Special Client Letter – October 2021

On Behalf of | Oct 1, 2021 | Legislative Updates

MARYLAND LEGISLATIVE UPDATE 2021

Lauri J. Corley, Esq.

There are seven new laws that were passed during the 2021 Maryland Legislative Session that directly impact community associations in Maryland. All of the new laws are effective October 1, 2021, with the exception of the new law pertaining to virtual meetings which became effective on June 1, 2021.

Virtual Meetings

(HB 1023/CH 524)

The virtual meetings law impacts cooperative housing corporations, condominium associations, and homeowner’s associations, and addresses meetings conducted or attended by telephone conference, video conference, or similar electronic means, including calling the meeting, establishing a quorum, casting ballots, and taking nominations from the floor for the election of members of the governing body (i.e., Board of Directors).

  • Calling an Electronic Meeting. Under the new law, the applicable governing body of a cooperative housing corporation, condominium association, or homeowners’ association may authorize any meeting of the membership, the governing body, and/or any committee to be conducted or attended by telephone conference, video conference, or similar electronic means subject to the requirements set forth. Specifically, for any meeting conducted through electronic means, (a) the equipment or system used must permit any meeting participant in attendance to hear and be heard by all other participants in the meeting; and, (b) a link or instructions on how to access the meeting must be included in the meeting notice.
  • Establishing Quorum. The new law provides that any person attending an electronic meeting shall be deemed present for purposes of establishing a quorum at that meeting.
  • Voting. With respect to voting at an electronic meeting, the governing body may set a vote to be held and may include a ballot with the notice of the meeting sent to the homeowners. However, only those persons present at the electronic meeting may vote by ballot (similar to in-person meetings). If a member or owner is not present at the electronic meeting than that person may vote by proxy subject to any requirements of the governing documents of the association or applicable statutes. Further, any ballots cast during the electronic meeting must be submitted to the association no later than 24 hours following the conclusion of the meeting and the time for submission must be included in the notice.
  • Nominations From the Floor for Election of Members of the Board of Directors. Notwithstanding any language in the governing documents of the cooperative housing corporation, condominium association and/or homeowners association, nominations from the floor are not required under the statute if at least one candidate has been nominated to fill each open position of the Board of Directors.

The law became effective on June 1, 2021.

Meeting Requirements

(HB 593/CH 500; SB 535/CH 501)

This law affects both condominium associations and homeowners associations. With respect to condominium associations, it modifies the existing provisions in Section 11-109(c)(8) of the Maryland Condominium Act pertaining to calling a reconvened meeting. It further creates a process for a homeowners associations to call a reconvened meeting under a new Section 11B-111(6) of the Maryland Homeowners Association Act instead of relying on the procedures generally established for Maryland corporations under a separate provision contained in the Maryland Corporations and Associations Article.

  • Condominium Associations. The following amendments to Section 11-109(c)(8) of the Maryland Condominium Act are significant and will impact all meeting notices as follows:
  • The notice of the initial meeting must include the date, time and place of the potential additional meeting.
  • The additional meeting must be held no less than 15 days from the date of the original meeting.
  • A separate notice of the additional meeting is required and must be delivered, mailed or sent by electronic transmission no less than 10 days before the date of the additional meeting. However, the means of providing notice of the additional meeting has been expanded to include mailing, electronic transmission, advertisement in a newspaper, or posting on the homepage of the Condominium’s website.

This will require Boards of Directors and/or managers to plan for an additional meeting ahead of time to ensure proper notice is provided in the additional meeting notice to the Unit Owners.

  • Homeowners Associations. Section 11B-111(6) of the Maryland Homeowners Association Act now establishes a procedure for calling an additional meeting of the Owners if a quorum is not established at the initial meeting. The provisions in the new law mirror the requirements under the Maryland Condominium Association Act for calling an additional meeting, as well as, establishing a quorum and voting at such meeting. Specifically, the initial notice of the meeting of the Owners must include the date, time and place of the additional meeting, the additional meeting must be held no less than 15 days from the initial meeting and notice of the additional meeting must be sent to the Owners no less than 10 days prior to the additional meeting. The additional meeting notice may be delivered by regular mail or electronic transmission, advertised in a local newspaper, or included on the homepage of the association’s website. Further, the Owners present, in person or by proxy, at the additional meeting will constitute a quorum, and, unless the Bylaws of the association provide otherwise, a majority of those Owners present may vote to approve any action which may be taken at the additional meeting; the quorum and voting requirements must be included in the initial meeting notice as well.

This law becomes effective on October 1, 2021.

Reserve Studies – Montgomery County Common Interest Communities Only

(HB 567/ CH 433)

This new law extends the reserve study and reserve funding requirements already applicable to Prince George’s County common interest associations to cooperative housing corporations, condominium associations, and homeowner’s associations in Montgomery County, Maryland. This law establishes the amount of reserves which must be budgeted for each year in the annual budget of the association. The amount of reserve funding is based on the most recent reserve study prepared for the association in accordance with the timing set forth in the new law as follows:

  • Cooperatives, Condominiums, and Homeowners Associations in Montgomery County Established on or after October 1, 2021. The new law requires the following:
  • Cooperatives:
    • A cooperative housing association in Montgomery County established on or after October 1, 2021, must have an independent reserve study completed at least 30 calendar days before the first meeting that members, other than the owner, have a majority of votes in the cooperative.
  • Condominium Associations:
    • A condominium association in Montgomery County established on or after October 1, 2021, must have an independent reserve study completed at least 30 calendar days before the meeting of the Council of Unit Owners at which the members of the Board of Directors are elected by the Unit Owners and not by the Condominium Developer pursuant to Section 11-109 (c)(16) of the Maryland Condominium Act.
  • Homeowners Associations:
    • A homeowners association in Montgomery County established on or after October 1, 2021, must have an independent reserve study completed at least 30 calendar days before (but not more than 90 calendar days before) the first meeting of a homeowners association at which the members of the Board of Directors are elected pursuant to Section 11B-106.1 of the Maryland Homeowners Association Act.
  • Cooperatives, Condominiums, and Homeowners Associations in Montgomery County Established Before October 1, 2021. If a cooperative housing corporation, condominium association, or homeowners association established before October 1, 2021, commissioned a reserve study after October 1, 2017, then the association must update the reserve study within 5 years. However, if the association has not had a reserve study conducted since October 1, 2017, then the association must have a reserve study completed no later than October 1, 2022.

All reserve studies must be updated at least every 5 years thereafter.

Although the current laws concerning reserve studies and funding requirements apply only to community associations in Prince George’s County and Montgomery County, the Maryland General Assembly has attempted to pass these regulations State-wide in previous legislative sessions. The Maryland legislature further intends to propose a State-wide reserve law again for consideration in the upcoming legislative session. In light of the tragedy that occurred at the Champlain Towers South Condominium in Surfside, Florida, we believe there will likely be enough support to pass the bill. Accordingly, we recommend that all of our community association clients located outside of Prince George’s County and Montgomery County take proactive steps to have an updated reserve study conducted (if one has not been completed in past few years) and review the amount of reserve funding and increase the same (if necessary) as you begin to work on your annual budgets for 2022.

This law becomes effective on October 1, 2021.

Impermissible Restrictions on Use – Portable Basketball Apparatuses

(HB 1347/CH 143)

Pursuant to the language adopted, a community association is prohibited from imposing unreasonable limitations on the location and use of a “portable basketball apparatus,” where the property owner owns or has the exclusive right to use of the area in which placement and use of the apparatus is to occur. A “portable basketball apparatus” means any portable apparatus or device designed for recreational use in conjunction with the game of basketball; it does not include basketball hoops that are affixed to the exterior of a home. An “unreasonable limitation” includes a limitation that significantly increases the cost of using the apparatus; or decreases the ability to use the apparatus as designed and intended. The law, however, is not applicable to historic property that is listed in, or eligible for inclusion in, the Maryland Register of Historic Properties.

As this new law may affect enforcement of existing covenants, rules and regulations and/or architectural violations, we recommend contacting our office to discuss any current violations that your association may be pursuing. In addition, if your association is interested in regulating the location and use of portable basketball apparatus, please contact any of our attorneys to discuss potential amendments to your association’s governing documents and/or appropriate rules and regulations.

This law becomes effective on October 1, 2021.

Restrictions on Use – Low–Impact Landscaping

(HB 322/CH 368)

The new law prohibits unreasonable limitations on “low-impact landscaping” in any deeds, declarations, contracts, bylaws or rules of a condominium association or homeowners association, security instrument, or any other instrument affecting the transfer of real property or any other interest in real property; provided that, the landscaping is on property which an owner owns or has the exclusive right to use and the owner maintains the landscaping. “Low-impact landscaping” is defined in the new law to mean “landscaping techniques that conserve water, lower maintenance costs, provide pollution prevention, and create habitat for wildlife”, and includes gardens intended to attract wildlife and/or pollinator species, rain gardens and similar features, and xeriscaping.

An unreasonable limitation means one that significantly increases the cost of the landscaping, significantly decreases the efficiency of the landscaping, or requires cultivated vegetation to consist in whole or in part of turf grass. However, an association may adopt reasonable design and aesthetic guidelines regarding the type, number, and location of low-impact landscaping features. The law is not applicable to historic property that is listed in, or eligible for inclusion in, the Maryland Register of Historic Properties.

As this new law may impact enforcement of existing covenants, rules and regulations and/or architectural violations, we recommend contacting our office to discuss any current violations that your association may be pursuing. In addition, if your association is interested in regulating the location of low-impact landscaping, please contact any of our attorneys to discuss potential amendments to your association’s governing documents and/or appropriate rules and regulations.

This law becomes effective on October 1, 2021.

Rights and Restrictions – Composting

(HB 248/CH 459)

This new law addresses an owner’s rights with respect to composting and impacts both condominium associations and homeowners associations.

  • Condominium Associations. Under the new law, the governing documents of a condominium association may not prohibit or unreasonably restrict a Unit Owners from contracting with a private entity to collect composting materials from a Unit Owner which would then be composted at a composting facility. Unreasonably restricting or prohibiting a Unit Owner from composting organic waste materials for the Unit Owner’s personal or household use includes provisions in the governing documents that unreasonably impedes the ability of a private entity to access the Common Elements for the purpose of collecting organic waste materials from a Unit Owner. A Unit Owner is not permitted under this law to compost organic waste material within the Unit or any Limited Common Element that such Unit Owner has the right to use.
  • Homeowners Associations. The new law prohibits any provisions in the governing documents from prohibiting or unreasonably restricting a Lot Owner from composting on the Owner’s Lot for the Owner’s personal or household use; provided that, the Lot Owner owns or has the right to exclusive use of the area where composting is conducted and is in compliance with all the local and State laws, or from contracting with a private composting service to collect materials from the Owner’s Lot. Further, any restriction on the ability of a private entity to access the Common Areas for the purpose of collecting organic waste materials from an Owner shall be deemed an unreasonable restriction and is not enforceable by the homeowners association.

This law becomes effective on October 1, 2021.

Electric Vehicle Recharging Equipment for Multifamily Units Act

((HB 110/CH 455; SB 144/ CH 456)

This new law impacts condominium associations and homeowners association and establishes standards relating to the installation and use of electric vehicle recharging equipment (i.e., property used for recharging motor vehicles propelled by electricity) (the “EV Equipment”) by a homeowner in the owner’s deeded or assigned parking space. The statute sets forth that any provision of a recorded covenant or restriction, a declaration, bylaws, or rules and regulations of a condominium association or homeowners association is void and unenforceable if it: (1) conflicts with the new law; or, (2) effectively prohibits or unreasonably restricts the installation or use of EV Equipment in an owner’s deeded or assigned parking space.

With respect to approval of the installation of the EV Equipment, an owner must submit an architectural modification request as required by and in accordance with the governing documents of the applicable association. However, if an application is not denied in writing within 60 days of submission of the application, the application is deemed approved, unless the delay is due to a reasonable request for additional information. This may differ from your association’s governing documents if they provide for an automatic disapproval of architectural modification requests which are not approved within a certain period of time. Moreover, the application must be approved if it complies with the requirements set forth in the statute concerning the effect of the EV Equipment on the areas surrounding the parking space, the owner must agree in writing to, among other things, comply with all building codes, the association’s architectural guidelines, use a licensed contractor for the installation and pay for electrical usage. Further, the owner and each subsequent owner must be responsible for all costs associated with the installation, maintenance, repair, removal as well as for any damage to the EV Equipment and/or any damage to any common elements of a condominium or common areas of a homeowners’ association resulting from the installation, maintenance repair, removal or replacement of the EV Equipment. Moreover, owners are responsible for obtaining any permit or approval that is required by the county or municipal corporation in which the association is located.

In addition, the law authorizes the Board of Directors to grant a licensee for up to 3 years, renewable at the option of the Board of Directors, for use of any common elements as necessary for the installation and/or for the supply of electricity to the EV Equipment. For a condominium association, the right to grant a license for these purposes does not require compliance with Section 11-125 of the Maryland Condominium Act.

Lastly, the new law requires an owner to name the association as an additional insured under the owner’s insurance policy, or the owner must reimburse the association for any increase in the association’s insurance policy as a result of the installation and use of the EV Equipment.

Our office recommends that you contact us if you receive a request for the installation of EV Equipment. Over the past few years, we have assisted our clients with reviewing architectural applications for the installation of EV Equipment including analyzing how the installation may affect the common elements of a condominium and/or common areas of a homeowners association and what, if any, easements or licenses may be required for the installation. We have also prepared written agreements between our clients and a homeowner which incorporate all of the requirements set forth in the statute as well as other protections for the community such as indemnification provisions and recoupment of attorneys’ fees in the event of default, to name a few. If you receive an owner request to install EV Equipment, please contact any of our attorneys and we would be happy to help guide you through this process and prepare any necessary documentation to project the interests of the community. Further, if you are considering adopting or amending any existing covenants and/or rules and regulations concerning electric vehicles charging equipment, we can assist you with drafting those provisions as well.

This law becomes effective on October 1, 2021.

If you have any questions or concerns regarding these new laws, please contact any of our attorneys here at Nagle & Zaller.