Maryland Gov. Harry Hughes has signed a condominium conversion bill designed to close loopholes in a consumer protection law approved last year, extending it to most developers who were not already in the process of converting last June.
The original conversion law contained information requirements and provided for assistance to elderly and handicapped tenants in the event of conversions. At the same time, it exempted developers who merely issued notices before July 1, 1981, that they intended to convert units.
This led to some developers issuing a notice when they actually had no immediate intention of converting an apartment building, simply so they would be exempted in the event they did decide to convert sometime in the future.
Under the newly signed legislation, a developer can be exempted only if he meets one of three tests:
The units already have been offered for sale and the developer has buyers under contract on at least 35 percent of the units by this Monday, in cases where the apartment building has not actually be converted into a condominium.
The building has been converted to condominium status by this Monday, units are offered for sale by April 15, and 10 percent are sold by May 15.
The building was bought in 1980.
The last exemption was added because several developers testified that they had bought with the intention of converting but delayed plans because of high interest rates and a surplus of condominium housing. Those in the last category are exempted from most of the consumer protection provisions but still must provide relocation assistance, the right of first refusal on a unit to the tenant and a three-year extension of leases for the elderly and handicapped.
The consumer protections that now apply to condominium conversions generally include the preparation of an extensive public offering statement, giving details of the project and the specific units and what will be done with them, before units are offered for sale.