A bill moving through the Maryland legislature would establish a standard procedure for condominiums, cooperatives and homeowners associations to follow when filing and enforcing liens against the property of individual members -- a measure seen by many condominium associations as necessary in light of a recent court decision declaring some of the procedures unconstitutional.
The Maryland Court of Special Appeals ruled in late January that the procedure for filing liens against condominiums in Maryland does not provide adequate due process, a ruling that could create problems for condominium associations because it invalidates the only method they have of recovering overdue assessment payments.
In Surfside 84 Condominium Council of Unit Owners v. James S. Mullen, the court ruled that a condominium association had denied a delinquent owner his constitutional right to due process by not notifying him or giving him a hearing before filing a lien against his unit.
The Maryland Condominium Act, as it stood at the time the Surfside council filed the lien several years ago, required only that the lien be signed and verified by an officer or agent of the council of unit owners, which it had done.
Although the condominium act was amended last summer to require that the unit owner be notified and given an opportunity to request a hearing before the condominium association's board of directors, some lawyers in Maryland have said they are not sure if those new requirements meet the due process test defined by the appeals court.
"It is not clear whether the current procedure is or isn't constitutional, because the only thing before the court was the statute as it stood at the time the lien was filed," said Roger Winston, a lawyer who sits on the Governor's Committee on Condominiums, Cooperatives and Homeowners Associations.
Winston said the new bill, which would standardize lien procedures for condos, co-ops and homeowners associations -- known as the contract lien provision -- would conform with the constitutionality test and validate the right of homeowners associations to use liens as a method of enforcement.
Representatives of homeowners associations testified at a public hearing before the governor's committee last summer that it was difficult in some jurisdictions for associations to file or enforce liens because the statutory right of associations to use liens had never been clearly established.
"This bill would establish a procedure that would have to be followed," said Winston. "One of the problems with the lack of clear statutory authority for homeowners associations has been that each one follows its own procedure. There is no telling if the procedures of all the different associations meet the constitutionality test or not."
Winston said that the three-judge panel that ruled on the Surfside case said that an association had to, at a minimum, give "notice and opportunity for hearing appropriate to the nature of the case."
It is the requirement of an "appropriate" hearing that raises doubts over the current Maryland law. That law requires only that the condominium owner be given a hearing before the directors of the condominium association.
"It could be argued that if the board of directors was serious enough about the problem to file a lien they would probably be unlikely to change their minds, even after a hearing," said Winston.
Under the procedures outlined in the bill, an association that wanted to file a lien against a delinquent member would have to give the member written notice by certified or registered mail. The member would then have 30 days to file a complaint in circuit court to determine whether probable cause existed for the lien.
Once the member filed his complaint in court, the burden of proof would shift to the association. If the member did not file a complaint, the association could file the lien.
Some associations have opposed passage of the contract lien bill on the grounds that the procedures are unduly burdensome to them.
"They feel that if someone owes them $90 it will cost them much more than that just to break even," said Winston. He said that proponents of the bill believe that would only be true in cases where the delinquent members have a legitimate reason to believe the outstanding dues could be contested.
"And in those cases," said Winston, "that's the purpose of having procedures that protect an individual's right to due process."