2016 Maryland Condo & HOA Legislative Scorecard

The Maryland legislature has passed legislation which affects the management and operation of condominiums and homeowner associations.  New laws which take effect October 1, 2016 include:

Resale Disclosures.   Homeowner associations will be required for the first time to provide resale disclosure information to an owner selling a home in an HOA.  For condos which have long been required to provide resale disclosures, the disclosure requirements have been clarified or changed on matters such as assessments, replacement reserves, pending litigation, unit alterations, and violations of health or building codes.  And, the amount which condos, HOAs and management companies may charge for providing resale disclosure information is capped by the new law.

Tax Sale Procedure.  The purchaser of property at a tax sale will be required to notify condos and HOAs when a court suit is filed to prevent owners of property in those communities from keeping ownership of property.  The new law also provides that when a tax sale is approved by the court,  the tax sale purchaser is responsible for payment of condominium and homeowner association assessments from the date of the court judgment, whether or not a tax sale deed to the property is recorded in the land records.

Assessment Collection.  A court suit will not be permitted for any unpaid assessments where the time for filing suit has expired. Any subsequent payment on the debt, or written or oral affirmation of the debt will not revive or extend the statute of limitations. This applies to all suits involving consumer debt, not just association assessments.

Home Gambling.  Card games and mah jong games hosted in a residence not more than once a week will now be allowed where the total gambling bets for all players is no more than $1,000 in a 24-hour period.  In senior communities with age 55 restrictions, these games will also be allowed in the common areas.

Legislation considered but not enacted would have required state registration of all condos, co-ops and HOAs, and would have made it easier to amend association governing documents by allowing an owner’s failure to vote on a proposed amendment to be counted as that owner’s approval of the proposed amendment.

Also rejected was a bill to prohibit provisions in condominium sales contracts and bylaws which limit the ability of condo associations to file suit to enforce construction warranties on the common elements.

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

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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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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.