Proposed Bill Would Prohibit Limitations On Disclosures Of Agreements To Unit Owners

Legislation now pending in the Maryland  House of Delegates would prohibit condominium boards from withholding legal agreements from unit owners, and would prevent developers from including provisions in the governing documents, sales contracts, or  settlement documents that bar disclosure to unit owners of settlement terms.  House Bill 30 would add new Subsection (c) to Section 11-109.1 of the Maryland Condominium Act, which addresses the requirements for closed door meetings of the board of directors, providing that “[n]othing in this section may be interpreted to, authorize the board to withhold or agree to withhold from the unit owners information about any legal agreement to which the board is a party.”  Additionally, the proposed law would amend Section 11-134.1 to provide that any provision in (1) the declaration, (2) the bylaws, (3) a contract for an initial sale from the developer, or(4) an agreement to settle a disputed claim, is unenforceable if it “[p]rohibits the disclosure to the unit owners of any term of an agreement to settle a disputed claim.”

Proposed House Bill Would Clarify Procedures for Mortgage Holder Approval of Amendments

Legislation being introduced in the 2020 session of the Maryland General Assembly would require holders a mortgage or deed of trust on a condominium unit to provide a written objection in writing to a proposed amendment to the declaration within 60 days of receiving notice, or be deemed to have consented to the amendment.  HB 25 pending in the House of Delegates is intended to address an uncertainty arising from provisions in condominium declarations requiring that mortgagees and holders of deeds of trust approve amendments.  A question has often arisen as to what happens if a mortgage holder receives notice of a proposed amendment, but does not respond.  HB 25 would amend Section 11-103(c) of the Maryland Condominium Act, and establish a 60-day period for holders of mortgages or deeds of trust to respond after receipt of the proposed amendment, or be deemed to have consented.  However, the proposed change does carve out three specific exceptions to the 60-day rule for any amendment that would (1) alter the priority of the lien; (2) materially impair or affect the unit as collateral; or (3) materially impair or affect the right of the holder of the mortgage or deed of trust to exercise any rights under the mortgage, deed of trust, or applicable law.  Amendments falling into those categories would still require actual approval by the mortgagee or deed of trust holder.  It is also noteworthy that the proposed legislation is limited to proposed amendments of the declaration, and does not address provisions requiring that holders of mortgages or deeds of trust approve amendments to the by-laws.

The Persistence of Prejudice

Here is a link to my opinion/commentary in today’s Baltimore Sun that you can copy and past to your browser:  http://digitaledition.baltimoresun.com/infinity/article_share.aspx?guid=f83309e8-b53c-4a5e-a07c-8548819a0b6f

New Maryland Law Affects Developer Voting Rights in an HOA

Governor Hogan has signed into law legislation adopted by the General Assembly during 2019 session that deals with the voting rights of developers in homeowner associations where not all lots have been sold.  Senate Bill 305, which was passed unanimously by both Houses and signed by the Governor on April 30, 2019, amends Section 11B-111.7 of the Maryland Homeowners Association Act, and addresses the votes to which a developer is entitled with respect to whether lots have been subdivided and recorded.  Of course, any lot that has been sold must have first been subdivided and recorded.  The issue has been the developer’s votes on unsold lots that have not been subdivided and recorded.  Under current law, which will be changed when the new law takes effect on October 1, 2019, until all of the lots have been subdivided and recorded, a developer is entitled to the number of votes equal to the number of unsold lots that have been subdivided and recorded but remain unsold.  There is no vote for lots that have not yet been subdivided and recorded.  The new law provides that, once all of the lots have been subdivided and recorded, the developer is entitled to one vote per lot that remains unsold.  But, until all of the lots have been subdivided and recorded, the developer’s votes are to be as provided in the governing documents; i.e., the governing documents  control until every lot has been subdivided and recorded.  So developers will have control of determining the number of votes to which they are entitled by addressing the issue when the governing documents are prepared.  Arguably, however, if the governing documents are silent on the issue, the developer gets no votes on unsold lots until each and every lot is subdivided and recorded.

Condominium Bills That Passed the House of Delegates But Were Not Voted on in the Senate

The following House of Delegates bills in 2019 session of the Maryland General Assembly passed in a vote of the full House but failed to get out of committee in the Senate:

HB207 concerning members qualified to vote to amend bylaws.

HB249 concerning responsibilities for insurance deductibles.

HB392 concerning dispute resolution procedures.

HB655 concerning denial of rental licenses for units with assessments in arrears.

HB825 concerning rights of holders of mortgages and deeds of trust in connection with declaration amendments.

HB826 concerning unit owner’s installation of electric vehicle charging equipment.

HB1037 concerning council of unit owner meeting requirements.