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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.
During the 2009 legislative
session of the Maryland General Assembly, numerous bills were introduced to implement various recommendations of the Maryland Task Force on Common Ownership Communities. A bill regarding developer to homeowner transition was enacted. It is anticipated that bills to implement some Task Force recommendations will again be introduced during the 2010 Maryland General Assembly session.
Click here to view the full Task Force report.
The CAI Maryland Legislative Committee represents the interests of CAI members before the Maryland General Assembly.
Tom Schild, right, and other members of the Maryland Legislative Committee of the Community Associations Institute (CAI), accepted the award for Legislative Committee of 2006 at the CAI National Conference in April 2007.
Close to Home -- and Out of Court
July 1, 2005
Thomas C. Schild represents homeowners associations in Montgomery County, where alternative dispute resolution system is in place. The biggest areas of contention are the 'the three P's -- pets, people and parking.' Schild says. He adds that the worst thing an association can do is end up in court.
From the Courts... printer-friendly version
The Maryland appeals court rejected a homeowner's contention that a trial court injunction interfered with a claimed constitutional right to communicate with the homeowners association manager and board members.
Applying the "fighting words" doctrine, long recognized by the United States Supreme Court as a speech not protected by the First Ammendment, the Maryland appeals court ruled than an injunction was appropriate to prohibit a homeowner from engaging in abusive and threatening communications regarding association matters. The injunction didi not bar all communications by the homeowner or prohibit attendance at association meetings, so long as the hoemowner was not abusive or threatening. Davis V. Seneca Crossing, decided August 31, 2009.
The court ruled that "the Maryland Condominium Act does not require the Council of Unit Owners to repair or replace property of an owner in an individual condominium unit after a casualty loss".
The basis of the court ruling is its conclusion that the Condominium Act requires the unit owner to make all repairs to the unit regardless of the cause of the damage.
The court further concluded that "the master insurance provision was intended to cover only damage sustained to the common elements or the structure of the condominium" and the master policy is not meant to insure each owner's property or individual unit. The court's decision is contrary to the long-standing interpretation of the Act by managers, attorneys and insurance professionals regarding master insurance coverage for units. (The Anderson v. Gables on Tuckerman Condominium, decided April 15, 2008).
In response to this court decision, the insurance provisions of the Maryland Condominium Act have been amended. The new law takes effect June 1, 2009. See New Laws and Legislation.
The court concluded that merely because a property owner received rental income is not inconsistent with the property being used for residential purposes. Moreover, the transitory or temporary nature of such use does not defeat the residential status. (Loudon v. Bosley, decided October 17, 2006)
At issue were two provisions from the condominium declaration and bylaws. The declaration contained a provision granting each unit owner a right of use easement in the common elements "for the purposes providing maintenance, support, repair, or service for such unit to and for the ducts, pipes, conduits, vents, plumbing , wiring, and other utility services to the unit."
Additionally, a provision of the bylaws provided that, except for purposes of proper maintenance and repair, a unit owner is prohibited from making any change or alteration to the exterior of any unit or the common elements until an application is submitted to, and approved in writing by the Board.
In a 4-3 decision, the Court of Appeals ruled that the owner was permitted by the easement in the declaration to install the dryer vent through the exterior common elements of the condominium without the prior approval of the condominium board. The three dissenting judges disagreed, concluding that nothing in the declaration easement provision or bylaw architectural change provision permit a unit owner to install a new vent on the exterior of the building without approval of the board. (Garfink v. The Cloisters at Charles Condominium, decided April 13, 2006).
New Laws and Legislation . . .
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 became effective 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 took 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 were 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.Under the new law, the charge for copying books and records may not exceed the amount charged by Maryland courts. Additional charges may apply if an owner wants to personally review the records or wants the records delivered. The new law applies as of October 1, 2009.
Developer to Homeowner Control. Developers must comply with new procedures for trnsition 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 took effect October 1, 2009
Under the maintenance transfer program, the County will provide structural maintenance for a facility after it has been inspected, and any repairs necessary to bring the facility into good operating condition have been made.
The responsibility for bringing the storm water facilities to good working condition and confirming the location and ownership of the facilities rests with the association. Although the association must bear the cost of inspection, repair and transfer, associations may save up to tens of thousands of dollars in future structural maintenance expense.
The actual transfer of maintenance responsibility for storm water facilities will be accomplished through recorded easements and covenants with Montgomery County.
Federal Update . . .
Reasonable modifications may also be made to public and common use areas, such as widening entrances to fitness centers or laundry rooms, or for changes to exteriors of dwelling units, such as installing a ramp at the entrance to a dwelling.
DOJ/HUD Joint Statement
This and That . . .
In March 2009, Tom Schild participated in a program in Washington, D.C. on Condominium Insurance. The program was part of the Annual Conference and Expo of the Washington Metropolitan Chapter of the Community Associations Institute (WMCCAI).
In October, 2008 Tom Schild taught Essentials of Community Association Volunteer Leadership in Silver Spring, Maryland. Mr. Schild presented the portion of the all day course regarding association legal documents and rules enforcement. He also taught the Essentials Course in Maryland in 2007.
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From the Courts/New Laws and Legislation/Federal Update/This and That
To receive additional information about Thomas Schild Law Group legal services, click on CONTACT US, call us at 301-251-1414, or send us email at law@SchildLaw.com.
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