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

New Fair Housing Harassment Rules Apply to Community Associations

Condominiums, housing co-ops and homeowner associations may be liable for the conduct of community residents which subjects other residents to “hostile environment harassment” under new rules issued by the United States Department of Housing and Urban Development (HUD).

The new fair housing rules, which apply beginning October 14, 2016, establish nationwide standards which HUD will apply in enforcing the federal Fair Housing Act with respect to alleged harassment based on race, color, religion, national origin, sex, familial status or disability. According to HUD, the rules do not create any new forms of liability under the Fair Housing Act but merely clarify HUD’s enforcement policies on “quid pro quo” and “hostile environment” harassment.  In addition, the rules clarify when a person may have vicarious liability for the actions of agents and employees in the context of discriminatory housing practices.

The new HUD rules define “hostile environment harassment” to mean “unwelcome conduct that is sufficiently severe or pervasive as to interfere with the availability, sale, rental, or use or enjoyment of a dwelling” and other housing-related activity.  Whether hostile environment harassment exists will be evaluated from the totality of the circumstances and from the perspective of a reasonable person in the aggrieved person’s position.

“Quid pro quo” harassment refers to circumstances where submission to an “unwelcome request or demand” is a condition related to housing transactions or services.

In addition to liability for a person’s own conduct and the conduct of that person’s agents and employees, the new fair housing rules also make a person liable for failing to take prompt action to correct and end a discriminatory housing practice by a third-party, where the person knew or should have known of the discriminatory conduct and had the power to correct it.

The HUD explanatory statement accompanying the rules specifically addresses the obligations of condominiums, homeowner associations and housing co-ops to act to correct a discriminatory housing practice by taking “whatever actions it legally can take to end the harassing conduct”.  And, HUD refers to the 2015 decision of the United States Supreme Court in Texas Department of Community v. Inclusive  Communities Project, Inc. in support of its position that a person’s failure to act to correct third-party harassment does not need to be motivated by a discriminatory intent in order to be liable for a Fair Housing Act violation.

Posted by Thomas Schild Law Group, LLC, attorneys for condominiums, homeowners associations and housing co-operatives in Maryland–including Montgomery County, Prince George’s County, Howard County, and Frederick County; and in the District of Columbia.

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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Community Governance Training For Managers

Tom Schild recently taught a 2-day program on Community Governance in Baltimore, Maryland.  Community association managers from Maryland, Virginia, Pennsylvania and Washington D.C. attended the class to learn about the legal aspects of operating condos, coops and homeowners associations.

The course is part of the Professional Management Development Program of the Community Associations Institute (CAI), a national organization comprised of community association managers, service providers and volunteer leaders.  Topics covered in the Community Governance program include association governing documents; statutes and case law affecting community management; fiduciary responsibilities of association boards and managers; management and service contracts; and developing and enforcing community rules.

Tom is member of CAI’s National Faculty and has taught the Community Governance program since 1998 in many cities throughout the United States. He is also a Fellow of CAI’s College of Community Association Lawyers (CCAL), which is  comprised of fewer than 160 attorneys nationwide who are recognized for their leadership  and contributions in the field of community association law.

POSTED BY:  Thomas Schild Law Group, LLC