#546-G, Potomac Glen South Homeowners Association, Inc. v. Mutreja (January 28, 2003) (Panel: Philbin, Weiss, Wertlieb: Wertlieb dissented from Decision)

The homeowners association (HOA) filed a complaint with the Commission alleging that the homeowners (HO's) were operating a family day-care business out of their home in violation of the HOA rules.  The HO's admitted operating the business but claimed that the HOA had no legal authority to prohibit it.

The evidence at the public hearing showed that the HOA Declarations prohibited day-care businesses in this small community of only 8 homes, but allowed the prohibition to be changed by a simple majority vote.  Under the Maryland Homeowners Association Act, an HOA can prohibit day-care businesses, but only if a simple majority of the members agree to enforce the rule.  Both the HO's and the HOA conducted separate "votes" or "surveys" of the members and obtained different results, however, neither of them complied with requirements of the HOA's own rules.  The Commission's staff arranged an informal mediation at which the parties agreed to conduct a third vote that complied with the HOA rules, and this vote resulted in a tie of 4 votes in favor  of, and 4 votes against, enforcing the rule.

The panel ruled that under the Maryland Homeowner Association Act, a majority of the members must vote in favor of enforcing the rule against day-care businesses, the HOA did not have a sufficient number of votes to enforce the rule against the HO's, and therefore the HO's could continue to operate their business so long as the business complied with the law or until a simple majority of the homeowners voted to enforce the rule.  The panel dismissed the complaint.