Legislation pending in the Maryland General Assembly would limit attorney’s fees recoverable by condominiums from unit owners, and by homeowners associations from lot owners, in connection with collecting assessments or fines. House Bill 1532 would add new Section 11-110.1 to the Maryland Condominium Act and new Section 11B-117.1 to the Homeowners Association Act. It would prohibit a council of unit owners or homeowners association from demanding, collecting or seeking to recover attorney’s fees from a unit owner “unless the amount of the attorney’s fees is reasonable in relation to the amount in controversy or the nature of the non-monetary violation.
The new Section would apply to any action in which the council of unit owners seeks to (1) recover attorney’s fees from an owner; (2) impose a lien on a unit based on a unit owner’s failure to pay regular or special assessments; or enforce a non-monetary violation of the declaration, bylaws, or governing documents. It is expressly provided that there would be a rebuttable presumption that the attorney’s fees claims are reasonable in relation to the controversy. A unit owner, or a court on its own initiative, may challenge that rebuttal presumption, at which point the council of unit owners would have the burden of proving the reasonableness of the attorney’s fees by a preponderance of the evidence. The bill would also provide that, where all or substantially all of a claimed amount is for attorney’s fees, the Maryland Contract Lien Act will not apply. Instead, that claim would have to be enforced like any other claim without a right to impose a lien.