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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 2014 regarding  property owner liability for injuries caused by dogs and co-operative housing governance. 

Throughout the 2014 legislative session, Tom Schild met with legislators, submitted written testimony and attended committee hearings regarding legislation affecting community associations.

Legislation to overturn a 2012 Courts of Appeals' decision regarding dog owner and property owner liability for pit bull bites was enacted after more than 2 years of debate.  For property owners, including community associations, the court-imposed strict liability for injuries caused by pit bulls has been eliminated  . Instead, the prior negligence standard hs been restored for all dog bites so that condo, homeowner associations and housing co-ops may be held liable for injuries caused by dogs only if it was known that a particular dog with prior viscous behavior was on the property.

Also approved is a law to extend to housing cooperatives certain governance requirements regarding open Board meetings, access to records, rules enforcement procedures, and distribution of information by co-op members.  The new governance provisions are similar to those already applicable to condominium.  The bill also sets a maximum late fee for unpaid assessments, and requires that assessments be delinquent for at least 3 months and notice and an opportunity for a hearing be given to the co-op member before a court action amy be filed to evict the co-op member for non-payment of assessments.

 

 

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)Dog 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.

purplenew.gif (1997 bytes)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.

purplenew.gif (1997 bytes)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.

star.gif (227 bytes)star.gif (227 bytes)star.gif (227 bytes)star.gif (227 bytes)Assessment Liens (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.

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.

 

 

NEW  MARYLAND  LAWS IMPACT COMMUNITY ASSOCIATIONS

In recent years, the Maryland General Assembly has passed several new laws which directly impact community associations. 

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.

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. 

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.

 

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DISTRICT OF COLUMBIA   LEGISLATIVE  UPDATE

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, 2014.

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 condominiums.

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 owner files.

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 assessments.

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.

 

FEDERAL   LEGISLATIVE  UPDATE

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

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   July 23, 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
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law@SchildLaw.com
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