by Raymond Daniel Burke | Mar 4, 2010
Legislation has been proposed in the current session of the Maryland General Assembly that would provide some relief to condominiums and homeowners associations in the event of a foreclosure. House Bill 842, known as the Residential Association Sustainability Act of 2010, provides that a specified portion of a lien on a condominium unit or lot in a homeowners association, would, in certain circumstances, have a priority over any future first mortgage or deed of trust recorded after October 1, 2010. This is intended to assist condominiums and homeowners associations who have been left with unpaid assessments, despite having obtained a lien on the property, where the proceeds of a foreclosure sale are exhausted by the outstanding mortgage debt. (more…)
by Raymond Daniel Burke | Jan 5, 2010
The effects of the recession on real estate values, and the resulting wave of foreclosures throughout the country, has had a direct and immediate impact on the ability of many condominium councils to collect the assessments necessary to properly operate and maintain their communities. Unit owners who are unable to keep up with their mortgage payments often become delinquent in their fee assessment payments as well. When this happens, the entire association is negatively impacted, because a condominium’s financial viability is entirely dependent upon timely payment of assessments by all unit owners.
Because condominiums cannot operate without full participation of all unit owners in paying their share of the common expenses, the Maryland Condominium Act establishes a procedure in which a council of unit can obtain a lien on a delinquent owner’s unit that is enforceable by foreclosure. However, the current real estate climate has left many associations empty handed in spite of the fact that unpaid condominium fees remain due and are subject to a lien. This happens when the sale of a unit fails to produce sufficient proceeds to satisfy all existing obligations. This can occur when the condominium forecloses on its lien, or when the unit is subject to foreclosure by a mortgage lender. In either case, the resulting sale often produces less than the amount due under the mortgage. This deficiency means that there is nothing left from the sale to satisfy other amounts due on the unit, including unpaid fees and assessments. (more…)
by Raymond Daniel Burke | Oct 30, 2009
A would be condominium buyer has inquired about having heard that it is possible to buy a condominium unit without having the benefit of the three-year common element warranty, because it has already expired at the time of purchase. What that purchaser heard is absolutely correct. Maryland’s three-year statutory warranty on certain components of the common elements can, indeed, expire before all units in the community are sold, leaving subsequent purchasers without the protection and assurance afforded by the statutory warranty specific to the common elements. This is of particular relevance in slow selling communities, especially as a result of the economic downturn, and in large communities that are built in phases over a long period of time. (more…)
by Raymond Daniel Burke | Sep 17, 2009
During 2005, in Maryland’s venerable Eastern Shore seaport town of Crisfield, an ambitious redevelopment project commenced at the City Dock. The Captain’s Galley is a luxury condominium complex consisting of a six-story building with 23 residential units, a heated pool, fitness center, boat slips, and a rooftop restaurant. One notable component of the project specifications called for the construction to result in a “Green Building” that would obtain a “Silver Certification” in accordance with the U. S. Green Building Council’s Leadership in Energy and Environmental Design rating system, popularly known as LEED standards. In doing so, the developer intended to qualify for more than $600,000 in tax credits.
Captain’s Galley became a memorable project, not only because it was one of the first in Maryland to incorporate the LEED rating into the contract documents, but because it became one of first anywhere to result in litigation arising, in part, from the general contractor’s alleged failure to comply with the environmental design standards. In the suit filed in the Circuit Court for Somerset County, the developer, along with other claims, sought damages for the loss of the tax credits as a consequence of the alleged failure of the building to meet the contractually specified LEED standards. (more…)
by Raymond Daniel Burke | Aug 19, 2009
If you have bought a new home in Maryland during the last several years, including a new condominium, your purchase likely included what are commonly referred to as “ten-year warranty” policies.” But a careful reading of the typical provisions of many of these policies reveals that the suggested coverage benefits are nearly non-existent. In fact, the policies often offer little, if anything, beyond the warranty obligations that the law imposes on new home sellers regardless of whether a warranty policy is offered. The initial coverage under these policies is usually not provided by the warranty company, but is the builder’s obligation alone; an obligation that the builder would have in any event. Only in year three does the policy coverage usually commence, and then only for “structural defects,” and only if one of numerous exclusions does not apply. Indeed, these policies do not provide any meaningful reason for homebuyers to feel assured that building defects in their new home will be corrected for a period of ten years. (more…)
