New laws were enacted in 2009 regarding condominium insurance, association meetings, access to books, records, and other topics. and foreclosure procedures. Maryland Governor Martin O'Malley signs a new law regarding fidelity insurance as Thomas C. Schild and others look on, April 14, 2009. See our New Laws and Legislation for details.
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
.
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
The following new laws were enacted:
Condominium Property Insurance. In response to the April 2008 Maryland Court of Appeals decision in the Anderson v. Gables on Tuckerman case, the Maryland Condominium Act was amended to clarify that condominium master property insurance policies must cover both common elements and units. Additionally, up to $5,000.00 of the master policy deductible will be the responsibility of the unit owner when the cause of damage or destruction originates in a unit.
The new condominium insurance law also requires each condominium to provide an annual notice to unit owners regarding the unit owner's responsibility for the property insurance deductible and the amount of the deductible. A similar notice must be included in resale certificates issued by the condominium.
The condominium insurance law will take effect on June 1, 2009.
Fidelity Insurance. This legislation requires all condominiums, homeowner associations, and housing cooperatives to purchase fidelity insurance to provide for the indemnification of the community against loss resulting from fraud or theft by any officer, director, managing agent, or employee who disburses funds for the community. The fidelity insurance policy must cover three months of assessments and the amount in investment accounts held by the community up to $3,000,000, at the time the fidelity insurance is issued. This legislation takes effect October 1, 2009.
Closed Meetings of Board of Directors. This new law repeals the provisions in the Maryland Condominium Act and Maryland Homeowners Association Act that boards of directors may hold a closed meeting on a two-thirds vote for "reasons so compelling as to override the general public policy in favor of open meetings." It adds language that allows boards of directors to close meetings for and units for consultation and discussion on all legal matters and for discussion of individual owner assessment accounts. The new closed meeting provisions are effective October 1, 2009.
Association Books and Records. This legislation requires condominiums, homeowner associations and housing cooperatives to provide copies of meeting minutes and financial statements prepared within the past 3 years to a requesting owner by mail, electronic transmission, or personal delivery within 21 days of receiving a written request. If the requested financial statements and minutes were prepared more than three years before the receipt of the written request, the community has 45 days to provide the copies.
As in the past, other association books and records must be available for examination and copying during normal business hours upon reasonable notice of a request to review or copy such records. However, there are some changes to provisions regarding what personnel and personal records may be withheld from inspection. This law became effective October 1, 2009.
Developer to Homeowner Control. Developers comply with new procedures for transition of control of a condominium 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. This new law became effective October 1, 2009.
The Maryland General Assembly also enacted several bills in 2008 intended to address the “mortgage crisis” and rising number of home foreclosures in Maryland. The foreclosure process will be extended from a minimum of 15 days to 150 days by requiring additional pre-sale notice and procedures. Before a foreclosure sale can occur, a notice of intent to foreclose must be sent to the homeowner and the homeowner must be served with a copy of the foreclosure suit.
The new foreclosure law was enacted as emergency legislation and became effective April 4, 2008.
A state Task Force on Common Ownership Communities issued its report to the Governor and General Assembly in December 2006 regarding:
- the education and training needs of common ownership community boards and owners;
- alternative dispute resolution services for common ownership communities;
- the desirability of adopting provisions of the Uniform Common Interest Ownership Act;
- issues facing aging communities;
- issues relating to the collection of assessments;
- issues relating to the resale of homes and common ownership;
See the Maryland Task Force on Common Ownership Communities - Final Report 12/31/06Bills to implement some of these recommendations were considered by the Maryland General Assembly in 2007 and 2008.
NEW MARYLAND LAWS IMPACT COMMUNITY ASSOCIATIONS
In recent years, the Maryland General Assembly has passed several new laws which directly impact community associations.
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.
FEDERAL LEGISLATIVE UPDATE
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
- 2010 Maryland Legal Handbook
- Maryland Condominium Act
- Maryland Homeowners Association Act
- Maryland Cooperative Housing Corporation Act
- Maryland Legislation and Statutes
- Maryland County Codes
- The District of Columbia Condominium Act
- Federal Laws -- United States Code
- Federal Regulations -- Code of Federal Regulations
- Government Resources Directory
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