We have been asked on numerous occasions recently to give guidance to our community association clients about disputes that arise with and between their members. Communities throughout Maryland, and across the country, grapple with these questions every day. Resolving disputes within a community association can be one of the most daunting tasks facing members of the Board of Directors or property managers. It can be a confusing process to the lay person and oftentimes is not as cut and dry as we legal practitioners would like. How a Board or property manager handles the first steps toward enforcement of a community's governing documents and dispute resolution can mean the difference between a functioning community and a dysfunctional one, between upholding and protecting the covenants, which in turn protect property values, and selective enforcement and losing the right to enforce. But what, exactly, do you do?
Many of our communities have expressed an interest in forming a neighborhood watch in order to assist with preventing crime and building stronger relationships with law enforcement. Though forming a neighborhood can be a great way to achieve these goals, a neighborhood watch could result in liability to the community. To reduce liability to the community, we recommend the following safe guards:
We have been asked on numerous occasions recently to provide guidance to our community association clients about the effects that bankruptcy has on their collections cases. The most common forms of bankruptcy by owners in the community association context are filed pursuant to either Chapter 7 or Chapter 13 of the United States Bankruptcy Code. Because of the confusion surrounding bankruptcy, many boards see bankruptcy as a negative for their community. Though the filing of bankruptcy certainly can have negative consequences, bankruptcies can actually be a good way for owners to restructure their debts and do not necessarily discharge all of the obligations owed to the community. That is, the bankruptcy may actually result in the association receiving more of the funds owed than they otherwise would have.
In a rare, unanimous, and bipartisan vote of 427-0, the U.S. House of Representatives approved the Housing Opportunity through Modernization Act ("the Act"). On July 29, 2016, President Obama signed it into law. The Act requires the Federal Housing Administration (FHA) to ease up on burdensome restrictions on condominium associations, in hopes of increasing the number of communities eligible to sell to homebuyers who qualify for FHA-insured financing.
As we enter the new year, we see new laws being passed at the local level that will affect our Prince George's County and Montgomery County clients.
A recent US Supreme Court decision will strengthen the position of condominiums and homeowners associations when their delinquent owners file Chapter 7 bankruptcy. Whereas, in a Chapter 13 bankruptcy, where the subject property has no equity (i.e. is "underwater"), the debtor may seek to "strip" the association's lien by filing a motion to that effect in the bankruptcy court (this varies by jurisdiction and by judge), it was not entirely clear whether the same action could be taken to strip a lien in a Chapter 7 bankruptcy.