Two new laws directly affecting community associations were passed during the 2019 Maryland Legislative Session. First, Residents of 55 plus communities in Carroll County can now conduct a bingo game on the common areas of their community in addition to Mahjong and card games for a small wager (HB 1127/SB 786). Boards may want to consider adopting reasonable rules regulating the location and/or times when a resident may use the common areas for such games. We are happy to discuss whether your community would benefit from additional rules and regulations address gaming on the common areas.
The second law passed amends the bill passed during the 2018 legislative session that capped the number of votes a developer could cast prior to the date that all of the lots which could be part of an association were subdivided (See §11B-111.7 of the Maryland Homeowners Association Act). The cap limited the number of developer votes to one (1) vote for each lot that has been subdivided but not sold to a member of the public. Senate Bill 305, which has been signed into law by the Governor, amends §11B-111.7 of the HOA Act such that after all of the lots which may be part of the community are subdivided and recorded among the Land Records, the developer has one (1) vote per such lot which has not been sold. But, before that time, the developer may cast as many votes as set forth in the Declaration. This is a potential concern for any community association in which all of the lots have not yet sold and settled. Further, the new law is effective October 1, 2019, and appears to apply to existing and new communities alike. If you have concerns regarding the developer’s voting rights in your community, please contact our office.
Although only 2 bills passed, the General Assembly considered many bills which impact community associations. Below, is a recap of some of the laws which did not pass this year. Many of these same bills were also considered during the 2018 legislative session and are likely to be re-introduced again in 2020. The laws that did not pass, but may be considered in the future, include:
1. Powers of the Council of Unit Owners (HB 68/SB 379). This bill prohibits the governing documents from limiting the powers of the Council of Unit Owners to take legal action on behalf of itself and/or 2 or more Unit Owners and/or to enforce the implied warranties. However, the bill does create an exception by providing that the Bylaws may require use of mediation or arbitration for: (i) claims against the developer that the council of unit owner may assert related to the incorporation and powers of the council and, (2) implied warranty claims. This law was withdrawn before any vote of the House or the Senate was taken.
2. Implied Warranties on Common Elements (HB 69/SB 380). This bill clarifies that the implied warranty set forth under §10-203 of the Real Property Article is applicable to all common elements. Further, it attempted to expand the common element warranty protection to any portion of the condominium that the council of unit owners is required to maintain, repair and/or replace pursuant to the governing documents of the condominium which could include both common elements and portions of the units. This law was withdrawn before any vote of the House or the Senate was taken.
3. Amendment of Governing Documents (HB 207). The purpose of this bill was to clarify the required vote for amending the governing documents of a condominium or a homeowners’ association. This law passed in the House, but no vote was held in the Senate.
4. Condominium Insurance Deductibles (HB 249). This bill would have clarified that the condominium’s master insurance policy deductible is a common expense for any damage that originates from the common elements or from an event outside of the units and/or common elements. Further, for damage to the condominium originating from a unit, this law would have increased the portion of the condominium’s insurance deductible that the owner of the unit where the damage originated is responsible for from $5,000.00 to $10,000.00. This law passed in the House, but no vote was taken in the Senate.
5. Priority Lien Act (HB 250/SB 374). This bill would have increased a condominium’s the priority lien from 4 months to 6 months as well as removed the current $1,200.00 cap on the amount which may be given priority under the current law. This law did not pass in either the House or the Senate.
6. Dispute Settlement Procedures (HB 392/SB 723). This bill modified the existing dispute settlement mechanism under §11-113 of the Maryland Condominium Act by eliminating the requirement to hold a hearing prior to the imposition of a fine for violations of the rules unless a hearing is required by the alleged violator. In addition, this bill would have created a statutory dispute settlement mechanism for violations of rules in a homeowners’ association. This bill passed in the House, but no vote was taken in the Senate.
7. Residential Rental Licensing – Common Ownership Community Fees (HB 655). This bill would have required any owner of property subject to a condominium, homeowners association or a cooperative housing corporation to certify that the dwelling unit was not more than 60 days in arrears in the payment of assessments in order to obtain a new or renewal rental license. While certain counties already require a certification regarding payment of common ownership fees in order to obtain a rental license or renewal, this certification would have applied to all counties in Maryland. This bill passed in the House, but no vote was taken in the Senate.
8. Electric Vehicle Recharging Equipment (Electric Vehicle Recharging Equipment for Multifamily Units Act) (HB 826; see also, SB 822). This bill would have made certain provisions in the governing documents of a condominium and/or homeowners association void and unenforceable to allow for the installation of electric vehicle recharging equipment in certain parking spaces and under certain circumstances. This bill passed in the House, but no vote was held in the Senate.
9. Reserve Studies (HB 900). This bill requires the governing body of a cooperative housing corporation, condominium and/or homeowners’ association to conduct a reserve study every 5 years under certain circumstances. It also established certain criteria for the reserve study and required certain amounts to fund any reserve account. This bill was withdrawn before any vote of the House or Senate was held.
10. Reconvened Meetings (HB 1037). This bill amends the procedures for calling a second meeting of the unit owners if a quorum was not established at the initial meeting called for the same purpose. This law also creates a procedure under the homeowners’ association act for calling a reconvened meeting instead of such meeting being called in accordance with the Corporations and Associations Article of the Maryland Annotated Code. This bill passed in the House, but no vote was held in the Senate