Maryland HOA Act and Maryland Condominium Act

(The All Employment Act for Printers and Photocopy Shops)

As new developments sprout up around the State, more and more are created as parts of Homeowners Associations and Condominiums. It is more the exception these days that a new development is not part of such an association.

In each case, the developers have recorded declarations of covenants that create a homeowners association with broad decision making powers about what homeowners can and cannot do with their properties. In years past, uninformed buyers might have purchased a home in a development controlled by a homeowners association and had some very disturbing surprises when they tried to paint their house a different color or put up a fence or new roof (or any change that affected the outside appearance of the property.) Sometimes, the greater surprise was the large quarterly bill received for maintenance of the common grounds and management of the Association that wouldn’t let them put up the fence that they wanted.

There have been numerous court cases involving enforcement and challenge of these covenants and many people have been forced to replace roofs; remove fences; repaint houses and even remove expensive additions. The claim by the homeowners that they were not aware of the covenants at the time of purchase fell on deaf ears. The offending additions had to be removed and the monthly assessments had to be paid.

In the face of these developments, the Maryland Legislature passed the Maryland Homeowners Association Act that is now codified as Title 11B of the Real Property Article of the Maryland Annotated Code. The Act provides requirements of full disclosure to purchasers of residential real estate located in a homeowners association. It applies to the initial sale by the developer as well as to resales by individuals. Similar disclosure requirements exist for Condominiums under the terms of the Maryland Condominium Act (Title 11 of the Real Property Article and Section 11-135 in particular).

• Application of the Act and new terms:
  • Declarant and Declaration
  • Homeowners Association Depository
  • Recorded Covenants and Restrictions
  • Homeowners Association

• Developer Disclosure requirements:
  • Numerous items of disclosure
  • Disclosure Due 7 days after contract fully executed
  • Right to rescind 5 days after receipt of disclosures
  • Also may rescind 3 days after receiving notice of increase of 10% or any other substantial and material amendment

• Resale Disclosure Requirements:
  • May be deferred until 20 days after execution of the contract
  • Buyer has 5 days to rescind after receiving disclosures
  • Also may rescind 3 days after receiving notice of increase of 10% or any other substantial and material amendment
  • Sellers are required to provide Articles of Incorporation, By-Laws & Declarations
  • Seller must obtain all of the disclosures by his or her own devices

• Contract cancellation:
  • Both disclosure sections require cancellation in writing
  • Buyer does not have to state a reason for the cancellation
  • Buyer is entitled to receive back the deposit. Seller may keep the actual costs of reproducing the documents or $100.00 (whichever is less) if buyer does not return the disclosure packet

• Condominium disclosures:
  • Controlled by Section 11-135 of the Act
  • Contract not enforceable unless it contains Notice required by statute
  • Documents and information and certificate from council of unit owners
  • Must be furnished no later than 15 days prior to settlement
  • Purchaser may cancel at any time within 7 days of receipt of info.
  • If Condominium is located in a homeowners association (e.g. Montgomery Village), both sets of disclosure are required

The disclosure requirements are clearly expansive (and expensive) and can be confusing. Never leave these requirements to chance. Investigate early whether your seller’s home is located in a homeowners association and be sure to obtain the documents as early as possible. The law puts the burden of delivery of the documents to the purchaser on the seller.