#39-09, Prue v. Manor Spring HOA (March 16, 2010) (Panel: McCabe, Dubin, Kali)

Prue filed a complaint against her HOA claiming that it violated the architectural rules of the HOA by permitting her next-door neighbor to install a privacy fence in the wrong locations on the lot.  She also argued that the HOA violated its rules by not allowing her to participate in the meeting at which the neighbor's fence application was approved.  The next-door neighbor was not a party to the case.

The hearing panel found that the HOA's rules required that fences not be farther forward that the rear of the house.  However, the house in question was on a corner lot.  To one side of the rear of the house was a basement stairwell and on the other side there was a slope.  The panel found that the HOA had good reason to create an exception based on these facts and to allow the fence to be placed somewhat forward of the rear of the house.  The panel also found that the HOA had created exceptions in other cases in which the houses had features that interfered with the strict application of the rule.  The rules also barred placement of fences where they interfered with the sight lines of  vehicle drivers on the streets; and although this fence might have blocked part of Prue's line of vision when exiting her driveway, it did not block her view once she was in the street.  Finally, the panel found that there was no requirement that Prue be given notice of a hearing on a neighbor's architectural application, as this was a mere guideline.

The panel ruled that as a matter of law, the HOA's interpretations of its rules were reasonable and it had a reasonable basis for making an exception to the rule regarding this particular lot. The HOA's decision was made in compliance with its rules and in good faith.  Therefore, the decision of the HOA not to enforce the architectural rules on fences against Prue's neighbor was within the business judgment of the HOA's board of directors.  As such, it was exempt from the Commission's jurisdiction under Section 10B-8(4)(e) of the Montgomery County Code ("Dispute does not include any disagreement that only involves .  .  .  the judgment or discretion of the governing body in taking or deciding not to take any legally authorized action.").

Although the issue was not raised in the complaint, and did not affect the merits of this particular complaint, the panel noted that the evidence showed that the HOA routinely failed to give notice to the membership about the meetings of its board of directors and architectural review committee.  This was a violation of Section 11B-111 of the Maryland HOA Act, which requires HOAs to give reasonable notice of all regularly-scheduled meetings.  The panel strongly recommended that the HOA establish procedures to give notice of its meetings.  The panel wrote that, "[a]t some point, the failure to give notice of Association meetings could lead to the conclusion that those meetings are not in fact 'open.'  If no one but the board knows about them, how can it be said that they are open to the community that has no knowledge of them?"  The panel warned that in the proper case, the board's decisions might be invalidated because it did not comply with the "open meetings" sections of the law.

The panel dismissed the complaint for lack of jurisdiction under Chapter 10B.