The Maryland legislature has approved several changes to the state's condominium law, including a bill that establishes a standard procedure for condominiums, cooperatives and homeowners associations to follow when filing and enforcing liens against the property of individual members.
However, a bill that would have put into place tough new regulations for homeowners associations was defeated, despite strong support for the measure from many consumers and homeowners.
The homeowners association bill was drafted by the Governor's Commission on Condominiums, Cooperatives and Homeowners Associations last year after the commission found that many Maryland residents were concerned about problems stemming from the operation and legal structures of homeowner groups.
At hearings held last summer, residents complained that the lack of specific laws regulating homeowners associations had created problems ranging from citizens being unaware they would be required to join an association if they bought a particular house, to "gray" areas of the law that left many of the functions and responsibilities of such groups unclear.
The number of homeowners associations in Maryland has been increasing rapidly over the past several years, particularly in suburban areas around Baltimore and Washington.
Roger D. Winston, a Montgomery County attorney who chaired the commission's subcommittee on homeowners associations, said that almost every new subdivision in the Maryland suburbs has homeowners associations, primarily because counties are unwilling to accept maintenance responsbility for roads inside subdivisions. Developers are thereby required to set up some sort of organization to own and maintain the roads and other neighborhood amenities, such as pools, sidewalks and streetlights.
Winston said the homeowners association bill would have required associations to make extensive disclosure of association documents to prospective buyers and would have allowed anyone buying a house in a subdivision with such an association five days after signing a contract to change his mind.
The bill passed both houses of the Maryland General Assembly but as slighly different versions. When the House version was sent back to the Senate Judicial Proceedings Committee for approval it was tabled, and thereby killed.
The amendments, pushed by the real estate industry, would have prohibited local jurisdictions from enacting additional restrictions. Montgomery County's lobbiests fought to stop the bill in that version, concerned that such an amendment would restrict the county from enacting some consumer protections under consideration.
"I think everybody was generally happy with the substance of the bill outside of the local pre-emption issue," said Winston. "I expect the bill will be reintroduced next year after we can reach some kind of agreement."
The bill that establishes a standard procedure for condos, coops and homeowners associations to follow when enforcing liens -- known as the contract lien provision -- corrects a section of the state condominium act that was invalidated by a Maryland Court of Special Appeals decision handed down in January.
Filing a lien against the property of a condo or homeowners association member delinquent in his dues payments is the only method such associations have of recovering unpaid assessments. The special appeals court decision said that the condominium act did not provide adequate due process for property owners who have had liens filed against them.
There have been no state laws outlining any procedure for homeowners associations seeking to file liens. Representatives of homeowners associations testified last summer before the governor's commission that it was difficult in some jurisdictions for associations to file or enforce liens because the statutory right of homeowners associations to use liens had never been clearly established.
Under the procedures outlined in the contract lien provision, an association that wants to file a lien against a delinquent member will have to give the member written notice by certified or registered mail. The member then has 30 days to file a complaint in circuit court to determine whether probable cause existed for the lien.
Once the member has filed his complaint in court, the burden of proof shifts to the association. If the member does not file a complaint, the association can file the lien.
The legislature also passed a bill that requires a condominium developer to file an annual statement making changes and corrections in the condominium's public offering statement and detailing the progress of construction, repairs and promises contained in the public offering statement every year until the registration of the condominium is terminated.
In the past developers have only been required to file such a statement for the first two years of a condominium existence.
The legislature also passed bills that clear up ambiguities about certain terms contained in the condominium act, including "moving expenses" and "board of directors." When apartment buildings are converted to condominiums in Maryland, displaced tenants are entitle to be reimbursed up to certain limits for some moving expenses, including hiring movers and moving equipment, packing and unpacking personal property, costs of disconnect and installing personal property, and the cost of disconnecting and reconnecting utilities.
The legislature expanded the definition of a condominium's "board of directors" to include "any person to whom some or all of the powers of the council of unit owners have been delegated" under the terms of the condominium's bylaws.
The legislature also amended the condominium act to specifically state that condominium associations may charge unit owners for utility services on the basis of usage rather than on the basis of percentage interest in the association.
All the bills have been forwarded to Gov. Harry R. Hughes for signing.