board members of condominiums, homeowner associations, and housing coops in Montgomery County, Maryland will soon have to complete a class on the responsibilities of serving on the board of directors.  Beginning in January 2016, a new County law  mandates training for all board members within 90 days of first being elected or appointed to the board of directors of a condo, HOA or coop.

The Montgomery County Commission on Common Ownership Communities (CCOC) has been tasked with developing an educational curriculum and approving a similar training program administered by other organizations. Where a condo, HOA, or coop board member does not complete the mandatory board education, the CCOC may take legal action to enforce the new training requirement.  Additionally, a CCOC dispute resolution panel may consider a board member’s failure to complete the training in deciding a dispute between a homeowner and a community association.

However, failure to complete the training requirement does not disqualify a board member from continuing to serve on the board or invalidate a vote by the member.

Each community association in Montgomery County will have to certify to the CCOC that each board member has completed the required training and must provide an annual report which includes the name and address of each board member, the date each member completed the training, the number of vacancies on the board, and the length of time each vacancy existed.

The legislation to require board education was considered by the County Council for several months before it was enacted in February, 2015.