The Maryland General Assembly is making another effort this year to pass stiff new regulations for homeowners associations across the state.
A similar measure passed both houses last year, but was killed in the final days of the legislative session when agreement could not be reached on a House-passed provision prohibiting local governments from enacting restrictions on the associations that are stiffer than the state's. Montgomery County officials had fought to keep the provision out of the bill and managed to kill the bill as legislators worked on a compromise.
The version proposed this year by the Governor's Commission on Condominiums, Cooperatives and Homeowners Associations says that local governments cannot enact additional regulations for homeowners associations, a provision that could jeopardize the bill again despite continued widespread support for it.
Nonetheless, Thomas Stone, director of legislative affairs for Montgomery County, said this week that, although the bill includes such language, it will not hamper the county's efforts to protect homeowners who belong to such associations. He said that if the language in the bill is not changed during the legislative process, it will have the support of most county legislators.
Roger D. Winston, a Montgomery County attorney who was chairman of the commission's subcommittee on homeowners associations, said the differences that prevented the bill from being adopted last year have been resolved, and the bill as drafted has support from a hefty majority of both legislative chambers.
The homeowners association bill, which would regulate homeowners association bylaws, responsibilities and rights, was drafted by the commission two years ago after it found that many Maryland residents were concerned about problems stemming from the operation and legal structures of homeowner groups.
At hearings held in 1984, residents complained that the lack of specific laws regulating homeowners associations had left some citizens unaware they would be required to join an association if they bought a particular house and that "gray" legal areas 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.
Winston said that almost every new subdivision in the Maryland suburbs has a homeowners association, primarily because counties are unwilling to accept maintenance responsibility for roads inside subdivisions. Developers therefore are required to set up some sort of organization to own and maintain the roads and other neighborhood amenities such as pools, sidewalks and street lights.
The proposed bill would require a developer selling a house in a subdivision with a homeowners association to make extensive disclosure to prospective buyers of association documents, budgets and contracts, as well as any development plans for the subdivision. The measure would allow anyone buying a house in a subdivision with such an association to rescind the purchase contract within five days of signing it.
The bill also would establish disclosure requirements for a homeowner reselling a home in a subdivision with a homeowners association, although those disclosure requirements are not as tough. In those cases, the owner of the house would have to make it clear if the house was in such a development, what the monthly association fees were for the preceding 12 months, the name and address of the association management and a statement of whether there is any litigation pending against the association.
If anyone selling a house in a subdivision with a homeowners association does not meet the disclosure requirements in the bill, the purchaser would be able to sue for damages within a year of the transaction.
The bill also would establish automatic warranties on common areas and amenities owned by the homeowners association. Such a warranty implies that the improvements to the common areas will be free from faulty materials, constructed according to sound engineering standards and in a workmanlike manner. The implied warranties on the improvements would last for one year.
Either a homeowners association or an individual lot owner would be able to sue for enforcement of the warranty within a year of the warranty period. The warranties, however, will not cover any common-area improvements completed before July 1, 1986.
The bill also would require homeowners associations to keep meetings open to the members of the association, except for certain legal matters. If a closed meeting is held, the association still would have to post the time, place and purpose and include any record of a vote in the minutes of the association. The law also would require associations to keep their books and records open for association members and lenders issuing mortgages for properties in the association.