Maryland Eases Hurdle to Amending Condo and HOA Covenants

The governing documents of Maryland condominiums and homeowner associations often require that amendments to the governing documents must be approved by up to 100 percent of the lenders who hold the mortgage of homeowner’s property. The Maryland Condominium Act for several years has allowed lender approval of most condominium bylaw amendments to be presumed if a lender does not object to the amendment within 60 days.

A new Maryland law extends the presumed lender consent to amendments to a condominium declaration and to all governing documents of a homeowners association, including the declaration of covenants, bylaws, deed and agreement, and other recorded covenants and restrictions. The hurdle of obtaining lender approval has been eased for nearly all amendments to condominium and HOA covenants. The only exceptions are amendments which alter the priority of the mortgage lien; materially impair or affect an owner’s unit or lot as collateral; or materially impair or affect the right of the lender to exercise rights under the mortgage or law.

The presumed consent procedure requires the association to deliver the proposed amendment to each lender entitled to notice of the amendment. If the lender does not object in writing within 60 days of actual receipt of the proposed amendment, the lender is deemed to have consented to the amendment.

The new amendment procedure is included in the Maryland Condominium Act and Maryland Homeowners Association Act, effective October 1, 2020.

Separately, the Maryland Condominium Act insurance provisions were amended this year to allow a condominium to require a unit owner to pay the master insurance deductible amount up to $10,000 where the cause of damage originates in the owner’s condominium unit. This is increase from $5,000, beginning in October, 2020.

And, the Maryland Condominium Act and Maryland Homeowners Association Act were amended to require all Maryland condos and HOAs to submit the approved annual budget to all owners within 30 days after the meeting at which the budget was adopted. This is in addition to the requirement that the proposed annual budget be provided to owners at least 30 days before it is adopted. The budget information may be provided by email, posting on the association website or inclusion in the association newsletter.

Another new Maryland law requires all condominiums, housing cooperatives, and homeowner associations in Prince George’s County to obtain a replacement reserve study of the condition the common property every 5 years and include in the annual condominium fees a portion of the estimated future cost to repair and replace major components of the condominium.

Maryland Condo Owners May Be Responsible for $10,000 Property Insurance Deductible

The Maryland Condominium Act has been amended to increase from $5,000 to $10,000 the amount which a unit owner may be required to pay where the cause of fire, water or other casualty damage to units or the common elements originates in that owner’s condominium unit, beginning October 1, 2020.

In recent years, it is has become common that the insurance deductible amount for property damage claims is at least $10,000.  Some condo associations are not able to purchase insurance with a lower deductible due to its claims history.  Others choose to have a deductible of $10,000 or more to obtain lower insurance premium costs.

For condos which have a deductible of at least $10,000, an owner will be responsible for the first $10,000 of repair costs to the owner’s units, other units and the common elements if the cause of damage originates in the owner’s water or sewer pipes, kitchen or other parts of the unit.  If the insurance deductible is less than $10,000, a unit owner will be responsible for the lower deductible amount.  The condominium association will be responsible for the repair cost in excess of the deductible amount.

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2020 Vision: Maryland Condominium Legislative Update

Condominium insurance, replacement reserves and dispute resolution procedures were among the condominium and homeowners association topics which were considered during the 2019 Maryland legislative session.  However, virtually no new laws affecting community governance were enacted this year.

Looking ahead to 2020, legislation concerning insurance, reserves and dispute resolution is likely to introduced again.

Condominium Insurance Deductibles

Where damage to condominium units and common elements is caused by fire, water or other perils covered by the master property damage insurance, the Maryland Condominium Act requires a unit owner to pay up to the first $5,000 of repair expenses when the cause of the damage originates in that owner’s condominium unit.  While some condos choose a higher deductible, others can only obtain insurance with a deductible of $10,000 or more.  This leaves the condominium association responsible for repair expenses between $5,000 and the amount covered by insurance. Continue reading

2018 Maryland Legislative Update–New Laws Help Condos and HOAs

The hot topic during the 2018 Maryland legislative session was how Maryland will adapt to recent changes in federal income tax and health insurance laws.

Beyond the headlines, the Maryland General Assembly considered many bills which directly affect Maryland condominiums, homeowner associations, and housing cooperatives. Several new laws which help condos and HOAs were enacted. Continue reading

Maryland General Assembly OKs Bill to Help Condos Collect Delinquent Assessments

The Maryland General Assembly has approved legislation to make it easier for condominium associations to suspend use of the common area parking lot, pool and other recreational amenities when an owner is delinquent in paying the condo assessments for more than 60 days.

The new law allows approval by owners with 60 percent of the total eligible votes to amend a condominium declaration to provide for the suspension of use of these portions of the condominium common property.  This is far less than the 80 percent minimum required by the Maryland Condominium Act for other declaration amendments, and some older condo documents require as much as 100 percent unanimous approval.  Continue reading

Maryland Legislature Bans Developer Restrictions on Condominium Warranty Claims

Legislation to prevent condominium developers from imposing restrictions on condominium warranty claims was passed by the Maryland General Assembly during the final days of the legislative session in April, 2018.  In recent years, condominium developers have put provisions in condominium bylaws and sales contracts to limit the ability to condominium associations and unit owners to sue the developer for construction defects. Continue reading