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2016 Hot Topics: Maryland Legislation

Posted by IKO Community Management on May 12, 2016 at 8:30 AM

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Several bills that affect condominium and homeowners association operations are being considered by House and Senate legislative committees of the Maryland General Assembly, including:

Resale Disclosures

A bill regarding resale disclosures will cap the amount that an association or management company could charge an owner for providing the governing documents and other information in connection to the sale of the owner’s home.

As introduced, the bill will limit the charge to $250. It will also allow additional charges of $100 for property inspection of covenant violations, and up to $100 for providing an expedited response to request for resale disclosures.

Condo associations are already required to provide the resale disclosure documents, but, if enacted, homeowners associations will have to oblige an owner who is selling a home in an HOA neighborhood.

Condo Construction Warranty

There’s also a bill for the amendment of the Maryland Condominium Act. The bill acts to prevent residential condo developers from including provisions in sale contracts and governing documents, which ultimately limit the condo associations’ ability to file suit to enforce construction warranties.

The provisions in sales contracts and governing documents that will be prohibited in the bill include:

  • Shortening the statute of limitations applicable to any legal claims
  • Waiving the “discovery rule” or other accrual date applicable to claims
  • Preventing a condo association from bringing claims on behalf of two or more unit owners
  • “Disallowing developer-imposed requirements that, as the condo association obtains the approval of unit owners, the developer or other as a condition to commencing mediation, arbitration or litigation on behalf of the condo association”

Annual State Registration

Another bill in legislation is the requirement of annual state registration of all condos, HOAs, and co-ops. It will require these associations to provide contact information for the associations’ board members, employed attorneys, and management companies as well as information regarding the number and type of residential units, fidelity insurance, replacement reserves, grievance procedures, and any other information required by the Maryland Department of Assessments and Taxation.

Amendment of Governing Documents

There’s also a bill to make condo and HOA declarations, bylaws, and other governing documents easier to amend. It will allow a proposed amendment to be enacted by a vote of owners in “good standing,” which includes owners who aren’t more than 3 months in arrears in association payments and have satisfied other requirements of the bylaws.

According to this new bill, an amendment can be passed by two-thirds of the total vote of owners in “good standing,” or by a lower percentage if required in the governing document. The legislation will also allow an owner’s failure to vote to be counted as that owner’s approval of the proposed amendment.

As of early March, none of these proposed bills have been enacted and remain under review by legislative committees. To become law, a bill must be passed by the Maryland House and Senate and signed by the governor.

We will keep this post updated as needed.

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Topics: HOA Board