Maryland House of Delegates Passes Bill To Raise Condo Unit Owner Responsibility for Insurance Deductible

By a vote of 139 – 0, the Maryland House of Delegates has passed legislation that would make condominium unit owners responsible for a larger amount of the insurance deductible when the condominium’s policy pays for damage from an issue that originates in the owner’s unit.  Under Section 11-114, a condominium must maintain property insurance on the entire property, including the common elements and the units, except for improvements and betterments installed in the units by the owners. Where damage originates from a component of a unit, the liability of the unit owner is limited to the insurance deductible under the condominium’s policy up to a maximum of $5,000.  HB 249 would double the unit owner responsibility to $10,000.  The bill also adds clarifying language with regard to damage that is a common expense.  The current law provides that any damage originating from the common elements is a common expense.  HB 249 provides that this also would include damage originating from “an event outside of the condominium units and the common elements.”  The bill now moves onto the Senate Judiciary Committee.

Proposed Bill In the Maryland General Assembly Would Increase Condominium Lien Priority

A bill introduced in the Maryland House of Delegates would increase the number of months of unpaid condominium assessments that have a priority over mortgages in the event of foreclosure.  HB 250 would amend Section 11-110(f) of the Maryland Condominium Act to provide that six months of unpaid assessments for common expenses have a priority over a first mortgage or first deed of trust. The current law provides that four months of unpaid assessments have priority.  The proposed law would also significantly expend the charges that can be included in the priority lien.  Under the existing provisions, the priority portion of a condominium’s lien may not include (1) interest; (2) costs of collection; (3) late charges; (4) fines; (5) attorney’s fees; (6) special assessments; and (7) any other costs or sums due under the declaration or bylaws, or as provided by any contract, law or court order.  HB 250 would entirely reverse this limitation, and provide that all seven of these items may be included in the portion of a condominium’s lien that has a priority.

The bill has been assigned to the Environmental and Transportation Committee, and will have its first hearing on February 12, 2019 at 1:00 pm.

Governor Approves Bill To Permit Suspension of Use of Facilities By Condo Owner Who Is Delinquent In Paying Assessments

Governor Larry Hogan has signed into law House Bill 575, which permits a condominium declaration to provide for the suspension of the use of parking or recreational facility common elements by a unit owner who is more that sixty (60) days in arrears in the payment of assessments.  The new law, which takes effect on October 1, 2018, will add new Section 11-103(d) to the Maryland Condominium Act, requiring that, prior to any suspension of privileges, the council of unit owners must first send a demand letter giving the unit owner ten  (10) days in which to pay the arrearage, or request a hearing to contest the suspension.  If a hearing is requested, the council must provide notice and hold the hearing before a suspension of privileges may be implemented.  The new law further provides that a condominium declaration may be amended to add or repeal such a provision for suspension of privileges by the affirmative vote of sixty percent (60%) of the unit owners.  House Bill 575 was passed unanimously by both the House of Delegates and State Senate.

Governor Hogan Approves New Law Preventing Developers From Limiting Condo Owners’ Rights of Action for Construction Defects

Maryland Governor Larry Hogan has approved a new law intended to prevent condominium developers from including provisions in the project’s governing documents and sales contracts that limit the ability of the unit owners to bring claims for construction defects.  The provisions of Senate Bill 258 and House Bill 77 will now become law as of October 1, 2018.  New Section 11-134.1 of the Maryland Condominium Act protects 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 new law prohibits 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.  The new law expressly only applies prospectively, and does not affect any governing documents recorded or contracts executed prior to October 1, 2018.

 

Maryland House of Delegates Passes Legislation Allowing Suspension of Use of Common Elements for Delinquent Accounts

The House of Delegates of the Maryland General Assembly has passed legislation that authorizes a condominium declaration to provide for the suspension of  the use of parking or recreational facility common elements by a unit owner that is more than 60 days in arrears in the payment of assessments.  House Bill 575 would amend Section 11-103 of the Maryland Condominium Act by adding new subsection (d).  The measure would require the condominium to provide the delinquent unit owner with 10 days notice, within which the unit owner may pay the delinquent assessment or request a hearing to contest the suspension.  The proposed law also allows an amendment to a declaration to add such a suspension provision with the approval of only 60% of the unit owners, regardless of what super majority is otherwise called for in the governing documents.  The bill is now under consideration in the Senate.

Maryland General Assembly Considers Bill To Significantly Reduce The Percentage of Votes Needed To Amend a Condo Declaration

House Bill 179 filed in the Maryland General Assembly would reduce the percentage of votes required to amend a condominium declaration.  Under current law, as provided in Section 11-103(c) of the Maryland Condominium Act, “80 percent of the unit owners listed on the current roster” must consent to an amendment of the declaration.  The proposed bill would reduce the required percentage to 60 percent.  Moreover, it would potentially have the effect of further reducing the number of affirmative votes needed by changing the voting pool from including “the unit owners listed on the current roster” to including only “unit owners in good standing.”  “Good standing” is defined in the bill as “not being more than 90 days in arrears in the payment of any assessment or charge due to the condominium.”  Accordingly, unit owners who do not qualify as being in “good standing” would be excluded from the pool of voters, of which 60 percent would be need to approve an amendment.