by Raymond Daniel Burke | Aug 30, 2011
I obtained a noteworthy ruling this morning in the Circuit Court for Montgomery County while representing a condominium unit owner in a construction defect suit. The sales agreement provided for arbitration of claims, and contained a provision that precludes the arbitration panel from awarding attorney’s fees. Under Md. Cts. & Jud. Proc Code Ann. Sec. 3-221, an arbitration award cannot include attorney’s fees unless provided for in the arbitration agreement.
The complaint filed on behalf of the unit owner included a cause of action under the Maryland Consumer Protection Act, which provides for the award of attorney’s fees. The Court accepted our argument that, because the damages that can be awarded under the Consumer Protection Act could not be awarded in arbitration, the Consumer Protection Act claim was not subject to the arbitration agreement, and can proceed in Court before a jury.
by Raymond Daniel Burke | Jul 12, 2011
The Maryland General Assembly enacted new legislation aimed at helping to resolve disputes concerning the election of officers and board members of a homeowners association. Senate Bill 532 amends Section 11B-115 of the Maryland Homeowners Association Act to give the Consumer Protection Division of the Attorney General’s Office authority to resolve election disputs. A lot owner who believes that the governing body of an HOA has failed to comply with the election procedures under the association’s governing documents can submit their dispute to the Division for resolution if any one of five specific matters are at issue: (1) Notice about the date, time, and place for the election; (2) the manner in which a call for nominations for the board was made; (3) the format of the election ballot; (4) the format, provision, and use of proxies during the election process; or (5) the manner in which a quorum is determined for election purposes. The new law take effect on October 1, 2011.
by Raymond Daniel Burke | Apr 13, 2011
Pursuant to legislation passed in the closing hours of this year’s session of the Maryland General Assembly, four (4) months of unpaid assessments due to condominiums and homeowner associations, up to a maximum of $1,200, will now receive priority over mortgages, but only those recorded after October 1, 2011. As reported in my post of March 18, legislation was pending in the General Assembly that would afford some limited relief to condominiums in the case of unpaid assessments for units that become lender-owned as a result of foreclosure. House Bill 1246 passed both houses on Monday, April 11, 2011, and once signed by the Governor, will take effect on October 1, 2011. The new law amends Section 11-110 of the Condominium Act to provide that four (4) months of unpaid assessments shall receive a priority over a first mortgage or deed of trust in a foreclosure action. However, there are significant limitations attached to the provision. Only the principal amount of regular assessments are given a priority. It does not extend to interest, costs of collection, late charges, fines, attorney’s fees, special assessments, or other charges that are normally considered part of the delinquency under the Contract Lien Act. Additionally, the Legislature imposed a $1,200 cap on assessments receiving a priority. Moreover, the priority only applies against mortgages and deeds of trust recorded after October 1, 2011. Lenders holding liens are also entitled to request written information from the condominium concerning the unpaid assessments, and, if the information is not provided, the priority is voided. (more…)
by Raymond Daniel Burke | Mar 18, 2011
Associations continue to suffer from an epidemic of unpaid assessments. Such delinquent owners are often also behind in their mortgage payments, which can lead to the lender foreclosing. Once the lender forecloses and takes title, it becomes responsible for assessments going forward, but not for past due assessments. As in last year’s session, the legislature is again considering a means of providing some relief to associations in these circumstances. The Residential Association Sustainability Act of 2011 is pending as Senate Bill 946 and House Bill 1246. It would provide that, in the case of a foreclosure on a mortgage or deed of trust on a condominium unit, the portion of a lien on the condominium unit that represents up to six months of specified unpaid assessments, including specified fees and costs, has priority over a first mortgage or deed of trust under specified circumstances. Accordingly, if the condominium has obtained a lien on the unit for unpaid assessments, six months of those assessments would constitute a priority over the mortgage or deed of trust. In other words, six months of assessment would be paid first out of a foreclosure sale before payment of the mortgage debt. (more…)
by Raymond Daniel Burke | Feb 16, 2011
When a lender fails to move forward with foreclosure on a delinquint unit, the association can be left with both a vacant property and no means to collect its assessements. However, the law may give condominiums and homeowner associations a way to fight back against lenders that have liens on delinquent properties in their communities, but refuse to take title and assume responsibility for unit owner oblgations to the association. A “quiet title” action may be the answer.
Condominium and homeowner associations continue to be impacted by the recession and depressed real estate values. Unit owners who are unable to keep up with their mortgage payments often become delinquent in their fee assessment payments as well. This, of course, damages the association, whose ability to operate is entirely dependent upon timely payment of assessments by all unit owners. And even when an association pursues all of it available statutory remedies, including placing a lien on the unit, the properties are usually subject to a mortgages, home equity lines, and other secured loans from banks and lending institutions that have first priority. This prevents the association from foreclosing and taking ownership for purposes of selling the unit. But a further complication arises when the lender holding the superior lien fails to move forward with it own foreclosure on such properties. (more…)
by Raymond Daniel Burke | Aug 4, 2010
For most individuals, the purchase of a new house or condominium unit is the largest investment that they will have ever made. Moreover, that investment is also a home and place of refuge and relaxation that they share with family and friends. Few things, therefore, have the potential to be more disturbing than the discovery of construction defect issues that diminish both the enjoyment of the home and its value. For that reason, new home purchasers in Maryland are afforded various protections in the form of statutory warranties. They also may receive specific warranties from the seller as part of their purchase agreement. Additionally, homebuyers may have other statutory and common law rights of action that arise as a result of construction deficiencies. However, none of these possible remedies provides a certain or easy path to relief. All such claims are governed by strict statutes of limitations that require considerable diligence or order to preserve the intended benefits. Pursuing claims is also an expensive and often protracted process that, in addition to the retention of capable legal counsel, also requires the involvement of building consultants who can identify defects, recommend repairs, and offer opinion evidence to support the claim.
In response to various comments and questions some of you have been kind enough to share on this blog, I am going to be authoring a series of posts that address some of these issues, as they relate to condominium and new home warranties, homeowner association warranties, seller’s warranties, contract claims, and common law causes of action. These matters will be addressed from the standpoint of both associations and individual owners. In the meantime, if there are any issues along these lines that are of particular interest, please feel free to send a comment.
