Maryland Condominium Rule May Not Suspend Use of Common Elements by Delinquent Owner

A Maryland condominium’s policy of towing vehicles of unit owners who are delinquent in payment of condominium assessments was recently struck down by the Maryland Court of Special Appeals–an intermediate appeals court.

In an effort to get owners to pay the condominium assessments, the Board of Directors of an Anne Arundel County condominium passed a rule which prohibited parking in the condominium common element parking lot if an owner was in arrears in payment of condominium assessments and other charges for more than 45 days.  The rule was enforced by towing vehicles from the condominium property.  The condominium Board also enacted a rule to prohibit use of the community pool by owners who had not paid their assessments.

When the owner filed suit challenging the suspension of the right to use the parking lot and pool, the appeals court concluded that the Board was not authorized to take such action unless the condominium declaration or bylaws were amended to allow suspension of use of the common elements a tool for the collection of delinquent assessments.

The court relied on a prior decision of the Maryland Court of Appeals–the highest state appeals court–and a provision in the Maryland Condominium Act which recognize that the right to use the common elements is a property right which can only be limited by the condominium declaration.  Although the Court of Special Appeals ruled that the use of the of common elements could not be restricted by Board rule, it concluded the declaration or bylaws could be amended to allow suspension of the common element parking lot and pool for non-payment of condo assessments.

The court decision in Elevaton Towne Condominium Regime II v. Rose is an “unreported” decision which is not a binding precedent applicable to any other condominium.  However, it is instructive on how Maryland courts view limitations on the authority of condominium boards to restrict the use of common elements by owners who are delinquent in paying assessments.

Posted by Thomas Schild Law Group, LLC, attorneys for condominiums, homeowner associations, and housing cooperatives in Maryland counties of Montgomery County, Prince George’s County, Howard County, and Frederick County; and Washington D.C.

 

 

Maryland Appeals Court Upholds Enforcement of Association Truck Covenant

A homeowner association restriction on trucks has been determined by a Maryland appeals court to be enforceable against the owner of a large military-style vehicle.

The 3-axle camouflaged vehicle was taller than the first story of the home and as wide as the driveway. The Maryland Court of Special Appeals agreed with the trial court that the truck covenant had not been waived by allowing other smaller Sport Utility Vehicles built on a truck chassis.  It was appropriate and reasonable to distinguish between “consumer vehicles” and a “massive army-surplus truck”.

Although the appeals court noted that restrictive covenants may become invalid and unenforceable if the original development plan has been abandoned, or the character of the neighborhood has changed so much as to defeat the purpose of the restriction, those factors were not applicable to the community of single family homes in Harford County where the over-sized military truck was parked.

The court also rejected the homeowner’s contention that suit to obtain an injunction to enforce the truck covenant could not be filed before complying with the dispute resolution procedure in the HOA bylaws.  The bylaws required notice of the alleged violation and an opportunity for a hearing before the HOA Board of Directors before imposing a fine, suspend voting rights or infringe on other rights of a homeowner.

The appeals court concluded that the right to enforce the covenants by court action was provided for in the Declaration without conditions and, therefore, the dispute resolution procedures in the HOA Bylaws did not apply.  Even if the suit was deemed to be an attempt to “infringe” on the rights of the owner, the terms of the Declaration which had no pre-conditions to litigation prevailed over the notice and hearing provisions in the Bylaws.

Although the decision in Maloney v. Fountain Glen Homeowners Association, Inc. is an “unreported” decision and, therefore, not a binding precedent, it is instructive on how courts view enforcement of homeowner association covenant restrictions.

Posted by Thomas Schild Law Group, LLC, attorneys for condominiums, homeowner associations, and housing cooperatives in Maryland and the District of Columbia.

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2016 Maryland Condo & HOA Legislative Scorecard

The Maryland legislature has passed legislation which affects the management and operation of condominiums and homeowner associations.  New laws which take effect October 1, 2016 include:

Resale Disclosures.   Homeowner associations will be required for the first time to provide resale disclosure information to an owner selling a home in an HOA.  For condos which have long been required to provide resale disclosures, the disclosure requirements have been clarified or changed on matters such as assessments, replacement reserves, pending litigation, unit alterations, and violations of health or building codes.  And, the amount which condos, HOAs and management companies may charge for providing resale disclosure information is capped by the new law.

Tax Sale Procedure.  The purchaser of property at a tax sale will be required to notify condos and HOAs when a court suit is filed to prevent owners of property in those communities from keeping ownership of property.  The new law also provides that when a tax sale is approved by the court,  the tax sale purchaser is responsible for payment of condominium and homeowner association assessments from the date of the court judgment, whether or not a tax sale deed to the property is recorded in the land records.

Assessment Collection.  A court suit will not be permitted for any unpaid assessments where the time for filing suit has expired. Any subsequent payment on the debt, or written or oral affirmation of the debt will not revive or extend the statute of limitations. This applies to all suits involving consumer debt, not just association assessments.

Home Gambling.  Card games and mah jong games hosted in a residence not more than once a week will now be allowed where the total gambling bets for all players is no more than $1,000 in a 24-hour period.  In senior communities with age 55 restrictions, these games will also be allowed in the common areas.

Legislation considered but not enacted would have required state registration of all condos, co-ops and HOAs, and would have made it easier to amend association governing documents by allowing an owner’s failure to vote on a proposed amendment to be counted as that owner’s approval of the proposed amendment.

Also rejected was a bill to prohibit provisions in condominium sales contracts and bylaws which limit the ability of condo associations to file suit to enforce construction warranties on the common elements.

Posted by: Thomas Schild Law Group, LLC, attorneys for condominiums, homeowner associations, and housing cooperatives in Maryland and Washington, D.C.

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2016 Maryland Condo and HOA Legislation—What’s Hot and What’s Not

As the Maryland General Assembly heads to the end of the 2016 session on April 11, some bills regarding community association governance are still under consideration.  Others have been killed in committee.  To become law, a bill must be passed by the Maryland House and Senate and signed by the Governor.

Here’s What’s HOT!

Resale Disclosures. A bill to cap the amount which an association or management company can charge for providing resale disclosure information has passed the House and is headed to the Senate.  If enacted, it would also create a new obligation for homeowners associations to provide resale disclosure information to an owner selling  a home in an HOA.

Annual State Registration.  Legislation to require each condo, co-op and HOA to register with the state was passed by the House after it was scaled back to limit the information required.

Foreclosure and Tax Sale Notices.   Where condos and HOAs have recorded assessment liens, a bill passed by the House would require lenders to notify the association of any proposed, postponed or canceled foreclosure sale.  Another bill passed by the House and Senate would require tax sale purchasers to notify condos and HOAs when a court suit is filed to prevent owners of property in those communities from retaining ownership of property purchased at a tax sale.

 

….and Here’s What’s NOT!

Condo Construction Warranty.  House and Senate committees rejected proposed changes in the Maryland Condominium Act to prohibit provisions in condo sales contracts and bylaws which limit the ability of condo associations to file suit to enforce construction warranties.

Amendment of Governing Documents.   A House committee also killed legislation to make it easier to amend the governing documents of condos and HOAs by allowing an owner’s failure to vote on a proposed amendment to be counted as that owner’s approval of the proposed amendment.

 

 

Montgomery Commission on Common Ownership Communities Under Review

Changes to the operation, composition and dispute resolution process of the Montgomery County Commission on Common Ownership Communities (CCOC) are under review by the Montgomery County Council.

Since 1991, the CCOC has been an information resource for residents and leaders of condominiums, homeowner associations, and housing cooperatives in Montgomery County, Maryland.  And, its mediation and arbitration program has offered a way of resolving disputes between homeowners and associations regarding matters such as association governance procedures, owner architectural changes, and the authority of the association board of directors.

Montgomery County has experienced significant growth in common ownership communities in the 25 years since the CCOC was established.  There are currently over 1,000 condominium, homeowners association, and co-operative communities with approximately 340,000 residents.

Legislation proposed by the County Executive would require mediation of certain disputes regarding common ownership communities and would require that all members of a dispute resolution hearing panel be members of the CCOC.  Currently, mediation is voluntary and the hearing panels are chaired by an attorney volunteer who is not a member of the CCOC.

Additionally, the proposed legislation (County Council Bill No. 50-15)  would change the composition for the CCOC membership to include 5 members of the public who are not owners or residents in a common ownership community or affiliated with professions associated with these communities.  Currently, the 15-member Commission is comprised of 8 members who are owners or residents and 7 members who are members of professions associated with common ownership communities (such as managers, attorneys, real estate agents, and developers).  The bill would also change the government agency responsible for providing staff and other support from the Office of Consumer Protection to the Department of Housing and Community Affairs.

The County Executive requested these changes in response to a report of the Council’s Office of Legislative Oversight regarding CCOC operations and a ruling of the County Ethics Commission regarding volunteer attorney hearing panel chairs who represent associations or homeowners before the CCOC for compensation on other matters.

The CCOC opposes the legislation and instead proposes that a work group which includes CCOC members be convened to provide recommendations to the County Executive and County Council before any statutory changes  are made.

Posted by: Thomas Schild Law Group, LLC, attorneys for condominiums, homeowner associations, and housing cooperatives in Maryland and Washington, D.C.

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Maryland Condo and HOA Legislative Hot Topics for 2016

With the Maryland legislature in the midst of its 2016 session which runs to mid-April, several bills which would affect condomium and homeowner association operations are now being considered by House and Senate legislative committees of the Maryland General Assembly.

Resale Disclosures

Legislation concerning resale disclosures would cap the amount which an association or it management company could charge an owner for providing the governing documents and other information  in connection the sale of the owner’s home. As introduced, the bill would limit the basic charge to $250 and allow additional charges of $100 to inspect the property for covenant violations and up to $100 for providing an expedited response to a request for resale disclosures.

Condo associations have long  been required to provide resale disclosure information.   If enacted, the bill would create a new obligation for a homeowners association to provide resale disclosure information to an owner who is selling a home in an HOA.

Condominium Construction Warranty

Also under review is legislation to amend the Maryland Condominium Act to prevent developers of residential condominiums from including provisions in sales contracts and condo governing documents which limit the ability of condominium associations to file suit to enforce construction warranties for the condominium common elements.

Among the provisions which the warranty bill would prohibit are those which purport to shorten the statute of limitations applicable to any legal claims; waive the “discovery rule” or other accrual date applicable to claims; and prevent a condo association from bringing claims on behalf of two or more unit owners.  It would also disallow developer-imposed requirements that as condo association obtain the approval of unit owners, the developer or others as a condition to commencing mediation, arbitration or litigation on behalf of the condo association.

Annual State Registration

Legislation has also been introduced which would require annual state registration of all condos, HOAs and coops and require associations to  provide contact information for the association board members and any management company and attorney.employed by the association.  It would also require information regarding the number and type of residential units,  fidelity insurance, replacement reserves, grievance procedures and any other information required by the Maryland Department of Assessments and Taxation.

Amendment of Governing Documents

A bill to make it easier to  amend the declaration, bylaws and other governing documents of condos and HOAs has also been introduced.  It would allow an amendment by a vote of owners in “good standing” which includes only owners who are not more than  3 months in arrears in payment of association assessments and have satisfied other requirements of the bylaws.  An amendment could be passed by  two-thirds of the total votes of owners in good standing, or by a lower percentage if required in the governing document. The legislation would also allow an owner’s failure to vote to be counted as that owner’s approval of the proposed amendment.

As of mid-February 2016, these bills are under review by House and Senate legislative committees and have not been enacted..

Posted byThomas Schild Law Group, LLC, attorneys for condominiums, homeowner associations, and housing cooperatives in Maryland and Washington, D.C.

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