Community Associations Newsletter - January 2019

Date: January 31, 2019

Solar Energy Collection Systems in Maryland, D.C., and Virginia
By: Michael J. Bouey

The use of solar energy is on the rise, and with residential solar energy collection systems becoming more affordable and accessible, we are likely to continue seeing a substantial increase in the installation of residential systems over the coming years. If a property owner in your community has installed a solar collection system on their property, it is often quite noticeable. Most residential solar energy collection systems are made of large panels sprawled across the roof or exterior walls of a property. Although energy efficient and environmentally beneficial, it is a common complaint by members in the community that these systems are a visual blight and disrupt the aesthetic plan of the community. How should an Association handle these complaints? Can the Association do anything to prohibit or regulate the installation and use of solar energy collection systems? The following provides a brief description of the laws in Maryland, D.C., and Virginia concerning a community association’s ability to prohibit or regulate the installation and use of residential solar energy collection systems in the community.

In Maryland, a restriction on land use, which includes a covenant, restriction, or condition in a Declaration, Bylaws, or rules of a condominium or homeowners association, may not impose or act to impose unreasonable limitations on the installation of a solar collection system on the roof or exterior walls of an improvement on the property, which improvement is exclusively owned by the property owner. Md. Code Ann., Real Prop. § 2-119(b)(1). An unreasonable restriction is one that would significantly increase the cost of the system or significantly decrease the efficiency of the system. Md. Code Ann. § 2-119(b)(2). The statue, however, does not prohibit restrictions on the installation of solar collection systems on other parts of a property (e.g., yard, balcony floor, decks, fences, etc.). A community association may be able to restrict the installation of solar energy collection systems if they are installed in a place other than the roof or exterior walls of an improvement on the property.

Washington, D.C.
In July 2018, Solar Expansion for Cooperative Associations Act of 2018 (the “Act”) was enacted in the District of Columbia. Pursuant to the Act, a homeowners association, condominium owners association, or cooperative housing association cannot prohibit a property owner from installing or using a solar energy collection device on the owner’s property. See D.C. Law 22-142. However, a community association can (i) prohibit the installation of solar energy collection devices on the common elements, other than a roof that only covers one owner’s property or unit, and (ii) establish reasonable guidelines for the installation and use of such devices for the sole purpose of preventing nuisances to other property owners in the community.  Any guidelines established by the Association cannot be for the purpose of aesthetics. These guidelines can, however, provide that an owner be responsible for maintenance and repair of the solar energy collection device, as well as any damages caused by the installation or use of the device.
In Virginia, an Association cannot prohibit the installation of a solar energy collection system on a property owner’s property unless the recorded Declaration establishes such a prohibition. Va. Code § 67-701. Any such prohibition in another instrument, such as rules, regulations, bylaws, or policies is unenforceable. According to the Office of the Attorney General, a prohibition by any means other than a recorded declaration, prior to the adoption of Va. Code § 67-701, is not grandfathered in. Any prohibition not included in the recorded declaration, regardless of when it was established by the Association, is unenforceable. In a well-established community, it is unlikely that the recorded Declaration includes a prohibition on the installation of solar energy collection systems. Therefore, if the community association desires to have a blanket prohibition of solar energy collection systems in the community, the association’s Declaration needs to be amended in accordance with both the association’s governing documents and the Property Owners’ Association Act or the Condominium Act.

Short of amending the Declaration, the Association is permitted to establish reasonable restrictions on the size, location, and placement of such solar energy collection systems on a property designated for individual ownership and use. Va. Code. § 67-701(A). Additionally, an Association may also prohibit or restrict the installation of solar energy collection systems on the common elements. Va. Code § 67-701(B). Any restriction or prohibition on the installation or use of a solar energy collection system must be included in any resale certificate or disclosure packet given to a purchaser of a property in the community. Va. Code § 67-701(A).
D.C. Case Law Update

By: David M. Hornstein

Condominium foreclosures in the District of Columbia have recently been the subject of several appeals cases that have clarified how the court interprets the foreclosure provisions of the D.C. Condominium Act.  On December 17, 2018, the District of Columbia Court of Appeals issued a Memorandum of Opinion in the case of Green Parks, LLC v. PMT NPL Financing, docketed as CA-9733-15. 

In that case, Green Parks, LLC (“Green Parks”) appealed an order from the Superior Court granting summary judgment in favor of PMT NPL Financing (“PMT”) from a judicial foreclosure action.  This case is consistent with the recent string of cases in the District of Columbia dealing with D.C. condominiums and super-priority foreclosures.  The recent string of cases focuses on determining whether foreclosures held pursuant to the D.C. Condominium Act are considered “super-priority” foreclosures or foreclosures subject to the first deed of trust, regardless of how the foreclosures were advertised.  The Court has taken a “looks like a duck, swims like a duck, quacks like a duck” approach to these cases.  In essence, a foreclosure noticed by a D.C. condominium with “subject to” language (implying that the foreclosure is not a “super-priority” foreclosure) is considered a “super-priority” foreclosure if the funds recovered from the foreclosure sale satisfy the latest six months of unpaid assessments.  In Green Parks, the record did not contain an “Accounting of Foreclosure Sale,” which the Court of Appeals believed would help determine whether the condominium foreclosed on its super-priority lien or not. 

Green Parks argued that there was no evidentiary support for the Association’s legal conclusion that it conducted a non-priority lien foreclosure that left the PMT’s lien intact.  PMT’s position was that the Association chose to conduct a non-priority lien foreclosure and sold the property subject to the first deed of trust.

On appeal, the Court of Appeals vacated the Superior Court’s summary judgment order and remanded the case to Superior Court for further proceedings.  In doing so, the Court of Appeals noted Green Park’s contention that the Association foreclosed to recover the latest six months of assessments, thus exercising its super-priority lien, which in turn would extinguish PMT’s interest in the Property.  However, the Court of Appeals highlighted the fact that the summary judgment record did not contain an Accounting of Foreclosure Sale that would help the Court determine whether the Association actually foreclosed on any portion of its super-priority lien.  While noting the “maximum flexibility” afforded to D.C. Condominium’s to choose which portion of their lien to foreclose upon, the Court of Appeals was not “comfortable” with the Superior Court’s conclusion that no reasonable trier of fact could conclude that the foreclosure sale conducted by the Association was a super-priority lien.   

Impact for Associations
The law in this area is still being shaped because the Court of Appeals is only addressing the issues brought before it on a case by case basis.  Based on this decision, an Association that wishes to foreclose on the non-priority portion of its lien must make sure that none of the proceeds are applied to any of the most recent six months of delinquent assessments owed to the Association.  It is important to note that the Complaint in Green Parks was originally filed on December 16, 2015, over three (3) years ago.  There are likely more cases before the Court of Appeals that were filed within the last three (3) that have not yet been decided and could possibly further shape this area of the law. 

This area of the law is currently in flux, with several recent decisions issued such as Liu v. U.S. Banks Nat’l Ass’n, 179 A.3d 871 (D.C. 2018) and 4700 Conn 305 Trust v. Capital One, N.A., 193 A.3d 762 (D.C. 2018).  In order to avoid any and all unforeseen/unwanted consequences, we recommend that Association’s contact any of our D.C. community association attorneys.