Maryland's new condominium law, in effect for just four months, may have to be amended because of a loophole that has allowed hundreds of building owners to escape its provisions.
Enacted by the General Assembly last session, the law was supposed to provide limited protection to tenants of buildings being converted to condominiums -- protections such as guaranteed moving expenses and the option to buy a converted unit. Officials said, however, that the law's most visible effect so far has been to produce a flood of conversion notices in May and June from building owners who discovered they could circumvent the law by filing a notice to convert before the new rules became effective on July 1.
State and local officials estimate that hundreds and perhaps thousands of apartment renters around the state were sent notices, mostly in the last days of June, that their buildings would be converted to condominiums. Most of the building owners never intended to convert, at least not in the near future, these officials said. But by filing the conversion notice before July 1, an owner could avoid the tenant protections of the new law, should he ever decide to convert.
Gov. Harry Hughes is expected to propose an emergency amendment to the law within the next two weeks that will have the effect of voiding many of those bogus conversion notices and "grandfathering in" many of those building owners who thought they were escaping the new law.
"There were a lot of bogus notices sent out," said Assistant Attorney General Jay L. Lenrow. "We don't believe the legislature intended this result. The biggest problem these notices created was a tremendous fear and anxiety, especially among a lot of senior citizens and elderly people."
The governor's office and the attorney general's staff will not say exactly what they will propose. But real estate lobbyists and officials, who usually keep abreast of such things expect that the proposed amendment will stipulate that conversions must be accomplished by a certain date.
Officials in Montgomery County, where condominium conversion has been a problem for the last few years, say existing restrictions prevented a flood of notices before the new law went into effect. But in Baltimore, City Council member Mary Pat Clarke said at least 850 apartment units in that city received conversion notices. Clarke said that many elderly persons, frightened by the notices, have already moved.
Filing the notices, however, was not without its drawbacks for apartment building owners. Once a notice to convert is filed, a landlord cannot raise rents on his units, and tenants, even with long-term leases, can move out on 30 days notice. Lenrow said many owners are now trying to retract their conversion notices.