MHA Presentation to Maryland Task Force

Maryland Homeowners’ Association Statement

to the

Task Force on Common Ownership Communities, February 13, 2006

 Maryland Homeowners’ Association

www.marylandhomeownersassociation.info

With our years of experience listening to homeowners, we can state without reservation, that problems remain unabated and are increasing in tandem with increased development. These problems can only be solved by education of all parties and, most importantly, through enforcement of existing laws.  MHA believes that one of the most egregious problems with HOA and Condo associations is “overreaching boards” as Mr. Lisman discussed at the last meeting.

MHA has found that one of the primary elements to good common interest community governance is that everyone understands their association documents and the Maryland Laws governing associations. There should be a State Agency that provides free educational materials that are clear, understandable and accessible. The State should provide basic courses for boards of directors and association members in leadership, fiduciary responsibilities, duties and obligations, and the State laws governing associations.  It is not unusual for a State agency to provide assistance and educational materials as demonstrated by the Maryland Insurance Administration. This Task Force may wish to review CAI’s “The ABC, A Basic Course for Community Associations” and the 5 part educational videos provided by the CCOC and currently found in all Montgomery County libraries.  Virginia, through its state library system, also provides these videos to its citizens.

MHA is aware that there is a sense of “lawlessness” by some Boards and professional service providers because they know they will not be penalized for their actions. There must be penalties for the disregard of State and County laws. Existing State laws are not being effectively enforced and State agencies, even if they wanted to pursue these violations, are lacking the funding to do so.  As an only recourse, it is unreasonable to expect homeowners to enforce provisions of law only through court action. There is an urgent need for the proper funding of a State agency charged with such enforcement, with the power to investigate and initiate appropriate corrective actions, such as removing Board members and officials from office, requiring publication of confirmed violations and monetary fines for violations. This agency could initiate Property Management standards to encompass ethics and education; licensing of Property Managers should be considered.  It was state action that created the association model, so it is reasonable to insist that the state assume responsibility for enforcement and correcting the problems created.

MHA suggests that within this State agency an Ombudsman’s Office be established and be given authority to hear all homeowner and association complaints, investigate complaints and initiate mandatory mediation and non-binding arbitration.  Associations have the resources to hire attorneys, property managers and other experts; therefore, this office should provide assistance to homeowners in preparing their cases.

MHA recommends funding of the agency through a “door tax” on each unit in the state. The State of Florida has established such an office which is supported by a door tax of $5 per unit per year. In Maryland condominiums are registered with the Office of the Secretary of State and Homeowner Associations are registered in their respective county depositories. Condominiums and Homeowner Associations should be registered with one state agency. Whatever form of funding is established, all monies collected should be dedicated specifically for the enforcement agency and should not be allowed to disappear into the General Fund.

An Ombudsman’s Office, as a means of settling disputes, certainly outweighs the thousands of dollars it takes to settle disputes in court.  Of course, the Ombudsman’s office would refer all violations of Federal, State, and County laws to the appropriate Attorney General’s office.

In future Task Force public hearings, you will no doubt hear from homeowners regarding long standing concerns.  We encourage you to be proactive, creative and, with a fresh eye, suggest realistic and effective solutions that will positively impact the quality of community life for residents in condominiums, homeowner associations and cooperatives.  Business as usual should not prevail.

Further discussion on Task Force agenda items and other areas of concern will be presented to you in writing.  Thank you for allotting MHA this time, and we would be happy to answer any questions you might have.

Second communication to Task Force:

TO:                   Maryland Task Force on Common Ownership Communities

FROM:               Maryland Homeowners’ Association, Inc. (MHA)

DATE:              June 15, 2006

At the February 13, 2006, Task Force meeting, the Maryland Homeowners’ Association (MHA) presented its comments on two issues being considered by the Task Force: Education and Training and, Alternative Dispute Resolution.  MHA would now like to comment on the other four areas of the Task Force’s mandate.

Uniform Common Interest Ownership Act (UCIOA)

If and when UCIOA, or parts thereof, is adopted into law, it must include all homeowner rights already in Maryland law.  Further, other homeowner rights should be considered for inclusion. The MHA believes that Maryland should have one Common Ownership Community Act that covers condominiums, homeowner associations and, if practical, residential cooperatives.

Aging Common Ownership Communities

MHA recognizes the importance of adequate reserves to the financial health of an association. We recommend that the annual amount put in replacement reserves, and the current total replacement reserve fund, as well as the most recent reserve study, be made available to homeowners, prospective buyers and mortgage lenders.   

Collection of Assessments

The timely collection of assessments is a major responsibility of an association. However, Maryland law must be strengthened so that non-judicial foreclosures by an association are strictly prohibited. Unless or until a court has decided in the association’s favor, no foreclosures should be allowed to proceed. 

Resale by Owners

MHA recommends the establishment of monetary penalties for sellers and real estate agents who fail to provide the legally required association documents to prospective buyers whose contracts have been accepted by the seller/agent.  Associations shall provide up-to-date documents and failure to do so will result in monetary penalties to the Association.  Sellers and real estate agents shall be responsible for the cost of document copying and shall provide the prospective buyers with the documents within seven (7) business days prior to closing date.  The prospective buyer shall, within seven (7) business days of receiving the documents, have the right to rescind the contract without penalty.

The MHA appreciates this opportunity to address the issues facing the Task Force, and is prepared to discuss its views with the Task Force at any time.

In closing, the MHA wishes to stress that positive change can only take place through steadfast and vigorous enforcement of existing laws and will support efforts to provide funding dedicated to this purpose.

Respectfully yours,

Richard H. Lloyd

President, Maryland Homeowners’ Association