New Maryland Statute Strengthens Condo Associations Against Owners

Posted on by Jocelyn Szymanowski in Real Estate.

Owners who do not pay their condo assessments are the bane of condominium associations.  The association can bring a lawsuit or establish a lien on the unit, but that might be of little value against an owner who holds the unit in an LLC and has little equity in the unit because of a substantial mortgage.

One tool that condo associations have turned to is to deny the owner’s common element privileges.  Denying use of the pool or common element parking creates an incentive to keep condo assessments paid.

In 2017, the Maryland Court of Appeals struck down a condominium policy that suspended a delinquent owner’s right to use the pool and parking facilities. The case of has Elvaton Towne Condominium Regime II, Inc. v. Rose determined that such a policy violated Section 11-108(a) of the Maryland Condominium Act.  The Court held that a condominium association to restrict a unit owner’s use and enjoyment of the common elements only if such restriction is expressly authorized by the condominium declaration. It could not be based on the association’s general rule making authority under governing documents.

Most condominium declarations do not have such an express provision, and to create one would require an amendment to the declaration, which often requires super-majority votes of owners, sometimes as much as an 80% affirmative vote.

In response to Elvaton Towne Condominium Regime II, Inc. v. Rose, the Maryland General Assembly has now amended the statute effective October 1, 2018.  MD Condo Act §11-103(d)(2) makes it easier for condominium associations to amend declarations to add language authorizing the suspension common element privileges of unit owners with delinquent condominium assessments. Under the new statute, an association need only obtain the vote of 60% of the total eligible voters of the condominium to amend its declaration to expressly authorize the condominium association to suspend the use of common element parking or recreational facilities of a unit owner whose assessments are more than 60 days in arrears.

Declarations containing such suspension provisions must also provide for the association to provide delinquent unit owners with specified notice and opportunity to be heard.  The suspension of common element parking or recreational facilities may not be implemented unless a condominium association mails the unit owner a demand letter giving at least 10 days to either pay the delinquent condominium assessment or request a hearing to contest the suspension. The hearing must be held in accordance with the dispute resolution procedures set forth Section 11-113 of the Maryland Condominium Act.

The new statute looks to restore to condominium associations a tool it has traditionally had for enforcement of condominium associations, balanced with protection of owner rights.