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Maryland General Assembly Fails To Finalize Legislation Prohibiting Limits on Condominium Owners’ Rights Of Action

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.