Section 11-131 of the Maryland Condominium Act provides significant warranty protections for the purchasers for new condominium units. Section 11-131 (a) codified the ruling in Starfish, and established that new home warranties under Section 10-203 “apply to all sales by developers” of condominiums, and that “a newly constructed private dwelling unit means a newly constructed or newly converted condominium unit and its appurtenant undivided fee simple interest in the common areas.” Specific warranties are applicable to certain specified components of both individual units and the common elements, and they are the obligation of the condominium’s developer.
Section 11-131(c) of the Condominium Act provides “an implied warranty on an individual unit from a developer to a unit owner” that is expressly in addition to the warranties provided by Section 10-203. Indeed, the Court of Appeals has held that the Title 10 warranties and the condominium warranties under Title 11 run concurrently, and aggrieved purchasers may proceed under either or both. This additional implied warranty is limited to specifically identified components, commences with the transfer of title to that particular unit, and extends for a period of one year. The warranty makes the developer “responsible for correcting any defects in materials or workmanship in the construction of walls, ceilings, floors, and heating and air conditioning systems in the unit,” and further warrants that “the heating and air conditioning systems have been installed in accordance with acceptable industry standards.” The stated standards are “[t]hat the heating system is warranted to maintain a 70°F temperature inside” and “[t]hat the air conditioning system is warranted to maintain a 78°F temperature inside” when the outdoor temperature and winds are “at design conditions established by the Energy Conservation Standards Act … or those established by the political subdivision” in which the condominium is located. This establishes what is, essentially, a strict liability standard; i.e., if the existence of a defect is proven, the developer is responsible for damages consisting of the cost of correction.
Section 11-131(d) provides for “an implied warranty on the common elements from developer to the council of unit owners,” that is also expressly in addition to the implied warranties provided in Section 10-203. Like the warranty on the units, this common element warranty is also applicable only to specific components, consisting of “the roof, foundation, external and supporting walls, mechanical, electrical, and plumbing systems, and other structural components.” The reference to “external and supporting walls” encompasses not only the wall framing members, but cladding systems as well. The inclusion of “structural components” broadens the application of the warranty to any common element component that is part of the building’s structure and framing, as well as community amenities that have a structural capacity, such as paving, pools, sport courts, curbs, steps and sidewalks, and drainage areas. Arguably, the specification of these components as being subject to the common element warranty requires that such components be defined as part of the common elements in any condominium regime. Otherwise, the full scope of the Legislature’s intent in providing the warranty could be negated by excluding some of these components from inclusion in the common elements. Indeed, the statute presumes that these specified components will be among the common element in every condominium.
The common element warranty provides “that the developer is responsible for correcting any defect in materials or workmanship, and that the specified common elements are within acceptable industry standards in effect when the building was constructed.” Like the warranty on the unit, this is a strict liability standard that applies once a defect is demonstrated.
The common element warranty “commences with the first transfer of title to a unit owner.” As to any common element “not completed at the first transfer of title,” the warranty commences “with the completion of that element or with its availability for use by all unit owners, whichever occurs later.” The warranty generally extends for a period of three years from the date of commencement. However, this provision gave rise to problems in enforcing the warranty in circumstances where a majority of the units, and, therefore, a majority of the condominium’s board of directors, remain in the control of the developer for an extended period of time. As a result, during 2010 session, the General Assembly amended the statute to provide that the common element warranty run for a period of 3 years, or “2 years from the date on which the unit owners, other than the developer and its affiliates, first elect a controlling majority of the members of the board of directors for the council of unit owners, whichever occurs later.”
Significantly, a suit for enforcement of the common element warranty may only be brought by the council of unit owners, and is not actionable by an individual or group of individual unit owners. Nevertheless, if the council of unit owners is controlled by the developer, and the time for filing a claim may expire, it is arguable that unit owners may be entitled to preserve the claim by acting on behalf of themselves and all unit owners.
Both the warranty on the units and the common element warranty are subject to a prerequisite notice requirement that is not applicable to the implied warranties under Section 10-203. In order to be enforced, the Condominium Act warranties require that notice of any defect must be given to the developer “within the warranty period.” Suit for enforcement must be brought within one year of the end of the warranty period. Accordingly, as to the warranty on the unit, this creates a maximum period of two years from the date of possession for bringing a claim. As to the common element warranty, the maximum period is four years in the event that the three-year warranty is applicable, or, if the two-year warranty is applicable, a maximum period of two years from the date that the independent unit owner board of directors is elected.
It is important to note that the Section 10-203 implied warranties, as they apply to condominiums, and the Section 11-131 implied warranties have separate and distinct periods of limitations. In Antigua Condominium Ass’n. v. Melba Investors Atlantic, Inc., the Court of Appeals held that the Title 10 warranties applied to newly constructed condominiums independent of Title 11, and therefore, limitations for condominium claims under Section 10-203 are governed by the two year period of limitations established in Section 10-204.
Unlike the Title 10 warranties, the Title 11 condominium warranties “may not be excluded or modified” by any action or written document. This recognizes that a condominium purchaser is buying an interest in the common elements of a building, or perhaps a number of buildings, and is not have the same ability as a purchaser of an individual home to inspect the entire premises. Therefore, the condominium warranties apply regardless of any agreement to exclude them or modify the content. However, the Title 11 condominium warranties are expressly limited so as not to apply “to any defects caused through the abuse or failure to perform maintenance by a unit owner or the council of unit owners,” and are also inapplicable to non-residential condominium regimes.
