Maryland Common Interest Communities 2017 Legislative Changes
Below we have outlined the substantive legislative actions taken by the Maryland General Assembly over the course of the most recent legislative session. We have included legislation that impacts both homeowners and condominium associations for a comprehensive view of the laws affecting community associations in Maryland generally. The below-referenced legislation takes effect October 1, 2017.
Amendment of Bylaws and Declaration
The threshold percentage of affirmative votes required to amend the bylaws of a condominium and the declaration of a homeowners association has been changed to sixty percent (60%), or a lower percentage if allowed by the governing documents, of voters in good standing. “Good Standing” is defined as not being more than 90 days in arrears in the payment of any assessment or charge due to the condominium or homeowners association. The previous minimum standard to amend the bylaws of a condominium was a two-thirds (2/3) majority and in a number of declarations for homeowners association, the threshold can be higher than three-quarters (3/4). These changes are significant because they make the process easier for older associations who need to amend their governing documents to bring them up to present-day standards.
Mortgagee/Lender Foreclosures
Notice of Foreclosure
This legislation places an obligation on a person authorized to sell residential property subject to foreclosure to file a notice of foreclosure with the Department of Labor, Licensing, and Regulation (DLLR) in the Foreclosure Property Registry. Notably, these foreclosure notices are generally not public record. However, the legislation expressly provides that the department or jurisdiction that maintains the respective registry may provide information in the notice of foreclosure to a homeowners association or condominium in which the subject property is located. This is useful to Associations for purposes of contacting the record owner as it pertains to any issues related to assessments, maintenance and security.
Notices of Foreclosure Sale Postponement or Cancellation of Foreclosure Sale
This is another requirement that is placed on those authorized to sell residential real property. A foreclosing party will now, in the event of a postponement or cancellation of a foreclosure sale, have the obligation to send, within fourteen (14) days of the subject foreclosure sale, notice that the foreclosure sale was postponed or canceled to the record owner and to a condominium or homeowners association. This notice requirement helps Maryland community associations track the status of pending foreclosure actions and assists in the identification and collection of delinquent assessments.
Expedited Foreclosure of Vacant and Abandoned Property
The provisions of this law allow a secured party to petition a circuit court for leave to immediately commence an action to foreclose a mortgage or deed of trust on residential property if the property is vacant and abandoned under specified circumstances. It also requires: a secured party send a copy of the specified petition to specified persons under specified circumstances; and, a court to rule on a specified petition promptly after the petition is filed. The law will be applied prospectively on October 1, 2017. This is another assist to Maryland community associations as the ability of a secured party to move more quickly through the foreclosure process helps to eliminate potential maintenance and security issues at a property, and stem the accrual of delinquent assessments and charges related to the collection thereof.
Sale of Common Elements and Common Areas
The legislature has placed an obligation on the governing body of a community association, and under specified circumstances, the developer and/or declarant to provide written notice to the community association's membership no less than thirty (30) days before the sale of any common element property, including the sale of real property via tax sale. The notice portion of this law is satisfied by providing written notice about the sale to each owner; or posting a sign about the sale on the property to be sold, in a manner similar to signage required for a zoning modification; and, if the community association has a website, providing notice about the sale on the home page of the website of the community association.
Inspection Fees for Resale of Lot
This law authorizes a homeowners association to charge a reasonable fee not to exceed fifty dollars ($50.00) for an inspection of a lot owner's lot if the inspection is required by the governing documents of the homeowners association at the time a lot is being sold.
Rear-View Mirror Obstructions
This new statute relates to parking hang tags or permits issued by Associations. Beginning October 1, 2017, a driver may not drive a vehicle on a highway with any object, material or obstruction hanging from the rearview mirror that interferes with the clear view of the driver through the windshield. Associations should consider an alternative such as a sticker or decal system for regulation and enforcement of Association parking.
Proposed Legislation that DID NOT Pass
Some noteworthy legislation which did not pass include: a ban on smoking tobacco within a condominium unit or townhome; a state licensing system for community managers; state registration of community associations not already registered in their local jurisdiction; limitations on the enforcement of developer construction warranties; required periodic replacement reserve studies; and limitations electric vehicle charging stations and backyard gardens.
If you have any further questions or would like to inquire more about Whiteford, Taylor and Preston, LLP's community associations practice, please feel free to contact our office at (301) 804-3610.