Condominium Act Amendment Requires Adopted Annual Budgets To Be Distributed To Unit Owners

An amendment to Section 11-109.2 of the Maryland Condominium Act passed during the 2020 session of the Maryland General Assembly requires that the budget adopted at an annual meeting be distributed to each unit owner no more than 30 days after the meeting at which the budget was adopted.  The distribution may be made “by electronic transmission, by posting on the condominium association’s home page, or by inclusion in the homeowner association’s newsletter.”  An amendment to the same effect was enacted as to Section 11B-112.2 of the Maryland Homeowners Association Act.  The new law takes effect on October 31, 2020.

Unit Owner Insurance Deductible Responsibility Increased to $10,000

Legislation enacted during the 2020 session of the Maryland General Assembly increases the amount for which an individual unit owner is responsible where the cause of damage to any portion of the condominium originates in their unit.  Under Section 11-114 of the Maryland Condominium Act, condominium master policies must cover property damage to all of the condominium structure, including both the common elements and units as originally constructed and finished by the developer, with the unit owners providing individual insurance for their improvements and personal contents.  If damage originates in an individual unit, the owner is responsible for the insurance deductible under the condominium’s master policy, up to a maximum cap, which has been set a $5,000.  The new law increases that cap to $10,000, and will take effect on October 1, 2020.  The statute  will now provide:  “If the cause of any damage to or destruction of any portion of the condominium originates from a unit, the owner of the unit where the cause of the damage or destruction originated is responsible for the council of unit owners’ property insurance deductible not to exceed $10,000.”  Any remaining deductible amount remains a common expense.

Condominiums Should Be Seeking Coronavirus Advice

As multi-family housing communities, condominium’s need to be particularly mindful regarding the impact the Covid-19 pandemic.  I have received a number of requests for guidelines, and condominiums are correct to reach out for advice from their attorneys and property managers.  There should be clear communications issued to the community concerning complying with social distancing requirements within the premises.  This includes such matters as restrictions on the use of facilities, issues relating to visitors and deliveries, and contact with employees, contractors and vendors who may be on the property.  Notifications need to be provided as to how scheduled meetings will be conducted, as well as instructions with regard to contacts with board members and management.  A specific plan needs to be in place for dealing with owners who request deferral or other accommodations with regard to the payment of assessments.  And special instructions need to be established for the dissemination of information about the presence in the community of someone who has tested positive for Coronavirus, or is in self-quarantine as a result of experiencing symptoms or having had contact with an infected person.  It is extremely important to seek professional guidance at this time as to what policies need to be in place and the content of communications with unit owner members.

Proposed Legislation Clarifies That The Percentage Needed For Approval Of Bylaw Amendments Is Based On Owners “In Good Standing”

A bill pending in the Maryland General Assembly would make clear that all percentages for approval of amendments to bylaws be determined based on the number of owners “in good standing.”  Owners “in good standing” are those not more than 90 days delinquent as to the payments of assessments and other charges.   House Bill 556 would clarify Section 11-104(e)(6)(ii) of the Maryland Condominium Act, which provides that amendments to the bylaws require the approval of  at least 60% of the unit owners “in good standing.”  That provision also recognizes that approval of bylaw amendments may be based on “a lower percentage if required by the bylaws.”  It was unclear, however, in instances where  the bylaws permit a lower percentage, whether the percentage required is also be based on owners “in good standing;” or whether that limitation only applies when the approval of 60% or more is required.  The proposed legislation would make clear that, if there is a lower percentage required under the bylaws, the percentage of approval is also be based on the number of owners “in good standing.”  The bill would also amend Section 11B-116(c) of the Homeowner Association Act to clarify this same issue.

Proposed Legislation Would Require Unit Owner Participation On a Condo’s Board of Directors During the Period of Developer Control

House Bill 1053, now pending in the Maryland General Assembly, would make significant changes affecting the operation of a condominium during the period of developer control.  The proposed law would require the developer, within 30 days after 25% of the units are sold, to appoint at least one board member who is a unit owner and unaffiliated with the developer.  If there is no board at that time, the developer would be required to create one.  Additionally, the developer would be required to keep separate books and records for the condominium apart from the developer’s own business records.

Once the unit owners take control, the bill would require the developer to provide notice of any bond provided by the developer to a government agency, and to provide advance notice of the developer’s intention to request that it be released from a bond.

The bill would also require, in all circumstances, that a condominium governing body meet at least two times per year.

The bill calls for similar requirements to be be applicable to homeowner associations.