Maryland Appeals Court Expands Condo Resale Certificate Liability

by Tom Schild

A recent decision of the Maryland Court of Appeals–the highest state appellate court–significantly increases the potential liablity of condominium associations and their managers when issuing resale certficates required by the Maryland Condominium Act.

The court ruled in MRA Property Management, Inc. v. Armstrong that false and misleading statements in a condo resale certificate may violate both the Maryland Condominium Act and Maryland Consumer Protection Act. It concluded that the condominium and management company were engaged “in the sale of consumer realty” by issuing resale certificates provided to purchasers and, therefore, subject to the Consumer Protection Act.

With regard to the scope of required disclosures, the appeals court ruled that a condominium must disclose board-approved capital expenditures–but not those only under consideration by the condo board of directors and not yet approved.

However, the court also concluded in its October 25, 2011 decision that “known” health or building code violations must be disclosed whether or not a government notice of violation has been issued.