NEW LAWS AND LEGISLATION
Bite Liability (2014).
A law to limit the liability for property owners for dog bites which occur
on an owner's property was enacted to overturn a 2012 Court of
Appeals' ruling which imposed strict liability for injuries caused by pit
bulls. The prior negligence standard has been restored so that
condominiums, housing coops, and homeowner associations may be held liable
for injuries caused by any breed of dog only where the association board or
other official representatives knows a particular dog has exhibited prior
vicious behavior and knows the dog in on the property. This law is
effective April 8, 2014.
Assessment Liens (2014).
The Maryland Contract Lien Act was
again amended to allow interest to be included in condo and homeowner
association liens which are subject to foreclosure. This is in
addition to the assessments, reasonable attorney fees, and costs directly
related to the filing of the lien permitted under existing law.
Housing Co-op Governance Procedures (2014).
The Maryland Cooperative
Housing Act was amended to extend to housing co-ops certain governance
requirements regarding open Board meetings, access to records, rules
enforcement procedures, and distribution of information. The new law
also provides that no court action to evict a co-op member for non-payment of
assessments may be filed until the member is at least 3 months delinquent
and the owner has been provided with notice of the delinquency with an
opportunity for a hearing before the Board of Directors. This law is
effective October 1, 2014.
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.
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
which has already been allowed for homeowners associations.
MARYLAND LAWS IMPACT COMMUNITY ASSOCIATIONS
In recent years, the Maryland General
Assembly has passed several new laws which directly impact community
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.
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.
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
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.
The most sweeping
changes in the District of Columbia Condominium Act since 1977 have been
passed by the District of Columbia Council and are effective as of June 21,
The District of Columbia Condominium Amendment Act of 2014
(D.C. Act 20-308) will have a significant impact on the governance of all
District condominim associations. The new law includes provisions
concerning meetings of the board of directors, unit owner access to books and
records, insurance, collection of assessments, leasing of units, maintenance
and repair, and other topics regarding the management and operation of
HIGHLIGHTS OF THE 2014 CONDOMINIUM AMENDMENT ACT
Board Decision Making. Decisions of the board of
directors will be given greater deference under the "business judgment" rul
where board action is challenged in court. This statutory standard
replaces the "reasonableness" standard which has been applied by the District
of Columbia courts.
Open Board Meetings. Meetings of the board of
directors and committees must be open for observation by all unit owners,
except as otherwise provided in the condominium governing documents of the
Condominium Act. The new law allows closed meetings for reasons such as
personnel matters, contracts in negotiation, consultation with legal counsel
and other specified reasons.
Additionally, a closed meeting cn be held with the approval of
two-thirds of the directors for any "exceptional reason so compelling"
as to override the general public policy in favor of open meetings. And, the
board can take action by unanimous written consent without a meeting.
Email Notice and Proxy Votes. The new law
establishes guidelines for allowing meeting notice and proxy votes by email or
other electronic means.
Access to Records. Books and records must
generally be made available for inspection and copying by unit owners.
Certain records may be withheld from inspection, including individual unit
Leasing Restrictions. New statutory authority is
granted to allow the board of directors to reasonably restrict leasing of
residential units. However, such restriction may not apply to any unit
leased at the time the restriction is adopted and continuing until the unit is
subsequently occupied by the unit owner or ownership transfers.
Insurance. Unit owners will now be required to
obtain individual unit owner's insurance with a minimum of $10,000 for
property damage and $300,000 for personal liability. Unless the
condominium bylaws provide otherwise, a unit owner will be responsible for up
to $5,000 of the association property insurance deductible where the cause of
the damage originates in that owner's unit.
Maintenance and Repair. Where the association
maintains, repairs or replaces limited common elements which affect only a
limited number of units, the new law provides that the board may assess the
cost to the affected unit owners.
Collection of Assessments. Where the condominium
governing documents allow for interest, late fees, attorney fees and
collection costs to be charged to a delinquent unit owner, the new law
provides that such charges may be included in the statutory lien for
Other charges clarify the assessment lien six-month priority
over the mortgage and the authority to convey a unit after a foreclosure sale
to enforce the assessment lien.
Amendments to Condominium Governing Documents. Where
lender approval of amendments to the condominium declaration or bylaws is
required, a new statutory presumption is established so the lender is deemed
to have approved the amendment if it does not object in writing within 60 days
of receiving notice of the amendment.
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 60
No more than 50 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.
At least 50 percent of the units must
be owner-occupied or under contract to persons who intend to occupy the
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