NEW LAW FACILITATES ABILITY OF CONDOS TO SUSPEND COMMON ELEMENT PRIVILEGES AS MEANS OF COLLECTING DELINQUENT CONDOMINIUM ASSESSMENTS

Cowie & Mott Condo and HOA Attorneys in Maryland and DC -NEW LAW ADDRESSES SUSPENSION OF COMMON ELEMENT PRIVILEGES AS A MEANS OF COLLECTING DELINQUENT CONDOMINIUM ASSESSMENTS

NEW MARYLAND LAW FACILITATES ABILITY OF CONDOS TO SUSPEND COMMON ELEMENT PRIVILEGES AS A MEANS OF COLLECTING DELINQUENT CONDOMINIUM ASSESSMENTS

SUMMARY OF ARTICLE

The Maryland legislature recently made it easier for condominium associations to amend their declarations to authorize the suspension of common element parking and recreational facilities of unit owners whose delinquent condominium assessments are more than 60 days in arrears. The new law allows condominium associations to amend their declarations to include such suspension authorization by approval of 60% of the total eligible votes of a condominium. Under prior law, a minimum of 80% or greater was required for such an amendment. This lowering of the threshold for amending a declaration to include authority to suspend common element privileges of unit owners with delinquent condominium assessments is important because Maryland’s highest court recently held that a condominium may only suspend common element privileges if such authority is expressly contained in the condominium declaration. Suspension provisions contained in bylaws, or suspension rules based on rule making authority in bylaws, are not sufficient. The declarations of many condominium associations in Maryland do not contain language that authorizes suspension and, therefore, those associations cannot lawfully suspend common element privileges for failure to pay assessments without amending their declarations to provide express authority.

This article provides background leading to the enactment of this new legislation and sets forth the details that must be followed by a condominium association in order to amend its declaration to include the express authority to suspend parking and recreational facilities of unit owners with delinquent condominium assessments, to the extent such authority does not already exist.

BACKGROUND

Suspension of a unit owner’s common element privileges within a condominium community can be a strong incentive to make timely assessment payments. In Maryland, a condominium association may only suspend a unit owner’s use of communally held common elements facilities for failure to pay assessments if the specific suspension in question is expressly authorized in the recorded condominium declaration. In the case of Elvaton Towne Condominium Regime II, Inc. v. Rose, 453 Md. 684 (2017) (“Elvaton”), the Maryland Court of Appeals struck down a condominium policy that suspended a delinquent owner’s right to use the pool and parking facilities. The court reasoned that Section 11-108(a) of the Maryland Condominium Act only permits a condominium association to restrict a unit owner’s use and enjoyment of the common elements if such restriction is expressly authorized by the condominium declaration. Elvaton, 453 Md. at 701-06. In Elvaton, the declaration at issue did not expressly authorize suspension of pool and parking privileges of unit owners with delinquent condominium assessments. Instead, the suspension policy was based solely upon the association’s general rule making authority under governing documents, which was insufficient. Elvaton, 453 Md. at 705-06. If not spelled out in the declaration, then such a suspension, according to the Maryland Court of Appeals, constitutes “an impermissible taking” and an unlawful “revocation” and “infringement of [an] owner’s property rights.” Elvaton, 453 Md. at 703-06.

For many Maryland condominium associations who relied on the suspension of common element privileges as an incentive for unit owners to pay delinquent condominium assessments, the ruling in Elvaton presented a problem because their declarations did not expressly authorize such suspensions. Instead, as in the Elvaton case, their suspension policies were adopted based on the association’s general rule-making authority in bylaws, which the Elvaton cases found unlawful. Thus, in order to continue such suspension policies as a means of collecting delinquent condominium assessments, it would be necessary, under the holding inElvaton,to amend the recorded declaration to add language that expressly authorized such suspension. Traditionally, amending a declaration for this purpose in Maryland has been difficult, if not impossible, because it required a minimum of 80% of eligible unit owners to vote in favor of the amendment or a greater percentage if specified in the declaration. In some older declarations, the voting majority for amending the declaration could be as high as 90% or more.

THE NEW LAW

In response to the Elvaton case, the Maryland General Assembly, in 2018, passed a law known as House Bill 575 making it easier for condominium associations to amend declarations to add language authorizing the suspension common element privileges of unit owners with delinquent condominium assessments. Under the new law, effective October 1, 2018, an association need only obtain the vote of 60% of the total eligible voters of the condominium in order to amend the declaration to expressly authorize the condominium association to suspend the use of common element parking or recreational facilities (e.g., swimming pool and exercise room) of a unit owner whose assessments are more than 60 days in arrears. MD Condo Act §11-103(d)(2). Declarations containing such suspension provisions must also contain language that requires the association to provide delinquent unit owners with specified notice and opportunity to be heard. MD Condo Act §11-103(d)(1)(ii). A suspension of common element parking or recreational facilities may not be implemented unless a condominium association mails the unit owner a demand letter giving them at least 10 days to either pay the delinquent condominium assessment or request a hearing to contest the suspension. Moreover, if a unit owner requests a hearing, the condominium association must provide notice and hold a hearing in accordance with the dispute resolution procedures set forth Section 11-113(b)(2) and (3) of the Maryland Condominium Act.

 

NOTE ABOUT TERMINOLOGY:

The term “condominium association” is used in this article to describe the organization or entity that governs the affairs of the condominium in accordance with the condominium bylaws and declaration, and whose members consist of all condominium unit owners. “Condominium association” is the terminology commonly used for this purpose. However, the Maryland Condominium Act refers to a condominium association as a “council of unit owners.”

The term “governing documents” is used to refer to the condominium declaration and bylaws which filed in the land records office of the county where the condominium is located. These documents establish the condominium regime and control its governance.

NOTE ABOUT AUTHOR:

Nicholas D. Cowie is a partner in the law firm of Cowie & Mott, P.A. Mr. Cowie and the attorneys of the law firm of Cowie & Mott, P.A. provide legal representation and legal advise to condominiums, co-ops and HOAs throughout the State of Maryland and the District of Columbia, including with regard to delinquent condominium assessments, condominium declaration and bylaw amendments, drafting board resolutions, developing condominium assessment collection policies, contract negotiation, legal opinions, foreclosure actions, litigation, arbitration, mediation services and other general counsel services tailored to condominiums associations, co-ops and homeowners associations.

 

Cowie & Mott Condo and HOA Attorneys in Maryland and DC -NEW LAW ADDRESSES SUSPENSION OF COMMON ELEMENT PRIVILEGES AS A MEANS OF COLLECTING DELINQUENT CONDOMINIUM ASSESSMENTS

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Maryland Collection Attorneys for Delinquent Condominium Assessments