Montgomery County Towing Law Yields Class-Action Settlement

Faced with a class action suit based on a Montgomery County towing law which makes a property owner liable for the actions of a towing company which is hired to tow unauthorized vehicles, dozens of condominiums and homeowner associations have agreed to settle the suit by paying nearly $400 per tow.

The suit was filed as a class action suit by vehicle owners against over 500 property owners in connection with over 20,000 tows.  It claimed that the towing company improperly asserted a possessory lien on the towed vehicles by refusing to release the vehicle until the tow charges were paid.  It also claimed that the towing company violated County and Maryland law by not providing required notices to the vehicle owners when they came to retrieve their vehicles and by imposing charges for credit card payment.

Although the condos, homeowner associations, and other property owners were not directly involved in the violation of towing law procedures, Montgomery law imposes joint and several liability on property owners for a towing company’s actions and imposes liability for three times the expenses incurred by the vehicle owner.

The cost of each tow was between $168 and $178 which could have resulted in damages of $504 and $534 per tow.  Therefore, the trial court judge who approved the settlement in January 2018 found the settlement of $390 per tow to be “fair, reasonable and adequate”.  Each property owner also was required to pay about $28 per tow as a portion of the legal fees incurred to defend and settle the suit based on a pro rata share of the number of tows which were part of the settlement.

Some condominiums, HOAs and other property owners opted not to settle the suit and the litigation of legal defenses and factual issues may continue to trial.

Although many contracts between the property owners and towing company require the towing company to indemnify the property owners for any improper or unlawful action by the towing company, an agreed $22 million judgment against towing the company with a payment of over $300,000 forced the company out of business and left the property owners without recourse against the towing company.  The claims against some condos and HOAs were covered by the association’s insurance.

Because condos, homeowner associations, and housing co-ops in Montgomery County, Maryland can be liable for up to three times the cost of an improper tow, each association which tows vehicles from the common property should ensure that its towing contract requires the towing company to provide and follow towing procedures which comply with state and local law.

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 Baltimore City and Washington, D.C.

This entry was posted in Maryland Condominium Associations, Maryland Homeowner Associations and tagged , , , by Tom Schild. Bookmark the permalink.

About Tom Schild

MarylandCondominiumlaw.net is written by Thomas C. Schild. Tom focuses his practice in the representation of community associations. Since 1985, he has represented condominiums, homeowners associations, and housing cooperatives throughout Maryland and Washington D.C. He is recognized locally and nationwide as a leader in the field of community association law. Tom has written numerous articles and presented many seminars concerning various aspects of condominium and homeowners associations operations. He has recently presented programs regarding community associations insurance, contracts, leasing restrictions, tips for avoiding litigation, and community governance. He is a long-time member and past Chair of the Maryland Legislative Action Committee of the Community Associations Institute (CAI), which represents community association interests before the Maryland General Assembly. Tom is also a member of CAI's National Faculty and teaches a Community Governance course for community association managers in cities nationwide. And, he is a member of the College of Community Association Lawyers (CCAL) which is comprised of fewer than 150 lawyers nationwide recognized for their leadership and contributions in the field of community law. He previously served on the Board of Directors of CAI's Washington Metropolitan Chapter. Tom is a 1976 graduate of Northwestern University and a 1980 graduate of the George Washington University Law School. He is admitted to practice before the state and federal courts in Maryland and the District of Columbia.

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