NEW LAWS AND LEGISLATION
Maryland General Assembly has enacted several new laws in 2011 which impact
the operation of condominiums and homeowner associations. These
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
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.
MARYLAND LAWS IMPACT COMMUNITY ASSOCIATIONS
In recent years, the Maryland General
Assembly has passed several new laws which directly impact community
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
association management companies which manage properties in Prince George's
County must now register with the Prince George's County Office of Community
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
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
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
Developer to Homeowner Control
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
(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
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
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.
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.
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.
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
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