



New
laws were enacted in 2008 regarding assessment liens, condominium insurance,
and foreclosure procedures.

|
Maryland Governor
Martin O'Malley signs a new law regarding assessment liens as Thomas C. Schild and others look on,
April 24, 2008. |




In April, 2007, Tom Schild and other members of the Maryland Legislative
Action Committee of the Community Associations Institute (CAI) accepted the
National CAI award for Legislative Committee of 2006. CAI is a national
organization which provides education, publications and legislative
representation for condominiums, housing cooperatives and homeowner
associations and the professionals who work with these community
associations.
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. |



In November 2006, Thomas Schild received the 2006 Public Advocate Award from
the Washington Metropolitan Chapter of the Community Associations Institute
in recognition of his volunteer work in representing Maryland Community
Association interests before the Maryland General Assembly.



Thomas Schild was featured in a July, 2005 article in The Daily Record
regarding alternative dispute resolution procedures for condominium and homeowners
associations.
See full text of the article.
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. |



A
Maryland Task Force charged with studying common ownership communities
issued its report in December 2006, recommending several new laws
regarding the operation and management of Maryland condominiums,
homeowners associations and housing cooperatives.
-
Replacement Reserves. The Task Force recommended that the board of directors of
a common ownership community be required to conduct a reserve study at least
once every five years to determine the amount and necessity of reserves for
anticipated capital replacements, repairs, and improvements. The
reserve study should be reviewed annually to determine the amount of
reserves to be included in the budget for such replacements to maintain
adequate reserves for such replacements.
-
Manager Licensing. With regard to common ownership communities which hire outside management companies, the Task Force recommended that the
management companies be licensed by the State of Maryland and should be required to post a bond in order to obtain a license. The bond is intended to protect common ownership communities by providing recourse in the event of financial losses caused by the management company.
-
Insurance Deductibles.
With regard to condominium insurance deductibles, the Task Force noted
that existing law allows up to $1,000 of the condominium insurance deductible
for property damage losses to be shifted to the unit owner under certain
circumstances. The Task Force recommended that the current $1,000 cap on the
property insurance deductible be increased to $10,000.
-
Collection of Assessments. The Task Force recommended that common ownership community assessments
be given lien priority as of the date of recording in the land records of the declaration or other document that
authorized the imposition and collection of assessments by the common ownership community. The lien priority would be
limited to an amount equal to six months' worth of delinquent assessments, plus any late fees, attorneys' fees, and costs of suit, if authorized under the declaration or other governing document.
During the 2007 legislative
session of the Maryland General Assembly, numerous bills
were introduced to implement various Task Force recommendations. It is
anticipated that bills to implement some Task Force recommendations will be
introduced during the 2008 Maryland General Assembly session.
Click here to view
the full Task Force report.




A recent ruling of the Maryland Court of Appeals significantly affects the
statutory requirements for master policy property damage insurance
for Maryland condominiums.
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).




The Maryland Court of Appeals has ruled that short-term vacation rentals in
the Deep Creek Lake area in Garrett County, Maryland did not violate a
covenant requiring that homes be used for "residential purposes only".
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)



The
Maryland Court of Appeals ruled that a condominium unit owner did not
need to obtain approval from the condominium board of directors prior to
installing an exterior dryer vent to comply with the building code.
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).



A
condominium foreclosure sale on an assessment lien was upheld by the
Maryland Court of Appeals where the unit owner who contested the amount of
debt failed to seek a court injunction to stop the foreclosure.
The ruling of the Court of Appeals -- the highest Maryland appellate court
-- reversed the prior decisions of the trial court and Court of Special
Appeals which had invalidated the foreclosure sale because the Condominium
had refused to accept the condominium unit owner's good faith tender of
payment prior to the sale.
The Maryland Court of Special Appeals -- the intermediate appeals court --
in September, 2004 upheld the trial court's decision and ruled that the sale
was invalid because the Condominium impermissibly denied the owner the right
to stop the foreclosure by requiring the owner to pay $31,114.
The court agreed that the owner properly relied on the auditor's statement
from a prior invalidated sale that the amount due at the time of the
previous foreclosure was $3,411.
However, on further appeal, the Court of Appeals reached a different
conclusion in June, 2005, ruling that the unit owner did not properly
exercise the right to stop a foreclosure sale and redeem the property by
tendering an amount less than that claimed by the Condominium.
Rather, a debtor must offer to pay the stated outstanding debt or must file
a court motion to enjoin the sale from occurring. (Greenbriar Condominium
v. Brooks, decided June 22, 2005).
Top of Page




The
United States Department of Justice (DOJ) and Department of Housing and
Urban Development (HUD) issued a joint statement in March 2008 regarding the
reasonable modification requirements of the federal fair housing laws.
Reasonable modifications are not limited to the interior of a dwelling.
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




The
Maryland General Assembly in 2007 considered many bills regarding
condominiums, cooperatives, and homeowners associations. Some of these bills
were introduced to implement recommendations of the 2006 Maryland Task Force
on Common Ownership Communities.
A few of these bills passed. Most did not.
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.
Also enacted was a new law to permit a court to appoint a receiver to
conduct the affairs of a condominium or homeowners association where the
owners fail to establish a board of directors with enough members to
establish a board of directors with enough members to establish a quorum
under the association bylaws.
These new laws take effect October 1, 2007.



In response to the surge in conversion of residential apartments to
condominiums, numerous bills were introduced in the 2007 and 2006 General
Assembly to aid tenants faced with displacement.
In 2006, the Maryland Condominium Act was amended to include mentally disabled
individuals among those entitled to a 3-year extended lease.
Previously, the extended lease requirement only applied to a disability
based on limited physical mobility. The new provision applies to any
condominium where an application to register the condominium with the State
is filed after March 15, 2006.
Also enacted was a law to allow counties and municipalities greater
flexibility in setting income eligibility standards for qualifying
for the 3-year extended lease. The provision applies to any condominium
conversion where notice of intent to convert the building is given to
tenants after March 16, 2006.
Other State condo conversion bills which did not pass included the
proposals to increase the extended lease set-aside from 20% to 25% of the
rental units, lower the income eligibility criteria, increase the amount of
a tenant's moving expenses which a developer must pay, change the tenant
notice requirement, and increase the extended lease period from 3 years to 5
years.
In 2007, the procedures regarding condominium conversion notice and tenant
purchase offers were modified.



In
2004, a
new Maryland law established uniform standards for condominiums, homeowners
associations, and housing cooperatives for making association books and
records available for inspection and copying by owners. Previously,
the availability of such records varied depending on the type of
community association.
The new law requires disclosure of all books and records
except to the extent they concern personnel
records;
an individual's medical records; an individual's financial records;
records relating to business transactions that are currently in negotiation;
an the written advice of legal counsel; or minutes of a closed meeting of
the board of directors or other governing body.
This new books and records disclosure law follows the
existing law for homeowners associations with the additional exception for
minutes of closed meetings.
The 2004 Maryland General Assembly also passed a new law
which permits condominiums, homeowners associations, and housing
cooperatives to provide meeting notices and deliver information to owners by
electronic transmission where certain conditions are met. Such
transmissions must be capable of creating a record which may be retained,
retrieved, reviewed and reproduced in paper format by the recipient.
The electronic transmission law also permits an owner to
submit a vote or proxy electronically where it is verified that the action
is authorized by the owner.
Another new law will preempt
association prohibitions on display of the United States flag. An
association may not prohibit or unduly restrict the display of one portable,
removable United States flag. However, an association may still adopt
reasonable rules regarding the placement and manner of display of flags and
flagpoles.



Many Montgomery
County associations are now seeking to transfer structural maintenance
responsibility for storm water management facilities to Montgomery County.
Under the maintenance transfer program
started in 2002, 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.
Top of Page




A
new federal flag law was signed into law in late July, 2006.
Aimed specifically
at condominiums, homeowners associations, and housing cooperatives, the
Freedom to Display the American Flag Act prohibits an association
from restricting or preventing a member of an association from displaying
the flag of the United States on the member's residential property or
exclusive use area.
However, community
associations may establish reasonable restrictions pertaining to the "time,
place, and manner of displaying the United States flag" where such
restrictions are "necessary to protect a substantial interest" of the
association. Additionally, flags must be displayed in a manner
consistent with the United States Flag Code and any rule or custom
pertaining to proper display or use of the American flag.



Major
changes in the federal bankruptcy laws will benefit community associations
in collecting assessments. The Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005 ("2005 Bankruptcy Act") establishes the most
comprehensive bankruptcy law revisions in nearly 30 years.
Prevention of
Bankruptcy Abuse
The new bankruptcy
law makes it more difficult for individuals to eliminate personal
obligations to pay debts through a chapter 7 bankruptcy. By establishing an
income/expense-based "means" test, fewer people will qualify to file a
chapter 7 bankruptcy and will only be eligible for a chapter 13 bankruptcy.
In a chapter 13 bankruptcy, all or part of the debt is typically repaid in 3
to 5 years.
The 2005 Bankruptcy
Act also increases the amounts debtors pay in a chapter 13 bankruptcy so
associations will receive more of the pre-bankruptcy assessments than in the
past.
Community
Association Assessments
The 2005 Bankruptcy
Act also includes a specific provision which aids community associations in
collecting assessments which are due after a chapter 7 bankruptcy is filed.
An individual will continue to be responsible for payment of condominium,
cooperative and homeowner association assessments for so long as the
individual or bankruptcy trustee has a legal, equitable, or possessory
ownership interest in the property.
Previously, a
chapter 7 debtor was not liable for post-bankruptcy condominium or
cooperative assessments if he no longer occupied the dwelling or received
rent from leasing it.
The 2005 Bankruptcy
Act applies to any bankruptcy filed after October 16, 2005.


The
United States Department of Housing and Urban Development ("HUD") and
Department of Justice ("DOJ") have issued a joint statement on the
provisions of the Fair Housing Act ("Act") which require housing providers
to make reasonable accommodations to individuals with disabilities.
One type of
disability discrimination prohibited by the Act is the refusal to make
"reasonable accommodations" in rules, policies, or practices or services
when such accommodations may be necessary to afford a person with a
disability an equal opportunity to use and enjoy a
dwelling, including
public and common use spaces. A "reasonable accommodation" is a
change, exception, or adjustment to a rule, policy, practice or service.
The joint statement issued by HUD and DOJ provides guidance on how to
respond to requests for accommodations. (Joint Statement,
Reasonable Accommodations under the Fair Housing Act, May 17, 2004).
Top of Page




Thomas
Schild Law Group was a 2007 Educational Sponsor of the Community Association
Institute's Washington Metropolitan Chapter
Annual Conference and Expo.
In April
2007, Tom Schild taught a two-day course on Community
Governance in Las Vegas, Nevada, as part of the National Conference of
the Community Associations Institute. . .He also taught that course in
Charleston, South Carolina in August, 2005, in Cincinnati, Ohio
in March 2006, Baltimore, Maryland and Alexandria, Virginia in November 2007. Tom Schild also taught a two-day course on The Manager and The Law
to association managers in Naples, Florida in April, 2005. The courses
are part of the Professional Manager Development Program of the Community
Associations Institute.




Tom Schild
taught a portion of a program on problem solving for
condominiums and homeowners associations in Maryland.
Sponsored by Lorman Education Services, the program was held in
Gaithersburg, Maryland in April, 2006. He also taught a portion of a Lorman
program on legal aspects of condominium and homeowners association
development in February, 2006.



In 2007, Christopher Hitchens is serving as a
Hearing Panel Chair for the Montgomery County Commission on Common
Ownership Communities. He leads
arbitration hearings involving disputes between homeowners and associations.



Tom Schild participated in a panel presentation regarding Community
Association Meetings for managers of the Chesapeake Region Chapter of the
County Associations Institute in October, 2007.
In September, 2006, he presented a program on Developer to Homeowner Transition for the
CAI Chesapeake
Region Chapter.
In
October, 2007 Tom Schild taught Essentials of Community Association Volunteer
Leadership in Rockville, 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 Germantown Maryland in April, 2007.
In February,
2006, Tom Schild presented a program in Washington, D.C. on Investor --
Owners and Tenants. The program was part of the Annual Conference and Expo
of the Washington Metropolitan Chapter of the Community Association
Institute (WMCCAI).




Tom Schild serves as Chair of the Maryland Legislative Action
Committee (MD-LAC) of the Community Association Institute. The Committee formulates
and represents CAI's views on proposed state legislation and on matters
under study by the Maryland Task Force on Common Ownership Communities. In
April 2007 CAI National named the MD-LAC the 2006 Legislative Action
Committee of the Year.
In
November, 2006, Tom Schild received the 2006 Public Advocate Award from CAI's Washington Metropolitan Chapter in recognition of his volunteer
work in representing Maryland community association interests.



Christopher
Hitchens serves on the Legislative Committee of the Washington
Metro Chapter of the Community Association Institute. The
Committee monitors and participates in legislative matters in Montgomery,
Prince George's, Frederick, and Charles counties.
Top of Page