Beware of Pit Bull—Maryland Landlords, Condos and HOAs Face New Liability

by Tom Schild

The Maryland Court of Appeals — the highest state court — has changed the long-standing legal standard for landlord liability to victims of attacks by pit bulls and cross-bred pit bulls which occur on leased property. 

In a landmark ruling in Tracey v. Solesky, the appeals court changed the “common law” of prior court decisions that a landlord is liable for the actions of a pit bull kept by a tenant only if the landlord had knowledge of “past vicious behavior” of that particular dog.

The new legal standard adopted by the 4-3 court decision on April 26 is that the dog owner and others who have “the right to control the pit bull’s presence” and knows, or has reason to know, that the dog is a pit bull or cross-bred pit bull mix will be liable for injuries caused by the dog.

Concluding that pit bulls or cross-bred pit bulls are “inherently dangerous”, the appeals court specifically ruled that the new strict liability standard applied to a “landlord who has the right and/or opportunity to prohibit such dogs on leased premises.”  This could expose landlords and their management companies to liability for attacks by such dogs merely by allowing these breeds to be kept on the leased property.

For other dog breeds, the “common law” is unchanged and it will still be necessary to show knowledge of the prior vicious behavior of a particular dog in order to establish liability for a dog attack.

In a vigorous dissenting opinion, 3 of 7 appeals court judges opposed the new strict liability standard, noting that it applies to any dog “with a trace of pit bull ancestry” without any guidance how that is to be determined.

Although the court ruling involved a rental property, it applies broadly to others who have the “right to control” the presence of pit bulls — which includes condominiums and homeowner associations.  To avoid liability for attacks by pit bulls and pit bull mixed breed dogs, landlords, condos and HOAs now may decide to prohibit such breeds.

 

 

 

 

 

 

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Maryland Foreclosure Laws Revised…..Again

by Tom Schild

Maryland foreclosure laws have been revised again for the fifth consecutive year.  Previously, changes were made to provide homeowners with more time, additional notices, and an opportunity for mediation before a foreclosure sale can occur.

For condominiums and homeowner associations, newly enacted mediation procedures could further delay lender foreclosure sales.  But, new post-sale notice requirements could help associations track foreclosure sales and collect post-sale assessments.

Maryland Governor Martin O’Malley last year appointed a Maryland Foreclosure Task Force to examine recent foreclosure trends in Maryland and to make recommendations regarding state government policies to aid homeowners and neighborhoods impacted by home foreclosures

Foreclosure Mediation  

Adopting a  recommendation of the January 2012 Task Force report, the Maryland General Assembly amended the foreclosure laws to allow a lender and homeowner to participate in “pre-file mediation” with a government mediator before a foreclosure court suit is filed.  To participate in such mediation, the owner must receive housing counseling services from a non-profit organization or government agency.  Where there is “pre-file mediation”, the homeowner will not be entitled to additional mediation after a foreclosure suit is filed (HB 1374).

Foreclosed Property Registry

Separately, a bill to establish a Foreclosed Property Registry was enacted.  A foreclosure purchaser will be required to notify the Maryland Department of Labor, Licensing, and Regulation (DLLR) after a sale has occurred and after a deed is recorded.  This will allow government agencies to better locate the foreclosure purchaser after the sale until the property is formally transferred by recording a new deed in the land records.

The purchaser information filed with the Foreclosed Property Registry will be available only to DLLR and local government officials.  Those agencies may provide the information to a person who lives on the same block as the foreclosed property is located and to a homeowners association or condominium where the property is located (HB 1373).

Post-sale Notice

Additionally, the purchaser of residential property at a foreclosure sale will now be required to provide a copy of the court ratification order to the tax office for the County where the foreclosed property is located.  This is intended to enable state and local governments to collect the correct property tax due for property which is no longer owner-occupied from the date of foreclosure sale regardless of when the deed in recorded (SB 123).

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2012 Maryland Legislative Session Ends With Limited Action on Condo and HOA Legislation

by Tom Schild

The Maryland General Assembly ended its 2012 session on April 9 without enacting  proposed legislation on community association manager licensing, developer to homeowner transition or HOA rules adoption and enforcement.  After considering dozens of bills regarding governance of condominium and homeowner associations, only a few bills passed.

New Laws Enacted

The Maryland Condominium Act was amended to authorize condo associations to gain access to units to investigate damage where necessary for public safety or to prevent damage to other portions of the condominium (HB 126).  Also enacted was a bill to require collection and removal of recyclable material by  condominiums and apartment buildings with 10 or more units beginning in October 2014 (HB 1). 

Legislation was approved  to permit Prince George’s County to enact an ordinance to impose and collect a fee for providing administrative hearing services for the resolution of disputes involving common interest communities (HB 906).

Other Legislation Considered

 Both the Senate and House of Delegates passed a bill to prohibit condominium developers from shortening the statute of limitations on condo unit warranties in sales contracts. It would also bar developers from including provisions in condo bylaws to require unit owner approval for a condo board to pursue legal claims by litigation or arbitration.  However, there were differences in the two versions passed and the bill died on the last day of the legislative session (HB 740/SB 725).

Legislation to regulate community association managers has been proposed for the past 4 years.  The bill considered this year would have established a State Board of Common Interest Community Managers to license and regulate managers.   Each manager would be required to obtain a state-issued license to act on behalf of a Maryland condo, HOA or co-op in its business, financial, legal or other transactions such as negotiating contracts, collecting and disbursing association funds, preparing budgets and financial reports, and enforcing association governing documents. The proposed Maryland Common Interest Community Managers Act was defeated by a Senate Committee but may be introduced again in 2013 (HB 433/SB 372).

Bills to require management contracts to include certain provisions and to require community association management companies to obtain fidelity insurance also died in committee.   Legislation regarding assessment collection and resale disclosures was also considered but not enacted.

 

 

 

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Developer Warranty Legislation Considered in Maryland

by Tom Schild

Maryland legislative committees are reviewing proposed legislation to ban condominium developers from limiting condo warranties in sales contracts and condominium bylaws.

In response to the broad warranty rights granted by Maryland law, developers have restricted these rights by provisions in sales contracts which shorten the time for filing court claims against developer.  Parties to a contract can agree to shorten the time to bring legal claims unless prohibited by statute from doing so.

A proposed bill (House Bill 740/Senate Bill 725) would prohibit provisions in sales contracts or other documents which shorten the statute of limitations applicable to warranty claims or other statutory or common law claims in connection with the sale of condominiums. 

The bill would also prohibit developer-imposed provisions in a condominium declaration or bylaw, or other documents which require unit owner approval for a condominium to pursue legal claims by litigation, arbitration, or other means.  Developers have utilized such restrictive approval provisions in recent years to deter warranty claims and other legal action against developers in connection with the development and construction of residential condominiums.

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Maryland Manager Licensing Legislation Considered

by Tom Schild

Manager licensing legislation is under review by Maryland Senate and House committees.  The proposed Maryland Common Interest Community Managers Act (House Bill 433/Senate Bill 372) would require individuals who provide management services to Maryland condominiums, homeowner associations, and housing co-ops to obtain a license issued by a State Board of Common Interest Community Managers.

Applicants for a common interest community manager’s license would be required to complete a state-approved training program and pass an exam.   Those actively engaged in providing management services for at least 12 months prior to applying for a manager’s license and having specified professional manager designations would also be eligible for a manager’s license.

Beginning October 1, 2013, a license would be required for a manager to act on behalf of a Maryland association in its business, financial, legal or other transactions such as negotiating contracts, collecting and disbursing association funds, preparing budgets and financial reports, and enforcing association governing documents.

Among those exempt from the manager licensing requirements are management support staff who are supervised by a licensed common interest community manager, association board members and residents who act without compensation, attorneys engaged in the practice of law, certified public accountants providing bookkeeping or accounting services, and real estate brokers or sales persons when managing individual properties.

The State Board of Common Interest Community Managers would be authorized to establish license fees to produce sufficient funds to operate the licensing board.  Separately, most condos, HOAs and co-ops would be required to register with the state board and pay of a fee of $2 per unit up to $500 per association.

Public hearings on the proposed Maryland Common Interest Community Managers Act are scheduled for February 15 and 16.

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Maryland General Assembly Considers Condo and HOA Bills

by Tom Schild

Same-sex marriage, budget deficits and tax hikes top the high-profile issues for the 2012 Maryland legislative session now underway in Annapolis.  For condominiums and homeowner associations, the focus will be on rules adoption and enforcement procedures, developer to homeowner transition, and manager licensing.

Legislation has been introduced to require all Maryland condominiums and homeowner associations to follow a specific rules enforcement procedure before imposing fines, suspending voting rights or infringing on owner rights for violation of association rules (HB 76/SB 184).

Also proposed is a bill to extend to homeowner associations the rules adoption procedure which already applies to condominiums.  This legislation would require notice to all homeowners and allow an opportunity to comment on a proposed rule before it can be adopted by the board of directors (HB 155).

Other proposed legislation would aid homeowners in the transition from developer to homeowner control of condos and HOAs by requiring the developer to appoint an independent owner to the board of directors when homes representing 25 percent of the votes in the community have been conveyed.  It would also require a developer to maintain independent books, records and accounts from the time the association is established.   Additionally, a developer would be required to notify members of a homeowner-controlled board of any government bonds related to the association and provide additional notice prior to requesting release from such bonds (HB 79/SB 202).

Future posts on the Maryland Condominium & HOA Law Blog will provide updates on these bills and other proposed legislation during the 2012 Maryland legislative session which runs until mid-April.

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CAI Chesapeake Chapter to Host Community Governance Program

The Chesapeake Region Chapter of the Community Associations Institute (CAI) will host the CAI Community Governance course in Pikesville, Maryland  on February 9 and 10, 2012.  The two-day course is part of CAI’s Professional Management Development Program for community association managers.

Topics include the legal responsibilities of condo and HOA boards and managers; the relationship between association governing documents and state, local and federal statutes; and the contractual and corporate basis for the manager’s role in community decision-making. The course also covers rules development and enforcement and potential conflicts of interest which managers and association boards may encounter.

The instructor for the Baltimore-area program will be Maryland attorney Tom Schild who is a member of CAI’s National Faculty and the College of Community Association Lawyers.  Tom has taught the Community Governance course in cities throughout the United States, including Seattle, Phoenix, Las Vegas, Chicago, Washington, Cincinnati, Nashville, Sarasota and Charleston.

For more information on the Community Governance course and the Professional Management Development Program, go to the Community Associations Institute website, caionline.org.

CAI is a national organization dedicated to fostering competent, well-governed community associations that are home to approximately 20 percent of all American households.  For nearly 40 years, CAI has provided education and resources to volunteer homeowners who govern community associations and the professionals who support them.  CAI’s 30,000 members include community association volunteer leaders, professional managers, community management firms, attorneys, and other professionals and companies that provide products and services to community associations.

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Maryland Legislature to Consider New Condo and HOA Laws

by Tom Schild

The Maryland General Assembly convenes its 2012 state legislative session on January 11, 2012.

Hot topics regarding Maryland condominiums and homeowner associations are expected to be community association manager licensing, homeowner association dispute resolution procedures, developer to homeowner transition, and mandatory recycling for condos with 10 or more units.

After bills are introduced, the proposed legislation is assigned to a legislative committee for consideration and a public hearing.  Most condo and HOA bills go to the Environmental Matters Committee in the House of Delegate and the Judicial Proceedings Committee in the Senate.  If a bill is voted favorably by the Committee, it then goes to the full House or Senate for action.

Future blogposts on the Maryland Condominium & HOA Law Blog will cover proposed legislation of interest to Maryland condos, HOAs and co-ops as bills are introduced and acted on during the 2012 session of the Maryland General Assembly.

To receive blogposts by email, subscribe for free to the Maryland Condominium & HOA Law Blog.

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Fair Housing Accommodation Required Only On Resident Request

by Tom Schild

Nearly 9 years after a fair housing complaint was filed in April 2003, the Maryland Court of Special Appeals ruled in December 2011 that a Baltimore management company did not violate the Maryland fair housing laws.

In Wallace H. Campbell & Company, Inc. v. Maryland Human Relations Commission, the resident of an apartment complex contended that the management company discriminated against him based on his disability by requiring that mediation of a dispute be held at a location which was not wheelchair accessible.  At the 2003 mediation, the management company staff physically assisted the resident and carried his wheelchair up and down several steps.  The resident did not complain about the assistance, request that the mediation be held at a wheelchair-accessible location or request any other accommodation to his disability.

Nevertheless, the resident later filed a complaint with the Maryland Human Relations Commission (“Commission”) alleging that the management company refused to provide a reasonable accommodation to the resident’s disability.  After more than 4 years of investigation and hearings, the Commission determined there had been a violation of the Maryland fair housing laws, awarded $7,500 in damages, and imposed a $5,000 civil penalty.  The Commission decision was upheld by the trial court.

On appeal, the Maryland Court of Special Appeals reversed the decision of the Commission because the resident had not requested any accommodation to his disability and, therefore, the management company did not “refuse” to make an accommodation in violation of the Maryland fair housing laws.

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Maryland Appeals Court Withdraws Ruling on Condo Resale Certificates

by Tom Schild

The Maryland Court of Appeals has withdrawn its October 25 decision regarding condominium resale certificates.

As discussed in my November 28 blogpost, the Court had ruled in MRA Property Management, Inc. v. Armstrong that the Maryland Consumer Protection Act applies to the issuance of condo resale certificates.  The Court also concluded that the Maryland Condominium Act requires the certificate to identify building conditions which constitute “known” health or building  code violations, whether or not a government-issued violation notice has been received.

In response to a request by the management company and condominium to reconsider its decision, the Court of Appeals on December 15 nullified its October ruling and scheduled a new court hearing for March, 2012.

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Maryland Foreclosure Purchaser Must Pay Condo Fees

by Tom Schild

The successful bidder at a foreclosure sale of a condominium unit is not exempt from paying condo fee assessments until legal title is conveyed after a court ratifies the sale, the Maryland Court of Special Appeals ruled on December 1, 2011.

In Campbell v. Bayside Condominium, a Maryland foreclosure sale purchaser challenged the authority of the Condominium to impose a lien for assessments during the interval between the foreclosure sale date and conveyance to the purchaser several months later.  She contended that the Maryland Condominium Act definition of “unit owner” should be applied to mean only those with “legal title” are obligated to pay the condo fees.

Under long-established Maryland law, the purchaser at a foreclosure sale acquires “equitable title” as of the sale date.  After court ratification of the sale and upon conveyance by deed, the purchaser acquires “legal title” retroactive to the foreclosure sale date.  Applying this principle in the context of the purchase of a condominium unit at a foreclosure sale, the Court of Special Appeals concluded that the term “unit owner” in the Condominium Act embraces the holder of equitable title.  Therefore, a foreclosure sale purchaser is liable for payment of assessments from the date of the foreclosure sale.

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Maryland Appeals Court Expands Condo Resale Certificate Liability

by Tom Schild

A recent decision of the Maryland Court of Appeals–the highest state appellate court–significantly increases the potential liablity of condominium associations and their managers when issuing resale certficates required by the Maryland Condominium Act. Continue reading

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