State legislation update

The Montgomery Village Foundation (MVF) tracks bills that affect homeowner associations and condominiums during the state legislative session, which ended on April 10. Here is a summary of a number of bills, some of which are on the Governor’s desk awaiting signature.

Manager Licensing: As in the past few recent General Assembly sessions, bills to require statewide Manager Licensing were again before both the House and Senate. Neither HB1192 nor SB530 had enough support to advance beyond the committee level and were not heard by the full House or Senate. MVF continues to oppose manager licensing programs that have been proposed thus far because in our view, they don’t appear likely to prevent financial mismanagement of association funds, which is the primary reason that is advanced for the licensing program. This year, MVF’s local legislators introduced an amendment that would have exempted MVF from the licensing requirements. We argued to them that MVF’s strong internal procedures and audits protect MVF communities from risk.

Statewide Registration of HOAs and Condos: Ongoing attempts to create a statewide registration of HOAs and Condos failed again this year. HB41 passed in the House, but it did not advance for consideration of the full Senate. At MVF’s request, MVF’s local legislators adopted an amendment that exempts MVF and other Montgomery County associations from registering, because we already register with the Montgomery County Commission on Common Ownership Communities (CCOC).

Procedures to amend Governing Documents: A significant change in the requirements for amending governing documents in Maryland associations will occur with the passage of HB789. The bill allows condos to amend by-laws and HOAs to amend any governing document by a vote of 60% of members in good standing. Even more significantly, owners who are delinquent in their assessments up to 90 days can now be included as “members in good standing.” MVF supported lowering the voting standard, but opposed expanding the definition of members in good standing to include those owners delinquent up to 90 days.

Foreclosure Issues: As the mortgage/housing slump extended into the mid-decade, systematic steps in the foreclosure process that lead to deteriorating neighborhoods have been recognized. Legislators have attempted to reduce the negative impacts of increased foreclosures on neighborhoods by addressing problematic aspects in timely completion of foreclosures. This year, HB26 was passed, requiring lenders to give notice of a foreclosure sale to HOAs and Condos who have liens filed on properties 30 days before the sale and then to also notify them if the sale is canceled. HB702 and SB1033, which allow the Circuit Court to accelerate the foreclosure sale process for vacant residential property, both passed.

HOA Resale Inspection Fee: HB34 was introduced to allow an HOA resale inspection charge of up to $100, consistent with state law condominiums. As passed, HB34 authorizes the charge, but only up to $50. MVF did not take a position on this bill. However, MVF did raise concerns about the additional fee.

Reserves Studies for HOAs and Condos: HB651, which sets out a time frame and other requirements for reserve studies, was approved by the full House, but did not advance in the Senate. MVF supported the bill.

Notice of Sale of Association Property: SB809 was adopted, requiring associations to give homeowners 30 days’ notice prior to the sale of association property. MVF advocated for allowing additional notice formats, and the bill was amended to permit associations to meet the notice requirement by posting signs or putting an announcement on an association website, rather than only through individual written notices.