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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Snow Disaster Aid Not Available For Community Associations

The Blizzard of 2016 left over 2 feet of snow blanketing many parts of Maryland, Washington D.C. and other areas from Virginia to New York.   To help with clean-up efforts after the historic storm, the District of Columbia and states throughout the mid-Atlantic region are expected to seek federal disaster funds.

Although many community associations have private roads which are available for public use, no federal snow clearing funds will be available for association roads and other common property.  Condominiums, housing co-ops, and homeowner associations are not eligible to receive federal funds to clean-up and repair common property after a natural disaster.

Under current law, the Federal Emergency Management Agency (FEMA) regards community associations as business entities, and therefore ineligible for most forms of federal disaster response and recovery assistance which is available to state and local governments. And, individual condo and co-op owners are not eligible for funds to repair commonly-owned building components..  That would change if Congress enacts legislation now pending in the United States House of Representatives.

The Disaster Assistance Equity Act of 2015 (HR 3863) would allow all community associations to receive funds for the removal of snow, trees and debris obstructing roads and for repair of critical community infrastructure that provide essential services of a governmental nature.  It would also allow condo and co-op owners to receive funds to repair commonly-owned items such as roofs, exterior walls, and elevators.

With all seats in the House and one-third of Senate seats up for election in 2016, now is the perfect time for community association leaders and residents to let their congressional legislators know the importance of enacting legislation to allow the availability of federal disaster aid funds for clean-up and repairs in community associations.

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

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Prince George’s County Adopts New Procedures to Resolve Condo, Co-op and HOA Disputes

Beginning in January 2016, Prince George’s County, Maryland will provide “alternative dispute resolution” assistance regarding disputes involving the governance of  condominium, co-op and homeowner associations.  The dispute resolution process will be conducted through the County Office of Community Relations (OCR) which will provide a “qualified dispute resolution specialist” to attempt to settle a dispute.

Disputes between associations and homeowners which may be submitted to the OCR include the authority of the association board of directors to require a person to take any action, or not take any action, involving a unit or common element; require a person to pay a fee, fine or assessment; or spend association funds or alter or add a common element.

The alternative dispute resolution procedure may also be used for disagreements concerning the failure of the association board of directors (when required by law or an association document) to properly conduct an election; give adequate notice of a meeting or other action; properly conduct a meeting; properly adopt a budget or rules; maintain or audit books and records; maintain or repair a common element if the failure results in significant personal injury or property damage; or exercise its judgment in good faith concerning the enforcement of the association documents.

Matters which are not subject to the OCR dispute resolution process include disagreements which involve the collection of an assessment validly levied, and the exercise of an association board’s judgment or discretion in taking or deciding not to take any legally authorized action.

A request to invoke the dispute resolution procedure may not be filed with the OCR until the requesting party makes a good faith attempt to exhaust all procedures and remedies provided in the association documents.

Additionally, under the recently enacted  Prince George’s County law which establishes the alternative dispute resolution procedure, a community association member “may not file an action in any Prince George’s County Court until he/she has first attempted conflict resolution” through the OCR.  The new County law also prohibits a community association from taking “any action to enforce or implement its decision until the time to file a request for alternative dispute resolution process has been exhausted and the opposing party has not requested alternative dispute resolution process”.

Posted by Thomas Schild Law Group, LLC.

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Know Before You Tow–Montgomery County Adopts New Towing Law

Towing from private property in Maryland has come under increased scrutiny in recent years as some towing companies and property owners engaged in “predatory” towing to immediately remove unauthorized vehicles.  In response, statewide towing procedures were enacted in 2012 to provide additional protections to vehicle owners. Maryland towing law, for instance, requires signs with specified information and requires a photo of the vehicle before towing.

 

In some counties and municipalities, towing is also regulated by local laws which impose more stringent procedures. Both state and local towing laws govern towing from the common area parking lots of condominiums, homeowner associations and co-ops.

 

In Montgomery County, towing has been regulated by County law for many years.   However, new restrictions apply to towing from private parking lots beginning November 30, 2015.   Requirements which affect towing from community association property include:

  • Each tow must be specifically authorized in writing in person, by fax or email on a form approved by the County Office of Consumer Protection, except for tows between 2 a.m. and 9 a.m. and tows from a fire lane or vehicles blocking access to another vehicle, the property or building.

 

  • For towing solely for failing to display a vaild registration, a violation notice must be placed on the vehicle at least 72 hours before towing.

 

  • In addition to signs at the entrance, there must be additional signs for each 45 spaces.  However, if  a violation notice is placed on an unauthorized vehicle at least 48 hours before towing, only an entrance sign is required by County law but the signage must still comply with the State towing law which requires one sign for every 7500 square feet of parking area.

 

  • Photographic evidence of the violation which is the basis for the tow must be provided to the vehicle owner and must be available for inspection for one year.

 

  • Towing contracts must specify the responsibilities of the property owner and towing company, state that the contract does not provide express authorization to tow, provide that the property owner and towing company are jointly liable for violations by the towing company, with a right of contribution or indemnification,  and include certain other provisions.

 

 

With parking spaces in short supply in many communities, parking and towing disputes are often contentious.  To help avoid these disputes, condo and HOA boards should carefully review all parking restrictions and contracts, and adopt a written towing policy in coordination with the association manager, attorney and towing contractor.

POSTED BY:  Thomas Schild Law Group, LLC

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Federal Advocacy Summit Tackles Condo and HOA Legislation

Tom Schild recently participated in the Federal Advocacy Summit sponsored by the Community Associations Institute (CAI) in Washington, D.C.  Community association attorneys, managers and homeowners from around the country gathered to learn about federal legislative and regulatory issues with direct financial impact on condos, homeowner associations and housing co-operatives….and carry the message to Capitol Hill.

Among the hot topics was legislation to provide federal disaster relief assistance for the clean up and repair of community association common areas.  This CAI legislative initiative was introduced in the House of Representatives at the end of October, 2015.

As part of the proposed Housing Opportunity through Modernization Act, Congress is also considering changes to the Federal Housing Administration (FHA) standards for condominium project approval to make it easier for condominium associations to obtain and maintain FHA-approval  so condo owners and purchasers can get FHA-insured mortgages.

On the CAI hit list is legislation introduced in both the House and Senate which would require the Federal Communications Commission to invalidate private restrictive covenants in condos and HOAs which prohibit or interfere with amateur radio antennas.

On the regulatory front, CAI is opposed to the actions of the Federal Housing Finance Agency (FHFA) seeking to invalidate state laws which recognize a priory lien for condo and HOA assessments.  FHFA is the government agency which now operates Fannie Mae and Freddie Mac.

With all seats in the House of Representatives and one-third of the Senate seats up for election in 2016,  now is the perfect time for community association leaders and residents to let their congressional representatives know the impact these federal issues have on the financial stability of condominiums, homeowner associations and co-operatives.

POSTED BY:  Thomas Schild Law Group, LLC

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Maryland Appeals Court Sinks Condo Boat Plan

by Tom Schild

A condominium association’s attempt to allow each homeowner to have exclusive use of a boat slip was recently torpedoed by the Maryland Court of Special Appeals.

The court ruled that the board of directors of a waterfront condominium with 8 owners and 8 boat slips, which were designated as general common elements, did not have the authority to lease the boat slips for 10 years to individual unit owners for their exclusive use even though all but one owner supported the leasing plan.

In Emerald Bay Townhouse Condominium v. Cioffioni,  the intermediate appeals court rejected the contention of the condo association that the long term leases were allowed by the Maryland Condominium Act, Section 11-125, and the condominium bylaws which authorize easements, licenses and leases of the common elements in excess of 1 year with the approval 66 2/3 percent of unit owners and their lenders.  The court reasoned that, since the boat slips were general common elements owned in common by all unit owners, the board could not lease slips for exclusive individual use without the unanimous consent of all unit owners.

According to the appellate court, Section 11-125 of the Condo Act does not allow the grant of an exclusive right use of the general common elements.  Rather, it only allows the lease of such common elements to others in addition to the use by unit owners, and does not allow the property rights of the unit owners to be redefined  by granting a unit owner an exclusive right to use a portion of the common elements.

The Emerald Bay decision is “unreported” so it may not be cited as precedent for other similar situations. However, it is instructive on how a 3-judge appeals court panel views the exclusive use of “general common element parking spaces, whether for cars or boats, without the unanimous consent of the unit owners”.

POSTED BY: Thomas Schild Law Group, LLC