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Maryland Governor Martin O'Malley signs new law to establish a 4-month priority for assessment liens when there is lender foreclosure as Tom Schild and others look on, May 10, 2011. New laws were passed by the Maryland General Assembly in 2011 regarding association liens and other topics. Condos and HOAs will benefit from legislation which allows a 4-month priority lien up to $1200 of unpaid assessments. When a lender forecloses, the association lien will be paid before the mortgage debt.
Throughout the 2011 legislative session, Tom Schild met with legislators, submitted written testimony and attended committee hearings in support of the priority lien bill.
The new assessment lien law applies to loans obtained after October 1, 2011.
In 2010, there were over 10,000 lender foreclosure sales in Maryland, according to the Maryland Department of Housing and Community Development. Over time, the priority assessment lien law will provide tens of millions of dollars to Maryland condos and homeowner associations.
LAWS REGULATING COMMUNITY ASSOCIATIONS printer-friendly version
The Law and Legislation portion of the Thomas Schild Law Group Web Site highlights laws and proposed legislation which impact community associations.
Community associations are governed by local, state and federal law. Local laws which affect associations include towing and zoning ordinances. State statutes regulate association governance and procedures.
Federal laws affecting community associations include laws concerning bankruptcy, collection procedures, fair housing, taxation, employment, telecommunications, and the environment.
Additionally, new laws are often proposed but not enacted.
Maryland Laws
Maryland laws concerning community associations include the Maryland Condominium Act, Maryland Homeowners Association Act, Maryland Cooperative Housing Act, and the Maryland Contract Lien Act. The general Maryland real property and corporate laws also affect community associations.
In addition, some counties and municipalities have enacted local laws which regulate community association activities
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District of Columbia Laws
The District of Columbia Condominium Act governs condominiums in the District of Columbia. Cooperatives are regulated by the District of Columbia Cooperative Housing Act. The general corporate and real property laws of the District of Columbia also apply.
Federal Laws
Community associations are also affected by a variety of federal laws including the Fair Housing Act, the Americans with Disabilities Act, the Telecommunications Act, the United States Bankruptcy Code, the Internal Revenue Code, the Fair Debt Collection Practices Act, and employment discrimination and job safety laws.
For more information concerning these federal laws, click here.
Federal agencies responsible for administering and enforcing these laws include the Department of Justice, Department of Housing and Urban Development, Department of Labor, Internal Revenue Service, Equal Employment Opportunity Commission, and Federal Communications Commission.
These agencies issue federal regulations which clarify and implement federal laws.
Click here for more information concerning federal regulations.
NEW LAWS AND LEGISLATION
MARYLAND LEGISLATIVE UPDATE
Over time, the priority lien law will provide tens of millions of dollars to Maryland associations.
The new law leaves it to each condominium to decide whether to require individual HO-6 policies, but encourages condominiums to require such policies by making it easier to amend the bylaws.
NEW MARYLAND LAWS IMPACT COMMUNITY ASSOCIATIONS
In recent years, the Maryland General Assembly has passed several new laws which directly impact community associations.
Homeowners Association Annual Budgets (2010). Homeowner Associations are now required to prepare and submit an annual proposed budget to owners at least 30 days prior to adoption. The new law also requires specified budget items including "reserves" and requires adoption of the budget at an open meeting. This is similar to the long-standing budget requirements of the Maryland Condominium Act.
Developer Warranties (2010). This new law alters the duration of implied warranties to three years on completed condominium common elements or two years after a homeowner board of directors is elected, whichever is later. It also alters the duration of implied warranties for homeowner associations to two years on completed common areas or two years after a homeowner board of directors is elected, whichever is later.
Clotheslines or "Right to Dry"(2010). This eco-friendly law allows an owner or tenant to use a clothesline or other similar laundry drying device notwithstanding the terms in the declaration, bylaws, or other documents. The board may still adopt reasonable regulations regarding the time, placement and manner of use of clotheslines.
Manager Registration - Prince George's County (2010). Community association management companies which manage properties in Prince George's County must now register with the Prince George's County Office of Community Relations.
Fidelity Insurance (2009). Maryland condominiums, cooperatives, and homeowner associations must have fidelity insurance to protect the association against fraud or theft of funds by association officers, directors, and managers. Theft of funds is typically not covered by directors and officers insurance or general liability insurance.
Maryland Governor Martin O'Malley signs a new law regarding fidelity insurance as Thomas C. Schild and others look on, April 14, 2009.
Closed Board Meetings (2009). Condominium and homeowner association boards of directors no longer may hold closed meetings based on a resons it believes is "so compelling as to override the general public policy in favor of public meetings ". hat catch-all provision is eliminated from the Maryland Condominium Act and Maryland Homeowners Association Act. However, those laws were amended to include new provisions to specifically allow meetings to be closed for discussion of all legal mattes and individual owner assessment accounts.
Books and Records (2009). Association meeting minutes and financial statements prepared within the past 3 years must be provided to a homeowner within 21 days of an owner's written request. These records must be provided by mail, electronic transmission, or personal delivery. As in the past, other records must be available for inspection and copying during normal business hours on reasonable notice.
Developer to Homeowner Control (2009). Developers must comply with new procedures for transition of control of a condominium or homeowner or homeowner association. This includes a meeting for the election of the board of directors and providing the financial records, contracts, owner records and other documents to the owner-controlled board.
Condominium Insurance (2009). Changes in the Condominium Act regarding payment of the insurance deductible were effective June 1, 2009. A unit owner is now responsible for payment of up to $5,000.00 of the insurance deductible under the condominium master insurance policy when the cause of the damage originates in the owner's unit.
A condominium board of directors must provide notice annually to all owners regarding an owner's responsibility for the property insurance deductible up to $5,000.00 and the amount of the deductible. A similar notice must be included in resale certificate issued by the condominium.
Assessment Liens (2008)
The time for enforcing condominium/homeowner association assessment liens by foreclosure has been increased from 3 years to 12 years to correspond to the duration of a court judgment. This new law will aid collection of assessments when there is a sale or re-finance of a property since some title companies have not been requiring payment of assessment liens which cannot be foreclosed after 3 years.
Solar Collector Restrictions (2008)
The law regarding restrictions on solar collection panels has been clarified and expanded to provide associations regarding land use may not impose unreasonable limitations on the installation of solar collector systems installed on a roof or exterior wall of a building where the property owner owns or has a right of exclusive use of the roof or exterior walls.
Foreclosure Procedures (2008)
The laws governing foreclosure of residential property have been significantly changed to require additional pre-sale notice. Under the new law, a notice of intent to foreclose must be sent prior to filing a foreclosure suit. And, a foreclosure suit must be served on a homeowner before a foreclosure sale can occur.
Enforcement of Homeowner Association Act (2007)
Among the new laws enacted was a bill to authorize the Maryland Attorney General's Consumer Protection Division to enforce provisions of the Maryland Homeowners Association Act which affect consumers. This enforcement authority is similar to existing authority for the Attorney General to enforce provisions of the Maryland Condominium Act which affect consumers.
Court Appointed Receiver (2007)
Where owners of a condominium or homeowner association fail to establish a board of directors with enough members to constitute a quorum under the association bylaws, a court may appoint a receiver to conduct the affairs of the association.
The receiver would have the powers and duties of a duly constituted board of directors and would be empowered to act for the association until the vacancies on the board are filled to establish a quorum of directors.
Montgomery County Storm Water Management
Montgomery County, Maryland is now implementing a new law that will offer homeowner associations the opportunity to reduce their responsibilities for maintenance of stormwater management facilities. An association can turn well-functioning stormwater management facilities over to the County for structural maintenance. And, an association can borrow money to bring sub-standard facilities into a condition where they can be turned over to the County.
The actual transfer of maintenance responsibility for storm water facilities will be accomplished through recorded easements and covenants with Montgomery County.
FEDERAL LEGISLATIVE UPDATE
A condominium association can apply to the FHA directly to become an FHA-approved condominium. The requirements for a condominium to qualify for FHA loans include:
No more than 15 percent of the units can be in arrears in payment of condominium assessments for more than 30 days;
No more than 10 percent of the units may be owned by one investor;
No more than 50 percent of the units in a condominium may have FHA insurance;
At least 10 percent of the annual budget must be for funding replacement reserves for capital expenditures and deferred maintenance, or there must be a reserve study within the past 12 months to asses the financial stability of the condominium.
In March 2008, the United States Department of Justice (DOJ) and Department of Housing and Urban Development (HUD) issued a joint statement regarding the reasonable modification requirements of the federal fair housing laws. Reasonable and necessary modifications must be allowed to the interior of a dwelling as well as public and common use areas.
DOJ/HUD Joint Statement
LAW LINKS
- 2013 Maryland Legal Handbook
- Maryland Condominium Act
- Maryland Homeowners Association Act
- Maryland Cooperative Housing Corporation Act
- Maryland Legislation and Statutes
- Maryland County Codes
- Montgomery County Code
- Prince George's County Code
- The District of Columbia Condominium Act
- Federal Laws -- United States Code
- Federal Regulations -- Code of Federal Regulations
- Government Resources Directory
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Laws Intro/Legislation/Law Links
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