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Several changes in Maryland condominium and HOA laws will affect the operation of condo and homeowners associations in 2018. Community associations and their Board of Directors are advised to act cautiously when interpreting amendments to the Maryland Homeowner Association Act and the Maryland Condominium Act.
Suspension of Use of Common Elements - Condominiums
There has been an ongoing discussion about a Condominium Board’s ability to suspend the use of parking or recreational facility common elements when a Unit Owner is in arrears in payment of assessments. The General Assembly passed and the Governor signed House Bill 575 effective October 1, 2018, giving the Board the suspension right if the Owner is more than 60 days delinquent in payment of any assessment. Such suspension may not be implemented until there is notification to the owner via a demand letter and a provision for the owner to request a hearing to contest the suspension in accordance with the dispute settlement mechanism contained in the Condominium Act.
The new law requires an amendment to the Condominium Declaration to provide for the suspension authority.The amendment requires the affirmative vote of at least 60% of the total eligible voters in the Condominium under voting procedures contained in the declaration or bylaws of the condominium.
CAUTION: "Eligible voters" is not defined in the Condominium Act so Boards should act cautiously when applying the new law until the Attorney General or the Courts weigh in on the apparently flawed amendment procedure.
Homeowners Associations – Number of Declarant Votes
House Bill 669 adds new Section 11B-111.7 to the Maryland Homeowners Association Act. It provides that until all lots in the HOA have been subdivided and recorded, the Developer of the Homeowners Association may exercise only one vote for each lot which it owns in the Association. Such lots must have been subdivided and recorded in the appropriate land records and must not have been sold.
This change prohibits the Developer from using some artifice to retain and exercise more and possibly absolute control over the affairs of the HOA than one vote per lot would permit. This is certainly beneficial to residential home purchasers as a consumer protection.
AMENDMENT OF GOVERNING DOCUMENTS: CONDOMINIUMS & HOMEOWNERS ASSOCIATIONS
For both Condominiums and Homeowners Associations, House Bill 789 enacted last year (2017) altered the definition of those owners who were entitled to vote on amendment of documents. The new requirement for voting is that the owners must be “in good standing” which means not more than 90 days in arrears in the payment of any “assessment or charge” due to the association. The second change reduces the percentage of votes necessary for the amendment to at least 60% of those owners who are in good standing AND vote in favor of the amendment.
For condominiums the new law applies only to amendment of bylaws if the bylaws provide for a vote of less than 60% the votes assigned in the bylaws would govern.
For homeowners’ associations, the 60% vote applies to all the “governing documents” including the declaration, bylaws, deed and agreement, and any recorded covenants and restrictions.
CAUTION: Interpretation of these changes rests with the meaning of “charge” which is undefined in either the Condominium or the HOA Acts. Additionally, the question of when the 90-day arrearage is calculated (on the date of the proposed vote, the date the votes are counted or the date the 60% approval is achieved)? The amendment of documents is critical to the operation of associations, these 2 issues must be resolved soon. Boards are advised to act cautiously until resolution by the Attorney General or the Courts.see all Community Association Law articles »
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