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Maryland Senate and House Both Have Bills To Limit Collection Of Attorney Fees In Actions Against Homeowners

Bills introduced late in both houses of the Maryland General Assembly would limit the rights of condominiums and homeowners associations to recover attorney’s fees from homeowners.  Senate Bill 1062 and House Bill 1532 would apply to actions by councils of unit owners and homeowners associations against individual owners for delinquent assessments or to enforce a nonmonetary violation of the governing documents.  The Bills would preclude a condominium or homeowners association from demanding, collecting or seeking to recover attorney’s fees “unless the amount of the attorney’s fees is reasonable in relation to the amount in controversy or the nature of the nonmonetary violation.”

The legislation is in reaction to circumstances in which attorney’s fees amount to substantial portion of the amount clauimed to be owing and forming the basis for monetary judgment actions and the imposition of liens.  Both Bills would add new Section 11-110 to the Maryland Condominium Act and new Section 117.1 to the Maryland Homeowners Association Act, and create a rebuttable presumption that attorney’s fees claimed are reasonable which could be challenged by a homeowner.  In any action in which all or substantially all of the claimed amount is attorney’s fees, the Maryland Contract Lien Act would not apply.  In other words, there would be no right to obtain a lien in the absence of first obtaining a money judment.