2017 Maryland Condo and HOA Legislation–The Final Score

During the 2017 Maryland legislative session, the General Assembly considered many bills regarding condominium and homeowner association governance, foreclosure procedures, state registration of community associations, and regulation of community association managers.

Legislation passed includes bills to make it easier to amend condo bylaws and an HOA declaration; require lender notice of foreclosure sale postponement and cancellation; and require community associations to provide owner notice of common property sales, including government tax sales. Continue reading

2017 Maryland Legislative Session Begins

Outside the glare of worldwide attention to the inauguration of Donald Trump as the President of the United States, the Maryland General Assembly began its 2017 90-day legislative session in mid-January.

Some bills considered–but not enacted–in 2016 will be examined again by legislative  committees in the Maryland House of Delegates and Maryland Senate.  This includes legislation to establish a state registry for common ownership communities, to require lender notice to condominiums and homeowner associations when a lender postpones or cancels a foreclosure sale, and to make it easier to amend the governing documents of condominiums and homeowner associations.

Other proposed legislation would require Maryland community association managers to obtain a state license to provide management services and establish a State Board of Common Ownership Community Managers.  Several bills would limit the authority to prohibit or regulate uses such as electric vehicle charging stations and backyard gardens.  Also under consideration is a bill to require condos and HOAs to obtain an independent reserve study of the condition of the common areas every 5 years to determine future costs of major repairs and replacement.

A legislative committee will receive comments on each bill and make a recommendation on whether the bill should become law.  Only legislation which is passed by both the House and Senate, and approved by the Governor becomes law.

For updates and details on legislation affecting Maryland condos, co-ops and homeowner associations, sign up for the Maryland Condominium & HOA Law Blog to receive the latest blogposts by email.

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, Frederick County, and Baltimore County; and in Washington, D.C.

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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Community Managers and the Unauthorized Practice of Law

by Tom Schild

Community association managers regularly assist Condo, Co-op and HOA boards in hiring contractors, collecting assessments, adopting community rules and many other tasks necessary to govern a community. Managers must be knowledgeable of a community’s declaration, bylaws and other governing documents, as well as variety of state, local and federal laws which impact association governance.

However, managers must be careful not to provide legal opinions or prepare documents which constitute practicing law. 

The Florida Supreme Court recently provided guidance on the boundary between activities which may be performed by a community manager and activities which require an attorney.  In a May 2015 advisory opinion, the Court commented on numerous specific tasks related to community association governance.  Although the Court ruling is directly applicable only in Florida, it is instructive for community association managers in Maryland and the District of Columbia.

The standard applied by the Court is that the practice of law “includes the giving of legal advice and counsel to others as to their rights and obligations under the law and the preparation of legal instruments, including contracts, by which legal rights are either obtained, secured or given away, although such matters may not then or ever be the subject of proceedings in a court.”

Nearly 20 years ago, the Florida Supreme Court advised regarding the activities which constitute the unlicensed practice of law and are not allowed to be performed by Florida community managers.   These include:

(1) drafting assessment liens and lien releases;

(2) determining the timing, method and form of giving notice of meetings;

(3) determining the votes necessary for certain actions which require the interpretation of statutes and rules;

(4) advising about the application of law to a matter being considered; and

(5) advising that an action may not be authorized by law, rule or the association’s governing documents.

This was confirmed by the Court’s 2015 advisory opinion. The new ruling also concluded that additional activities which constitute the practice of law include drafting amendments to the association declaration and bylaws; determining who must receive a pre-lien letter; and analyzing statutory or case law to reach a legal conclusion.

However, tasks which are ministerial or do not require interpretation of the association governing documents or law do not constitute the practice of law, and may be performed by community association managers.  This includes preparing certification of the amount of assessment due by an owner; determining the number of days’ notice  required for an action or meeting, if it does not involve interpretation of statutes, rules or governing documents; and drafting meeting notices and mailing affidavits.

THE BOTTOM LINE:  While condominium, co-op and homeowner association managers must have general knowledge of the association’s governing documents and laws related to association governance, managers should avoid the unauthorized practice of law and consult an attorney on matters which require the interpretation of  governing documents or the application of state, local or federal law.

POSTED BY:  Thomas Schild Law Group, LLC

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