2018 Maryland Legislative Update–New Laws Help Condos and HOAs

The hot topic during the 2018 Maryland legislative session was how Maryland will adapt to recent changes in federal income tax and health insurance laws.

Beyond the headlines, the Maryland General Assembly considered many bills which directly affect Maryland condominiums, homeowner associations, and housing cooperatives. Several new laws which help condos and HOAs were enacted.

Suspension of Parking and Amenities

A bill to make it easier for condominium associations to collect delinquent assessments by suspending use of the common area parking lots and recreational facilities was approved unanimously in the final days of the legislative session.

The new law allows approval by 60 percent of the total eligible votes to amend a condo declaration to provide for suspension of use of these portions of the condominium property when an owner is delinquent in paying the condo assessments for more than 60 days.  This is far less than the 80 percent minimum required by the Maryland Condominium Act for other declaration amendments, and some older condo documents require as much as 100 percent approval. The new amendment procedure takes effect October 1, 2018 (HB 575).

The legislation was in response to a 2017 Maryland appeals court ruling that a board of directors did not have the authority to adopt rules for suspending use of the common property.  Instead, any such restriction must be in the condo declaration.  For more, see Delinquent Assessments, April 11, 2018.

Purchaser Protections

Beginning October 1, 2018, condo developers will no longer be able put provisions in condominium bylaws or sales contracts which shorten the time for condo associations and owners to file suit against the developer regarding construction defects.  This applies to claims which allege failure to comply with implied statutory warranties, building codes, government approved plans and specifications, or manufacturer’s installation instructions (HB 77/SB 258). For more, see Condominium Warranty Claims, April 4, 2018.

Separately, a new law will allow for an earlier turnover of developer control of a homeowners association by preventing developers from using disproportionate weighting of votes for lots owned by the developer.   Instead of getting multiple votes for each lot, the developer will have one vote for each lot which has been subdivided, recorded in the land records, and not yet sold to a member of the public.  This new law takes effect July 1, 2018 (HB 669).

Discriminatory Covenants

Where covenants restrict ownership based on race, religious belief, or national origin, the board of a homeowners association must delete these unenforceable restrictions from common area deeds and declarations by September 30, 2019.  The board may delete these restrictions without approval by the homeowners, as of October 1, 2018.   The final version of this legislation eliminated proposed provisions which would have created new fair housing liability for HOAs (SB 621).

Master Electric and Gas Meters

The Maryland Public Service Commission (PSC) will no longer be able to authorize new gas or electric service for leased or owned multi-family residential properties unless there are individual meters or submeters.  The PSC must also study the feasibility of transitioning master meters for gas or electric service to energy allocation systems or submeters in apartment building, condominiums and housing co-operatives, and reports its findings to the Maryland General Assembly by January 15, 2019 (HB 1491).

In Prince George’s County, beginning June 1, 2018, master meters for gas, electricity or water will no longer be allowed in a residential multi-family occupancy building that is newly constructed or converted for condominium or co-operative ownership.  A property with an existing master meter system cannot be converted to condominium or cooperative ownership until individual meters have been installed for each individual dwelling unit and the common areas (HB 218).

Not This Year

Many other bills concerning the management and governance of condos, HOAs and co-ops were considered but not enacted.  Several bills were introduced again this year to establish a state agency to regulate community association managers and require managers to obtain a license based on training and testing, but all died in committee with any action (HB 1158/SB 1208 and SB 65).

A bill to revise the dispute settlement procedure for condos and to extend a similar dispute settlement procedure  to HOAs was passed the House but did not make it through the Senate Committee (HB 1097).  A similar bill regarding the dispute resolution procedure for housing co-ops was also killed (HB 680). And, bills concerning board conflicts of interests  (SB 95) and HOA governance procedures (HB 1007/SB 883) were not acted on.

Legislation to restrict the authority of condos and HOAs to regulate electric vehicle recharging stations died in committee (HB 602). Other bills killed in committee would have required condo developers to provide the board with information about government bonds on common areas; required earlier transition of the board to the homeowners; and required a developer replacement reserve study and reserve funding (HB 564/SB 432 and HB 997).  A bill to amend a 2017 law to reduce the vote required to amend condo and HOA governing documents also was not acted on (HB 413).

These bills can be obtained on the website of the Maryland General Assembly.

Posted by Thomas Schild Law Group, LLC, attorneys for condominiums, homeowner associations and housing cooperatives in Maryland -– including Montgomery County, Prince George’s County, Howard County, and Baltimore County; and in Baltimore City and Washington, D.C.

 

 

 

 

 

 

 

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