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Law and Legislation

 

purplenew.gif (1997 bytes)star.gif (227 bytes)star.gif (227 bytes)star.gif (227 bytes)star.gif (227 bytes)New laws were passed by the Maryland General Assembly in 2013 regarding  association liens and closed condo board meetings.

Throughout the 2013 legislative session, Tom Schild met with legislators, submitted written testimony and attended committee hearings regarding legislation affecting community associations.

The Maryland Contract Lien Act was amended to limit the liability of condo and homeowners asociations to foreclose on liens which include charges other than assessments, and reasonable costs and attorneys fees "directly related to the fitting of the lien and not exceeding the amount of the lien".

The General Assembly also passed a bill to allow condominium boards to meet in closed session to consider the terms of a business transaction in the negotiating stage, if disclosure would adversely affect the economic interests of the condominium. The amendment to the Maryland Condominium Act extends to condos a similar business transaction exemption which has already been allowed for homeowners associations. 

 

LAWS REGULATING COMMUNITY ASSOCIATIONS

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.

 

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NEW LAWS AND  LEGISLATION

MARYLAND   LEGISLATIVE  UPDATE

purplenew.gif (1997 bytes)star.gif (227 bytes)star.gif (227 bytes)star.gif (227 bytes)star.gif (227 bytes)Assessment Laws (2013). The Maryland Contract Lien Act was amended to limit the ability of condo and homeowners associations to foreclose on liens which include charges other than assessments, and reasonable costs and attorney's fees "directly related to the filing of the lien and not exceeding the amount of the lien". A lien which includes late fees, interest, collection costs and attorney's fees not directly related to filing the lien, or fines will no longer be subject  to foreclosure.  However, the new law expressly provides that it does not prevent collection of those charges by other means.

purplenew.gif (1997 bytes)star.gif (227 bytes)star.gif (227 bytes)star.gif (227 bytes)star.gif (227 bytes)Condominium Board Meetings (2013).  The Maryland Condominium Act was amended to allow condominium boards to meet in closed session to consider the terms of a business transaction in the negotiation stage, if disclosure would adversely affect the economic interests of the condominium.  This amendment to the Maryland Condominium Act extends to condos a similar business transaction exemption whic has already been allowed for homeowners associations.

The new lien foreclosure law and closed meetings law take effect October 1, 2013.

star.gif (227 bytes)star.gif (227 bytes)star.gif (227 bytes)star.gif (227 bytes)The Maryland General Assembly has enacted several new laws in 2011 which impact the operation of condominiums and homeowner associations.  These include:

star.gif (227 bytes)star.gif (227 bytes)star.gif (227 bytes)star.gif (227 bytes)Priority Assessment Lien (2011). The Priority Assessment Lien law aids condominiums and homeowner associations when there is a lender foreclosure. The bill allows a 4-month priority up to $1,200 for condominium and homeowner association assessments.  When there is a lender foreclosure sale, up to $1,200 of assessments will be paid before the mortgage debt is paid.  The new law applies to loans obtained after October 1, 2011.

Over time, the priority lien law will provide tens of millions of dollars to Maryland associations.

star.gif (227 bytes)star.gif (227 bytes)star.gif (227 bytes)star.gif (227 bytes)Condo Unit Owner Insurance (2011) This law helps condominium associations by allowing amendments to the condominium bylaws to require unit owners to purchase an individual HO-6 insurance policy with the approval of 51 percent of the ownership votes. This is less than the usual 66 2/3 vote required to amend condominium bylaws.

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.

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.

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FEDERAL   LEGISLATIVE  UPDATE

purplenew.gif (1997 bytes)star.gif (227 bytes)star.gif (227 bytes)star.gif (227 bytes)star.gif (227 bytes)As of February, 2010  the Federal Housing Administration (FHA) no longer allows "spot loans" which allowed borrowers to qualify a condominium for FHA-instituted loans on an individual basis.  Now the entire condominium must obtain FHA approval in order for individual condominium units to be financed with an FHA-insured loan.

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.

 

star.gif (227 bytes)star.gif (227 bytes)star.gif (227 bytes)star.gif (227 bytes) 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


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Last updated   February 11, 2014 Copyright 2014 Site designed by AIS

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Serving Community Associations Since 1985

THOMAS SCHILD LAW GROUP, LLC 401 NORTH WASHINGTON STREET   SUITE 500   ROCKVILLE,  MARYLAND  20850
Tel: (301) 251-1414 Fax: (301) 251-6636
law@SchildLaw.com
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Blog: marylandcondominiumlaw.net