#335-O, Pereira v. Park Terrace Condominium (March 3, 1997) (Panel: Stevens, Auvil, Jacobsen)

The condominium owner (CO) claimed that his condominium association (CA) had violated its rules and State law in the following ways, and the hearing panel made the following rulings:

1. The board was adopting the annual budget which was the right of the membership.  The hearing panel found that the CA's bylaws specifically stated that the board of directors was to adopt a budget.

2. The board was spending reserve funds for current expenses.  The hearing panel found that the bylaw stated that the board was to include in the budget both "a general operating reserve, and reserves for contingencies and replacements."  Furthermore, the Maryland Condominium Act authorizes communities to establish a reserve for current expenses as well as for long-term capital needs but does not restrict the money from being spent on current maintenance needs.

3. The board was spending more than $1000 for "additions, alterations or improvements" in violation of the Bylaws without the approval of the majority of the owners.  The panel ruled that the board had the authority under the bylaws to spend funds for repair and replacement of the common elements and for certain other structural elements of the community, and that there was no evidence to show that the board spent any money for any other purpose, and therefore the board did not need the approval of the majority of the members for the expenditures.

4. The board violated Section 11-109 of the Maryland Condominium Act by assessing and expending reserves without the approval of the members.  The panel found that the CA bylaws explicitly granted the board the right to assess and spend reserve funds.

5. The board did not provide every unit owner with a copy of the monthly financial statement in violation of Section 11-135 of the Maryland Condominium Act.  The hearing panel found no violation because the duty of providing information in 11-135 is upon the owner who is selling his unit, and not a duty of the CA..  However, all unit owners have a right of access to the records under Section 11-116, and the evidence showed that the records are available in the office of the property manager.

6. The board failed to give proper 30-day notice of the budget pursuant to Section 11-109.2 of the Maryland Condominium Act.  The panel found that in 1995 the board approved a budget only 2 weeks after it first proposed it to the members; but in 1996 the board gave a proper 30 day notice.  The panel ruled that there was no appropriate remedy for the board's error in 1995.

The panel ordered the complaint dismissed with prejudice.