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New Maryland Bills Impacting Common Ownership Communities: Dogs, Liens and Coop Transparency

Community Associations Update

After the conclusion of one of the most active legislative sessions for common ownership community related bills, the story could be about which bills failed. The most notable and hot button bills that did not pass are the bills addressing manager licensing and limitation on resale package fees. In the end, the Maryland General Assembly passed three bills of note that impact the operations of common ownership communities in Maryland.

HB 73 – Injury Caused by Dog

This long-awaited bill addresses the April 2012 case of Tracey v. Solesky, which held that pit bulls are inherently dangerous animals. Notably, this bill treats all dogs equally and does not differentiate between breeds. The bill is split into two parts: liability of dog owners, and liability of a person other than the owner of the dog (which includes common ownership communities). With respect to liability of a dog owner, the bill creates a rebuttable presumption that an owner of the dog knew or had reason to know that the dog had dangerous or vicious tendencies and therefore, the owner of the dog is liable for damaged caused by the dog. Similarly, owners of a dog are liable for damage caused by a dog running at large. Common ownership communities, on the other hand, are liable only if the association knew, or had reason to know of the dog’s dangerous tendencies. Given the passage of this bill, an association does not have to create breed restrictive rules and regulations (although it may still choose to do so or keep existing breed restrictive rules in place). We do, however, recommend that if an association has the capability and capacity to do so, and it makes practical sense, an association may wish to require all dog owners to register their dogs with the association and sign indemnification agreements, which would have the owner assume all liability and indemnify the association for any and all claims for damages arising from that dog’s actions. This bill is considered emergency legislation and becomes effective after it is signed by the Governor in June of 2014.

HB 602 – Foreclosure of Liens

This bill states that a common ownership community may only foreclose on a lien that consists solely of: 1) periodic (annual) assessments; 2) special assessments; 3) interest; and 4) reasonable costs and attorneys’ fees directly related to filing of the lien that do not exceed the amount of delinquent assessments (excluding interest). In essence, the lien being foreclosed upon may not consist of any late fees, fines, attorneys’ fees relating to fines, or other collection fees. Importantly, this bill only prevents associations from foreclosing on liens comprised of the above fees; it does not prevent an association from recording a lien comprised of all fees incurred. This bill becomes effective October 1, 2014.

SB 856 – Maryland Cooperative Transparency and Members Rights

This bill creates certain notice, meeting and other operational requirements, which govern the operations of residential cooperatives. Specifically, this bill requires that all cooperative meetings be open to members and agents; provides certain and limited circumstances when meetings may be closed (similar to the Maryland Condominium Act); requires that notice of all regular meetings be provided to owners; as of January 1, 2016, creates a depository for public offering statements and proprietary leases; creates limits on late fees; and creates a dispute resolution procedure (again – similar to the Maryland Condominium Act). Notably, a cooperative may not evict an owner who is delinquent for less than three months and in order to do so, the cooperative must go through the dispute resolution process set forth in the bill. This bill becomes effective October 1, 2014.

Ruth Katz is a community associations attorney at Lerch, Early & Brewer in Bethesda, Maryland. She helps community association managers and boards with general condominium, homeowners association and cooperative issues like document interpretation and amendments, as well as with litigation, dispute resolution, covenant enforcement and delinquent assessment collections. She serves as a co-chair of CAI’s Maryland Legislative Committee. For more information about this legislation, contact Ruth at (301) 657-0188 or rokatz@lerchearly.com.

This content is for your information only and is not intended to constitute legal advice. Please consult your attorney before acting on any information contained here.

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