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Maryland Legislative Update

Maryland law for Condominiums and HOAs

2020 Maryland Legislative Session

The 2020 session of the Maryland General Assembly ended early in mid-March due to the Coronavirus health crisis. However, several important changes were made to the Maryland condominium, homeowner association, and housing co-operative laws.

Condominium Insurance Deductible. The Maryland Condominium Act was amended to increase from $5,000 to $10,000 the amount which a unit owner may be required to pay when the cause of fire, water or other casualty damage to units or the common elements originates in that owner's condominium unit. Beginning October 1, 2020, for condos which have a deductible of at least $10,000 on the condominium master policy, an owner will be responsible for the first $10,000 of repair costs.  If the insurance deductible is less than $10,000, a unit owner will be responsible for the lower deductible amount.  The condo association will be responsible for the repair cost in excess of the deductible amount.

Governing Document Amendments.   The governing documents of Maryland condominiums and homeowner associations often require that amendments to the governing documents must be approved by up to 100 percent of the lenders who hold the mortgage on the owner's property. The Maryland Condominium Act for several years has allowed lender approval of most condominium amendments to be presumed if a lender does not object to the amendment within 60 days.

A new Maryland law extends the presumed lender consent to amendments to a condominium declaration and to all governing documents of a homeowners association, including the declaration of covenants, bylaws, deed and agreement, and other recorded covenants and restrictions.  The new amendment procedure is included in the Maryland Condominium Act and Maryland Homeowners Association Act, effective October 1, 2020.

Annual Condo and HOA Budget.  All Maryland condominiums and homeowner associations are now required to submit the approved annual budget to all owners within 30 days after the meeting at which the budget was adopted.  This is in addition to the requirement that the proposed annual budget be provided to owners at least 30 days before it is adopted.  The budget information may be provided by email, posting on the association website or inclusion in the association newsletter.

Replacement Reserve Funding. A reserve study to determine the funding needed for future major repairs and replacement of common property in condominiums, homeowner associations, and housing cooperatives in Prince George's County, Maryland  is required by a new Maryland law, effective October 1, 2020.

The replacement reserve study must be prepared by a qualified professional and identify each structural, mechanical, electrical, and plumbing component of the common property and any other components that are the responsibility of the condo, HOA or coop to repair and replace.  It must also state the normal useful life and estimated remaining useful life of each component; state the estimated cost of repair or replacement; and state the estimated annual reserve amount necessary to accomplish any future repair or replacement.

The new Maryland law also requires the annual budget of a condominium, HOA and coop in Prince George's County to include reserves equal to the funding amount recommended in the most recent reserve study.

Similar legislation which would apply to all condominiums, co-ops and homeowner associations in Maryland was considered but not enacted in 2020.

 

2019 Maryland Legislative Session

No new laws regarding community association governance were enacted in 2019.

 

2018 Maryland Legislative Session

The hot topic during the Maryland legislative session was how Maryland will adapt to the recent changes in federal income tax and health insurance laws. Beyond the headlines, the Maryland General Assembly considered many bills which directly affect Maryland condominiums, homeowner associations, and housing cooperatives. Several new laws were enacted.

Suspension of Parking and Amenities.  A bill to make it easier for condominium associations to collect delinquent assessments by suspending use of the common area parking lots and recreational facilities was enacted.   The new law allows approval by 60 percent of the total eligible votes to amend a condo declaration to provide for suspension of use of these portions of the condominium property when an owner is delinquent in paying the condo assessments for more than 60 days. This is far less than the 80 percent minimum required by the Maryland Condominium Act for other declaration amendments, and some older condo documents require as much as 100 percent approval. The new amendment procedure takes effect October 1, 2018.

Purchaser Protections.  Beginning October 1, 2018, condo developers will no longer be able put provisions in condominium bylaws or sales contracts which shorten the time for condo associations and owners to file suit against the developer regarding construction defects. This applies to claims which allege failure to comply with implied statutory warranties, building codes, government approved plans and specifications, or manufacturer's installation instructions.

Separately, a new law will allow for an earlier turnover of developer control of a homeowners association by preventing developers from using disproportionate weighting of votes for lots owned by the developer. Instead of getting multiple votes for each lot, the developer will have one vote for each lot which has been subdivided, recorded in the land records, and not yet sold to a member of the public.

Discriminatory Covenants. Where covenants restrict ownership based on race, religious belief, or national origin, the board of a homeowners association must delete these unenforceable restrictions from common area deeds and declarations by September 30, 2019. The board may delete these restrictions without action by the homeowners, as of October 1, 2018. The final version of this legislation eliminated proposed provisions which would have created new fair housing liability for HOAs.

 

2017 Maryland Legislative Session

During the 2017 Maryland legislative session, the General Assembly considered many bills regarding condominium and homeowner association governance, foreclosure procedures, state registration of community associations, and regulation of community association managers.

Legislation passed includes bills to make it easier to amend a community’s governing documents; require lender notice of foreclosure sale postponement and cancellation, and require community associations to provide owners with notice of common property sales, including government tax sales.

Document Amendments.  The vote required to amend bylaws of a condominium, and the declaration or bylaws of a homeowner association, has been reduced to 60 percent of the members in good standing, or a lower percentage if allowed by the document amended.  Owners are in “good standing” if payment of association assessments or other charges are not more than 90 days past due.

Previously, the minimum necessary for amending condominium bylaws was 66 and 2/3 percent of all of votes of all owners.  For HOA’s, declaration amendments often require approval by 80 percent or more of the homeowners.

The new lower approval standard will make it easier for condos and homeowner associations to make changes to their governing documents beginning October 1.

Lender Foreclosure Sales.  When a lender postpones or cancels a foreclosure sale, notice will now have to be sent to a condominium or homeowners association which has recorded an assessment lien at least 30 days before the foreclosure sale date.  This additional notice is intended to help associations better monitor the status of foreclosures and assist in collecting delinquent assessments when a sale is delayed or canceled.

Because notice of postponement or cancellation must also be provided to the property owner, the owner will know of the continuing obligation to pay the mortgage and association assessments.

Sale of Common Area.  A new requirement for a condo or HOA to notify owners of sale of the association common property was enacted.  Notice can be provided by sending to each owner, or posting a sign on the property and including on any association website.

HOA Resale Inspection Fee.  A bill to allow a fee of up to $100 for inspecting a home in connection with issuance of a resale  certificate was amended before being passed to allow an inspection fee of up to $50 only if the fee is authorized by the HOA governing documents.

 




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