Both the Senate and House of Delegates are considering legislation that would preclude a condominium developer from including provisions in the community’s governing documents or the sales contracts that limit the ability of the council of unit owners or individual unit owners to bring claims against the developer for construction defects. Senate Bill 258 and House Bill 77 are similar to legislation that was introduced and passed in the House during the 2017 legislative session. The proposed new law would cover claims relating to the developer’s failure to comply with applicable building codes; approved plans and specifications; product manufacturer’s installation instructions; or the implied warranties provided under Maryland law. The legislation would prevent a developer from including language in the condominium’s governing documents or in the purchase agreements that (1) shortens the applicable statute of limitations; (2) waives the application of the discovery rule or other means of determining the claim’s accrual date; (3) requires that the claim be submitted to arbitration within a period shorter than the applicable statute of limitations; or (4) operates to prevent the assertion of a claim within the applicable statute of limitations. (more…)
The United States District Court for the District of Maryland has denied a motion to dismiss filed on behalf of a developer, and allowed claims of a property owner’s association to proceed that concern actions taken while the board was under the control of the developer’s agents. In Greenspring Quarry Association, Inc. v. Beazer Homes Corp., Civil No. JKB-17-646, the association’s suit relates to charges for common area maintenance costs. The assoication alleged that the developer was to be responsible for such charges until title transferred to the association, and claimed that, during the period that the developer controlled the board, the management company had been instructed to bill the association for common area maintenance for several years before title was transferred. The court denied the developer’s motion to dismiss all claims, finding that there were sufficient allegations of an independent duty of care and reasonable reliance on the representations made, and that the claims were stated with sufficient particularity. Notably, the court found that the developer’s agents on the board assumed fiduciary duties to the association when they occupied the board seats.
Here is a link to my opinion/commentary in today’s Baltimore Suhttp://digitaledition.baltimoresun.com/infinity/article_popover_share.aspx?guid=cc83bd82-adfa-4b64-a256-ebb7d649fd53n:
Section 11-133 of the Maryland Condominium Act gives a council of unit owners the right to terminate leases, management contracts, employment contracts, and other contracts entered into by the developer during the period that the developer had control of a majority of the votes in the council. However, that right of termination must be exercised within three (3) years from the date on which majority control of the council passed from the developer to the unit owners. Termination of such contracts, if timely exercised, is effective upon thirty (30) days written notice of termination. Grants to any governmental entity or public utility are not subject to termination. Also, the right of termination exists only for residential, and not commercial, condominiums.
The Maryland Court of Appeals has invalidated a rule adopted by a condominium to suspend access to common elements for unit owners who are delinquent in paying assessments. In an opinion issued on June 23, 2017 in the case of Elvation Towne Condominium Regime II, Inc. v. Rose, No. 33, Sept. 2016, the Court held that, in order to restrict access to the common elements as a means of enforcing payment of condominium assessments, such a restriction must be provided in the condominium’s declaration. It may not be adopted by rule promulgated by the board of directors. The ruling affirmed prior rulings in the case by the Circuit Court for Anne Arundel County and the Maryland Court of Special Appeals. (more…)
Maryland Governor, Larry Hogan, has signed into law legislation passed in the General Assembly that requires a condominium council of unit owners or a homeowners association to provide at least 30-days notice to all owners of any sale, including a tax sale, of a common element in the condominium or common area in the HOA. What had been Senate Bill 809 and House Bill 1369 in the 2017 session will add new Subsection 11-108(d) to the Maryland Condominium Act, and new Section 11B-106.2 to the Maryland Homeowner Association Act. The notice required to be given must include written notice to every homeowner; posting of a sign on the property; and, if the association has a website, a notice on the home page.
Beginning in October, Maryland homeowner associations will have the right to collect a fee relating to inspections during the resale process. What had been House Bill 34 in the 2017 session of the General Assembly, and has now been enacted, entitles an HOA to charge “a reasonable fee not to exceed $50 for an inspection of the lot if required.” Under Section 11B-106 of the Maryland Homeowner Association Act, sellers are required to provide certain information to prospective purchasers, much of which is often provided by the Association. Under the statute, the Association can charge “a reasonable fee” for providing this information up to certain limits provided in the statute. The new law adds an additional fee charge for costs relating to an inspection of the property as part of the resale process.
The Maryland Senate failed to vote on SB 670, which would prevent condominium developers from limiting the ability of the council of unit owners and individual unit owners to bring claims for building defect issues. The House of Delegates version of the bill was approved by a vote of 136-0, but the Senate version did not make to the floor for a vote. The legislation was intended to prevent condominium developers from limiting the ability of a council of unit owners and individual unit owners to bring claims for building issues. The proposed law would prevent developers from including certain provisions in condominium governing documents or contracts of sale that act as an impediment to claims alleging the failure of the developer to comply with (1) applicable building codes; (2) plans and specifications for the project approved by the local governing authority; (3) manufacturer’s installation instructions for building products used the condominium; and (4) warranty provisions under Sections 10-203 and 11-131 of the Real Property Article. Under the bill passed by the House, a developer would be precluded from including provisions that: (a) shorten the statute of limitations for filing claims; (b) waive application of the “discovery rule” for purposes of determining when a claim accrued; (c) require the council or a unit owner in an arbitration proceeding to assert a claim within a period shorter than the applicable statute of limitations; or (d) operate to prevent a council or unit owner from filing a law suit, initiating arbitration proceedings, or otherwise asserting a claim within the applicable statute of limitations.
Maryland Governor, Larry Hogan, has signed into law a bill which will reduce the number votes required to amend condominium and homeowner association bylaws. What originated as House Bill 789, (now Chapter 480 of the 2017 legislative session), provides for a reduction in the required percentage vote for an amendment of the bylaws from two-thirds to 60 percent. The original version of the bill passed by the House of Delegates called for a reduction to 55%, but that was ultimately amended in the final version that was passed in both houses of the General Assembly. Additionally, the bill authorizes adopted bylaws to provide for a percentage lower than 60%. The new law will also limit the voting to members in “good standing, ” which is defined as not being more than 90 days in arrears with regard to assessment payments.
The new provisions will take effect on October 1, 2017.
Both houses of the Maryland General Assembly have passed an amended version of legislation that would reduce the number votes required to amend condominium bylaws. As amended, what originated as House Bill 789 would reduce the required percentage vote for an amendment of the bylaws from two-thirds to 60 percent. The original version of the bill called for a reduction to 55%, but that was ultimately rejected in the final version. However, the bill authorizes the bylaws themselves to provide for a percentage lower than 60%. The law would also limit the voting to members in “good standing, ” which is defined as not being more than 90 days in arrears with regard to assessment payments.
The approved legislation contains similar provisions to reduce the percentage vote required for bylaw amendments under the Maryland Homeowners Association Act.