LEGISLATIVE UPDATES (MARYLAND)

FOR HOMEOWNER ASSOCIATIONS & CONDOMINIUMS
 

Real Property - Condominiums, Homeowners Associations, and Cooperative Housing Corporations - Virtual Meetings

Real Property Article Sections 11-139.3 & 11B-113.6; and Corporations and Associations Article Section 5-6B-25.1

Applicable to Condos and HOAs

Effective June 1, 2021

 

This law generally permits the applicable governing body for a cooperative housing corporation, condominium, or homeowners association (HOA) to authorize any meetings to be conducted or attended by telephone conference, video conference, or similar electronic means subject to specified standards. The law also (1) addresses the use of such electronic means for meeting quorum and voting purposes and the inability for individuals to attend due to technical difficulties and (2) establishes that floor nominations are generally not required if at least one candidate has been nominated to fill each open position on a board or governing body.

 

What this means for your communities: ZOOM meetings are here to stay and have been officially sanctioned by the State legislature. Communities should pay close attention to the procedural requirements including the right to be heard and stipulations for floor nominations.
 

Electric Vehicle Recharging Equipment for Multifamily Units Act

Real Property Article Sections 11-111.4 & 11B-111.8

Applicable to Condos and HOAs

Effective October 1, 2021

 

This law establishes standards relating to the installation and use of electric vehicle recharging equipment in condominiums and homeowners associations (HOAs).

 

What this means for your communities: communities may not unreasonably deny the installation of electric charging equipment. This includes designated parking spaces in Condos and HOAs.  However, homeowners desiring to install equipment are responsible for all costs associated with such installation.

 

Condominiums and Homeowners Associations - Rights and Restrictions - Composting

Real Property Article Sections 11-111.4 & 11B-111.8 and 

Environment Article Section 9-1701

Applicable to Condos and HOAs

Effective October 1, 2021

 

This law prohibits a recorded covenant or restriction, a provision in a declaration, or a provision in the bylaws or rules of a condominium or homeowners association (HOA) from prohibiting or unreasonably restricting an owner from contracting with a private entity to collect organic waste materials from the owner for composting at a composting facility. For HOAs only, the law also prohibits a recorded covenant or restriction, a provision in a declaration, or a provision in the bylaws or rules of an HOA from prohibiting or unreasonably restricting a lot owner from composting organic waste materials for the owner’s personal or household use, as specified.

 

What this means for your communities: Composting must be permitted, however, the activity may be reasonably restricted 

 

Montgomery County - Cooperative Housing Corporations, Condominiums, and Homeowners Associations - Reserve Studies

Real Property Article Sections 11-109 et seq. & 11B-106.1 et seq. And Corporations and Associations Section 5-6B-26.1

Applicable to Condos and HOAs in Montgomery County ONLY

Effective October 1, 2021

 

This law requires a study every five years of the reserves needed for future major repairs and replacement of the common elements of a cooperative housing corporation or condominium, or the common areas of a homeowners association (HOA), in Montgomery County. Furthermore, the governing body of a cooperative housing corporation, condominium, or HOA in Montgomery County must provide funds to the reserve in accordance with the most recent reserve study, must review the reserve study annually, and has the authority to increase an assessment levied to cover the reserve funding amount required – despite any applicable provision restricting assessment increases or capping the assessment that may be levied in a fiscal year. The law does not apply to an HOA that issues bonds to meet capital expenditures.

 

What this means for your communities: If your community is located in Montgomery County, then it must address any reserve underfunding as soon as possible.  It should also make preparations for a reserve study and potentially a special assessment to properly fund its reserves.  Communities should be conscious of the five-year requirement and not delay.

 

Condominiums and Homeowners Associations - Meeting Requirements

Real Property Article Sections 11-109 & 11B-111

Applicable to Condos and HOAs

Effective October 1, 2021

 

This law establishes procedures by which a homeowners association (HOA) may call an additional meeting of the board of directors or other governing body, if the number of lot owners present in person or by proxy at a meeting is insufficient to constitute a quorum. The law also makes numerous clarifying and technical changes to corresponding provisions of the Maryland Condominium Act (MCA) and (1) specifies that the notice of the original meeting must contain the date, time, and place of the additional meeting; (2) specifies that an additional meeting called must occur no less than 15 days after the initial properly called meeting; (3) specifies that notice of the additional meeting must be provided, as specified, no less than 10 days before the additional meeting; and (4) newly authorizes delivery of notice of the additional meeting by advertising in a newspaper published in the county where the condominium is located or, if the condominium has a website, by posting on the homepage of the website.

 

What this means for your communities: this makes it easier to hold subsequent meetings of the Council or Association if there is insufficient quorum without having to rely on the procedures set forth in the Corporations and Associations Article. Communities should be mindful of all of the procedural requirements for holding subsequent meetings.
 

Southern Maryland - Dwelling Registration and Inspection - Fees and Fines

Public Safety Article Section 12-203

Applicable to Condos and HOAs in Charles County ONLY

Effective October 1, 2021

 

This law authorizes the county commissioners of a code home rule county of the Southern Maryland class (i.e., Charles County) to (1) require a property owner of a dwelling unit or a multifamily dwelling to register the dwelling with the county in order to offer units for lease; (2) charge a fee on a property owner for registering a dwelling unit or a multifamily dwelling with the county; (3) conduct inspections of a dwelling unit or a multifamily dwelling that is registered with the county to enforce minimum property maintenance standards; and (4) impose a fine on a property owner, as specified. The law also authorizes the county to adopt regulations relating to the registration of dwelling units or multifamily dwellings.

 

What this means for your communities: unless the community is located in Charles County, then the law will not affect it.  If it is located in Charles County, then homeowners desiring to lease their homes must register with the County, and communities may notify the County of leased homes that are in non-compliance with the law.

 

Water Infrastructure Assets - Authorization of Emergency Actions

Environment Article Section 5-509

Applicable to Condos and HOAs that own a reservoir, dam, or 

any other waterway construction

Effective July 1, 2020

 

This law modifies provisions related to the Maryland Department of the Environment’s (MDE) authority to respond to an emergency situation related to a “water infrastructure asset,” defined as a reservoir, dam, or any other waterway construction. A water infrastructure “asset owner” must reimburse MDE for costs incurred, and a lien must be established for nonpayment under specified circumstances. The law also establishes legal protections for MDE and the State.

 

What this means for your communities: If your homeowners association or condominium owns a reservoir, dam, or other waterway construction, then it should be aware of the Maryland Department of the Environment’s right, under emergency circumstances, to take over an asset, taking remedial action as necessary, and charging costs back to the association or condominium, with a right to lien.
 

Historic Revitalization Tax Credit - Expansion - Rehabilitation of Common Elements of Condominiums and Cooperative Projects

State Finance and Procurement Article Section 5A-303

Applicable to Condos 

Effective July 1, 2020

 

This law allows the rehabilitation of a condominium or cooperative project to qualify for the historic revitalization small commercial tax credit if the rehabilitation is undertaken by the governing body of the condominium or cooperative housing corporation and the rehabilitation targets only the common elements of the structure. The Maryland Historical Trust (MHT) must adopt regulations implementing the law. The law takes effect July 1, 2020, and applies beginning with tax year 2020.

 

What this means for your communities: If your community is rehabilitating its common elements and meets the MHT’s requirements, then it may qualify for the historic revitalization small commercial tax credit.  Generally, this only includes agricultural or post-World War II structures (built between December 31, 1944 and January 1, 1970).

 

Amendments to Declarations and Governing Documents

Real Property Article Sections 11-103 & 11B-116

Applicable to Condos and HOAs

Effective October 1, 2020

 

This law establishes that, if a declaration of a condominium or the governing document of a homeowners association (HOA) contains a provision requiring any action on the part of the holder of a mortgage or deed of trust on a unit in the condominium or a lot in the HOA, in order to amend the declaration or governing document, the provision must be deemed satisfied if specified procedures are followed. Those procedures include delivering a copy of the proposed amendment to the holder of a mortgage or deed of trust and providing them sixty (60) days to object or else consent is implied.  The law does not apply to amendments that alter the priority of the lien of the mortgage or deed of trust, materially impair or affect the unit as collateral, materially impair or affect the right of the holder of the mortgage or deed of trust to exercise their rights pursuant to said deed or mortgage.  In such cases, implied consent would not be implied and these procedures cannot be utilized.

 

What this means for your communities: This law makes the process somewhat easier when dealing with holders of mortgages or deeds of trust who must provide their consent to an amendment, but who do not actively participate in the amendment process.
 

Responsibility for Property Insurance Deductibles

Real Property Article Section 11-114

Applicable to Condos

Effective October 1, 2020

 

This law specifies that the council of unit owners’ property insurance deductible is a common expense if the cause of any damage to the condominium originates from an event outside of the condominium units and common elements. The law also increases, from $5,000 to $10,000, the maximum amount of the council of unit owners’ property insurance deductible that a unit owner is responsible for when the cause of damage to the condominium originates in a specific unit. The law applies to all policies of property and casualty insurance issued, delivered, or renewed in the State to a condominium council of unit owners on or after the law’s October 1, 2020 effective date.

 

What this means for your communities: Coverage by the council is expanded to include an event outside of the units and common elements.  This does not limit subrogation.  Also note the increase in maximum deductible amount responsibility.  Remember, the council is responsible for informing each unit owner annually in writing of the amount of deductible and the unit owner’s responsibility for the council’s property insurance deductible.

 

Prince George’s County - Cooperative Housing Corporations, Condominiums, and Homeowners Associations - Reserve Studies

Real Property Article Section 11-109 et seq. & 11B-106.1 et seq.

Applicable to Condos and HOAs in Prince George’s County ONLY

Effective October 1, 2020

 

This law requires a study every five years of the reserves needed for future major repairs and replacement of the common elements of a cooperative housing corporation or condominium, or the common areas of a homeowners association (HOA) in Prince George’s County. The law applies only to a cooperative or condominium in Prince George’s County or an HOA in Prince George’s County that has responsibility under its declaration for maintaining and repairing common areas. The law does not apply to an HOA that issues bonds to meet capital expenditures. The law also authorizes electronic transmission of notice regarding specified expenditures as a result of a budget amendment for HOAs.

 

What this means for your communities: If your community is located in Prince George’s County, then it must address any reserve underfunding as soon as possible.  It should also make preparations for a reserve study and potentially a special assessment to properly fund its reserves.  Communities should be conscious of the five-year requirement and not delay.

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Southern Maryland - Homeowners Association Commission - 

Alternative Dispute Authority

Real Property Article Section 11B-104 & 11B-116

Applicable to HOAs Charles County ONLY

Effective October 1, 2020

 

This law expands the authority of homeowners association commissions in code home rule counties in the Southern Maryland class to address disputes between a homeowners association (HOA) and a homeowner through alternative dispute resolution. The expanded authority authorizes a commission to hear and resolve disputes regarding the enforcement of the governing documents of the HOA. The law only affects Charles County since it is the only Southern Maryland County that is a code home rule county.

 

What this means for your communities: If your community is in Charles County, then it probably does not affect interactions with the Charles County Homeowners Association Commission since the law merely expands the definition of what causes of action can be brought before the Commission.

 

Real Property - Deletion of Unlawful Ownership Restrictions - 

Exemption from Fees and Surcharges

Real Property Article Sections 11B-113.3 & 3-601; Courts and Judicial Proceedings Article Section 13-604

Applicable to HOAs

Effective October 1, 2020

 

This law permanently exempts from specified fees and surcharges the recordation of a restrictive covenant modification or an amendment to the common area deeds or other declarations of a homeowners association (HOA) if the recordation is to modify or delete, in accordance with statutory provisions, a covenant or restriction that restricts ownership based on race, religious belief, or national origin. The law also repeals a reference to a statutory deadline by which governing bodies of HOAs were required to delete related recorded covenants or restrictions.

 

What this means for your communities: If your community has a discriminatory restrictive covenant that must be removed, then it will not be charged administrative fees for recording an amendment.

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Condominium Associations and Homeowner Associations - Adopted Annual Budget - Submission to Unit Owners and Lot Owners

Real Property Article Sections 11-109.2 & 11B-112.2

Applicable to Condos and HOAs

Effective October 1, 2020

 

This law requires the board of directors or other governing body of a homeowners association (HOA) and the council of unit owners or other governing body of a condominium to submit the adopted annual budget to the lot or unit owners no more than 30 days after the meeting at which the budget was adopted. The law authorizes the budget to be submitted to each lot or unit owner by (1) electronic means; (2) posting on the homepage of the entity; or (3) inclusion in the entity’s newsletter.

 

What this means for your communities: Remember to post the adopted budget or deliver it to homeowners within thirty (30) days of adoption.  Posting may occur electronically.

 

Real Property - Notice of Easements, Covenants, Restrictions, and Conditions - Recordation

Real Property Article Section 3-102.1

Applicable to Condos and HOAs

Effective October 1, 2020

 

This law allows for a specified notice to be recorded in applicable land records, and indexed in a specified manner, if a recorded easement, covenant, restriction, or condition has been granted, devised, dedicated, reserved, donated to, or otherwise affects an interest in real property.

What this means for your communities: Not much. The notice is discretionary and does not waive or impair the rights of pre-recorded easements, covenants, etc. It appears to be a method to provide additional, recorded notice regarding recorded easements, covenants, etc.

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Residential Property Foreclosure Procedures

Real Property Article Sections 7-105 et seq. & 14-126 et seq.

Applicable to Condos and HOAs

Effective October 1, 2019

 

This law substitutes the Commissioner of Financial Regulation for the Department of Labor, Licensing, and Regulation (“DLLR”) in certain provisions of law relating to the Foreclosed Property Registry; renumbers certain sections; makes technical changes; and generally relates to foreclosure procedures.

 

What this means for your communities: Not much.  Generally, foreclosure procedures have been updated with respect to renumbering sections, and instead of registering certain foreclosure notices with DLLR, the Commissioner of Financial Regulation is now in charge of such registries.  This law mainly affects the foreclosure procedures that collection attorneys must follow when filing a non-judicial foreclosure in the State of Maryland.

 

Carroll County - Gaming - Home Games - Bingo

State Government Article Section 9-1C-01

Applicable to 55+ Senior Condos in Carroll County Only

Effective October 1, 2019

 

This law adds bingo to the list of home games that an individual may conduct in a common area of a residential property that is restricted to residents that are at least 55 years old.  Additional restrictions apply, including a $1,000.00 limit on the total amount of money that may be wagered by all players during any 24 hour period.

 

What this means for your communities: If you reside in Carroll County, in a 55+ senior community, then you are now authorized to play bingo in your common areas for money given certain limits and restrictions.  Unfortunately, this law does not extend to other counties in Maryland.  Those communities can still play bingo, just not for money :(

 

Number of Declarant Votes

Real Property Article Section 11B-111.7

Applicable to HOAs

Effective October 1, 2019

 

This law was originally made effective on July 1, 2018.  The main thrust of the law remains intact, i.e. once the lots of a development have been subdivided and recorded among the land records, declarants are limited to one vote per lot for the homes that have not been sold to members of the public, notwithstanding language in the governing documents that may state otherwise.  It has since been amended to clarify that prior to the date of subdivision and recordation of the lots, the declarant may rely on the governing documents to determine the set number of votes.

 

What this means for your communities: If your homeowners association still has declarant owned lots, then the declarant is limited to one vote per lot for each lot still owned by it even if the governing documents state otherwise.  However, before such subdivision and recordation occurs, the declarant has the right to give itself any number of votes per lot as specified in the governing documents.

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Claims Against Developers and Vendors - Unenforceability of Certain Provisions

Real Property Article 11-134.1

Applicable to Condos Only

Effective October 1, 2018

 

This law establishes that any provision of an instrument, such as a declaration, bylaw, (“governing documents”) or contract for the initial sale of a condominium unit, made by a developer or vendor in accordance with the Maryland Condominium Act is unenforceable if the provision places specified limitations on specified building defect and other claims.

 

The law applies prospectively and may not be interpreted to have any effect on any provision of a declaration or bylaws of a condominium recorded in the land records of the county where the property is located or any other instrument executed before the law’s October 1, 2018 effective date.

 

What this means for your community: For Condominium’s built after October 1, 2018, provisions in the governing documents or other instrument that limit a unit owner, who is the initial purchaser of a unit, from filing a claim against the developer or vendor by shortening the statute of limitations or restricting the discovery rule are unenforceable.

 

Condominiums - Suspension of Use of Common Elements

Real Property Articles 11-101 & 11-103

Applicable to Condos Only

Effective October 1, 2018

 

This law authorizes a declaration of a condominium 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 delinquent in paying assessments. The law authorizes the council of unit owners to amend the declaration to add or repeal such a suspension provision by the affirmative vote of at least 60% of the total eligible voters of the condominium.

 

What this means for your community: Condominiums can now suspend parking privileges for unit owners that are delinquent in assessments provided certain conditions are met. Previously, the courts had cast doubt on a condominium’s authority to suspend parking privileges--this law provides clarity to this issue.

 

Deletion of Ownership Restrictions Based on Race, Religious

Belief, or National Origin

Applicable to HOAs Only

Real Property Article 11B-113.3

Effective October 1, 2018

 

The law requires the governing body of a homeowners association to delete any recorded covenant or restriction that restricts ownership based on race, religious belief, or national origin from the common area deeds or other declarations of property in the development by September 30, 2019.

What this means for your community: Unless your association contains restrictive covenants based on race, religion, or national origin, then this law will not affect you. However, if your governing documents do contain such restrictions, then they must be amended by deleting such covenants prior to September 30, 2019.

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Homeowners Associations - Number of Declarant Votes

Applicable to HOAs Only

Real Property Article 11B-111.7

Effective July 1, 2018

This law specifies that until all lots in a homeowners association (“HOA”) have been subdivided and recorded in the land records of the county in which the HOA is located, the declarant, when voting on an HOA matter, must have the number of votes equal to the number of lots that have been subdivided, recorded, and not yet sold to members of the public.

What this means for your community: The declarant can no longer give itself more votes per lot than other class members, for example, three votes for every one lot that is owned by the declarant. Essentially, one vote per lot, regardless if you are an owner or declarant.

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Amending the Governing Documents is Now Slightly Easier

Real Property Articles 11-104 & 11B-116

Applicable to HOAs & Condos

Effective October 1, 2017

 

The threshold for amending bylaws within a homeowners association or condominium has been lowered from 66 ⅔ percent to 60 percent (or by a lower percentage if required by the bylaws).  Those members in favor of an amendment must be in good standing, which means not more than 90 days in arrears for assessments or charges.

 

What this means for your community: Since it is now easier to amend the bylaws, communities may want to consider amendments to aging documents that affect collections, notices, meetings, etc.  Although the threshold has been lowered, it still requires more than a simple majority, but no longer a super majority.

 

Notice Requirement for Sale of Common Elements/Areas

Real Property Articles 11-108 & 11B-106.2

Applicable to HOAs & Condos

Effective October 1, 2017

 

While under declarant control, the declarant of a homeowners association or condominium must provide notice no less than 30 days before the sale of any common element or area by mail or posting.

 

What this means for your community: Not much.  Unless your community is still under control by the declarant, then this new law has no effect on homeowner controlled communities.

 

HOAs May Now Charge Up to $50 for Inspection

Real Property Article 11B-106

Applicable to HOAs Only

Effective October 1, 2017

 

While the sale of a home is under contract, a homeowners association may charge a reasonable fee not to exceed $50 for an inspection of a lot owner's lot IF the inspection is required by the governing documents of the homeowners association.

 

What this means for your community: Your homeowners association may now be able to recoup the cost of inspecting a lot that is under contract that it was not able to before the new law.  However, the inspection MUST be required by the governing documents to permit the charge.

 

Notice of Pending Foreclosure Sale

Real Property Article 7-105.2

Applicable to HOAs and Condos

Effective October 1, 2017

 

The new law requires the person authorized to make a foreclosure sale to give written notice of the proposed sale to a specified condominium or homeowners association that, at least 30 days before the date of the proposed sale, has recorded a statement of lien against the property.  It also requires the trustee, within 14 days after the postponement or cancellation of a foreclosure sale, to send a notice that the sale was postponed or canceled to the condominium or homeowners association.

What this means for your community: If your community holds a statement of lien recorded at least 30 days before the proposed sale, then you will receive notice prior to the sale, which would give you the option of satisfying the debt and to redeem the property.  Generally, this is not something a community would consider doing.  However, the pragmatic effect of the new law will make communities more aware of pending foreclosures and when those foreclosures have been canceled or postponed, which was not always the case.

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