by Raymond Daniel Burke | Nov 2, 2012
As condominium boards and property managers should well know, Section 11-135 of the Maryland Condominium Act imposes a duty on councils of unit owners to provide unit purchasers with a resale certificate whenever a unit is being re-sold. One significant disclosure that must be made in a resale certificate is “[a] statement as to whether the council of unit owners has knowledge of any violation of the health or building codes with respect to the unit, the limited common elements assigned to the unit, or any other portion of the condominium.” This, of course, gives rise to the question of what constitutes “knowledge” of a code violation for disclosure purposes. The Maryland Court of Appeals recently addressed this issue, but only in a footnote contained in MRA Property Management, Inc. v. Armstrong, 426 Md. 83, 43 A. 3d 397 (2012). While the issue was not actually before the Court, it, nevertheless, took the unusual step of considering the question, and concluded that the disclosure requirement involves only “charged violations;” that is, only violations as to which a formal violation notice has been issued by the code authority. It can certainly be argued that “knowledge” of a code violation includes knowing that a deviation from a code requirement exists, such as in the form of an engineer’s report, and that such information is highly relevant to a consideration of what maintenance and repair costs may confront the unit purchaser. However, the Court’s voluntary discussion of this issue, while only dicta, certainly indicates the direction and narrow reading of the statute the Court may take if the issue were to be placed squarely before it. (more…)
by Raymond Daniel Burke | Sep 28, 2012
I am frequently asked to discuss my representation of the owner of a multi-million dollar penthouse condominium unit on the top floor of a residential high-rise building on Baltimore’s Inner Harbor known as Harborview Condominium. The claim concerned the failure of the Condominium’s Council of Unit Owners to correct defects in the common elements of the roof, exterior façade and HVAC system. These defects were alleged to have permitted water intrusion through the exterior envelope and into the Plaintiff’s unit, resulting in damage to building components, interior finishes and furnishings and other personal property, along with microbial contamination, which rendered the unit uninhabitable.
The case was tried over five days before a three-judge arbitration panel in September 2011. In November 2011, the arbitration panel awarded the Plaintiff cash damages in the amount of $1,252,487, representing the cost to repair damage to the unit and to remediate the environmental contamination, along with alternative living expenses and other related costs. The panel also issued a specific performance award directing the Condominium to undertake an identified scope of work to repair to the roof, exterior façade and HVAC system. The value of the repair is approximately $5,000.000. The panel ordered that the HVAC repairs be completed within 60 days, and that the remaining building repairs be completed by December 2013. (more…)
by Raymond Daniel Burke | Aug 16, 2012
House Bill 433 and Senate Bill 372 from the 2012 session of the Maryland General Assembly proposed the creation of a State Board of Common Interest Community Managers to regulate the provision of property management services to common interest communities, including condominiums, homeowner associations and housing cooperatives. The legislation would have required the licensing of community association property managers through the new State Board. It also would have required condominiums with more than 10 units, associations with more than 50 lots, and any community that is professionally managed, to register with the Board. The bill was considered by the Environmental Matter Committee, but never came to a vote.
by Raymond Daniel Burke | Aug 16, 2012
Effective October 1, 2012, entities that bill Condominiums Councils for water or sewer charges are required to post notices if utility bills are in arrears for more than 60 days, and are authorized to enter the common area of the condominium to post a notice of the default. Under House Bill 884 (Chapter 684) from the 2012 session of the General Assembly, public utilities, sanitary commissions, political subdivisions, and the public service commission, when directly bill the governing bodies of condominiums for utility charges, are required to post notices on the condominium property that a utility bill is in arrears. Previously existing law requires that such utility providers provide notice to property owners that service will be discontinued due to unpaid bills. The new law amends various sections of the Annotated Code of Maryland as to condominiums to require that such notices be posted at the condominium, and authorizes entry into the common area for the purpose of posting the required notice. Effected code provisions include Sections 9-662, 9-724 and 9-726.1 of the Environmental Code, and Sections 7-307.2 and 25-504 of the Public Utilities Code.
by Raymond Daniel Burke | Aug 2, 2012
Despite similar bills unanimously passing both houses, the 2012 Maryland General Assembly was unable to finalize an amendment to the Condominium Act that would have precluded developers from restricting rights of action by councils of unit owners and individual unit owners to enforce warranties and other claims. Both House Bill 740 and Senate Bill 725 would have added a new section to the Condominium Act that would have dramatically stripped away the ability of developers to limit the time in which councils and unit owners can bring suit, as well as impose other hurdles to commencing litigation. Both bills would have prohibited provisions in a condominium declaration, bylaws or contract of sale that (1) purport to shorten the statute of limitations applicable to to any warranty claim or other statutory or common law claim; (2) purport to waive the applicable “discovery rule” or other accrual date for claim; (3) operates to prevent the filing of suit, initiating arbitration, or otherwise asserting a claim with the applicable statute of limitations; and (4) requires a claim to be asserted in a period of time shorter than the applicable statute of limitations. Significantly, the new law would also have prohibited provisions requiring that a vote of the owners, approval of the developer or other non-unit owner, (most likely meaning mortgage holders), as a precondition to pursuing a claim; unless such restrictive i is adopted by the council of unit owners after election of the first independent board of directors.
The only difference between the two versions was that the House bill provided an exception for condominiums sold by the developer “as is” and without warranties. This is peculiar since the Condominium Act warranties under Section 11-131 cannot be excluded or modified. Both versions provided an exception for non-residential condominiums. We will see if the legislation is renewed at the next session.
by Raymond Daniel Burke | Aug 1, 2012
The 2012 session of the Maryland General Assembly resulted in an amendment to the Condominium Act regarding the circumstances under which a council of unit owners may enter a condominium unit. Section 11-125 of the Act previously provided that a council of unit owners, or its authorized designee, has “an irrevocable right and an easement” to enter units for the purpose of making repairs, where the work is “reasonably necessary for public safety or to prevent damage to other portions of the condominium.” The 2012 amendment, House Bill 126 (Chapter 101) expands this authority to also permit entry to “investigate damage” in addition to actually undertaking repairs. A proposal to remove the requirement that entry be limited to circumstances in which it is necessary for public safety or to prevent other damage was deleted from the final bill. It is still required that the council make “a reasonable effort to give notice” to the unit owner that the unit will be entered for purpose of investigation or repair; except that notice is not required “in cases involving manifest danger to public safety or property.” The amendment takes effect on October 1, 2012.
