House Bill 1080, now pending in the Maryland House of Delegates, would establish revised disclosure requirements and procedures in both initial sales and re-sales of residential condominium units. The most extensive changes would impact re-sale contracts. In addition to providing purchasers with additional rights of rescission, councils of unit owners would be required to furnish information requested by a seller to be disclosed to a purchaser with seven days after the request rather than the current twenty days. In particular, purchasers would be entitled to receive notice of any significant change in the disclosure information once it is provided. With regard to re-sales of existing condominium units, the proposed new law would amend Section 11-135 of the Maryland Condominium Act, which requires certain disclosures to purchasers by both the council of unit owners and the selling unit owner. The bill would also add new Section 11-135.1 to exclusively apply to condominiums having less than seven units. With regard to initial sales of new condominium units, the proposed law would amend Section 11-126, and impose certain new disclosure requirements on developers.
The specific items and information required to be provided in connection with re-sale of a unit would remain the same as presently contained in Section 11-135(a) without change. However, when a seller submits a written request to the council of unit owners for the required information to be disclosed to a purchaser, the council would have only seven days, rather than the current 20 days, to provide the disclosure information. The seven-day period in which the purchaser can rescind the contract after receipt of this information would remain the same.
The bill would also amend Section 11-135 to require that the purchaser be “given notice of any changes in the mandatory fees and payments exceeding 10% of the amount previously stated to exist and any other substantial and material amendments to the disclosures after they become known to the seller.” In other words, the seller must be apprised of significant changes in the disclosure information that occurs after it is originally provided to them. The purchaser would have three days following receipt of the revised information to cancel the contract.
If information that is required to be disclosed in not provided at least seven days before the contract is entered into, the purchaser would have seven days to rescind the contract after the information is received.
Disclosure requirements for condominiums with less seven units would now be codified in a new Section 11-135.1, with the same changes provided for larger condominiums.
With regard to the initial sale of new condominium units, the bill would amend Section 11-126 to require a developer to also give “notice of any changes in the mandatory fees and payments exceeding 10% of the amount previously stated to exist and any other substantial and material amendments to the public offering statement after they become known to the vendor.” A purchaser would have a new right of rescission within three days of receiving any such revised information.
As with re-sales, if information that is required to be disclosed in not provided at least seven days before the contract is entered into, the purchaser would have seven days to rescind the contract after the information is received.