Living in a Common Ownership Community
Frequently Asked Questions
- What is a "common ownership community"?
- I’m thinking of buying a condominium or a house in a planned community governed by a homeowners’ association (HOA). What do I need to know?
- I bought a home in an HOA and now the HOA is telling me I have to remove a shed that was there when I bought the home. Can they do this?
- What about buying into a cooperative?
- What should I do if I want to sell a condominium, or a house in an HOA?
- What are my association's powers? Can the board do what it is doing?
- What are "governing documents" and how do I find them?
- Can I go to the meetings of my association's board of directors?
- The board just raised everyone's assessments by $200 per month. Can they do this?
- Do I have the right to inspect the records of my association?
- What does my condominium's master insurance cover? Who fixes my unit if it is damaged?
- A tree fell into my yard. Who is responsible for removing it and repairing the damage to my property?
- Who is supposed to clear snow from the sidewalks and parking lots in my community? My documents say these are all common areas.
- Can the association tow my car or truck?
What is a "common ownership community"?
Condominium associations (“condos”), most homeowner associations (“HOA”), and cooperative housing corporations ("co-ops") are common ownership communities under Montgomery County law. What they all have in common is that they are regulated by State law, and they have binding rules that all members must obey. A person becomes a member simply by buying a condominium unit or lot or a share in the building or land in the association.
All common ownership communities in Maryland are self-governing democracies. That is, the members elect the boards of directors, and the boards make the ordinary operating decisions and adopt and enforce the rules. However, only the members can vote to amend the covenants and bylaws, and in some cases the members can repeal rules adopted by their boards.
I'm thinking of buying a condominium or a house in a planned community governed by a homeowners’ association (HOA). What do I need to know?
If you have an agent, you should ask your agent to tell you if you are buying a home in a common ownership community and how to get more information on what this will mean for you.
One of the most important things you need to do is demand the "resale package". Under Maryland law, the seller of a used condominium unit or house in a homeowners’ association is required to give a prospective buyer a package of information about the rules and the financial status of the association. The resale package should also state if the association has any pending claims against that unit or house. The seller cannot enforce the contract until he provides a copy of the resale package to the buyer. The prospective buyer in a homeowners’ association has up to 5 days to cancel the contract after receiving a copy of the resale package if he was not given the package at least 5 days before he signed the contract, and up to 7 days to cancel if buying into a condominium association.
A resale package can be lengthy. The cost will vary depending on the size of the document but can run $150 or more. Many sellers do not know that they have to provide the resale package. Therefore, prospective buyers should insist upon receiving it.
There is one other very important thing you need to keep in mind. You are buying into a community that has legally-binding rules and regulations concerning what you can do with your property, what kind of vehicle you can park within the community, what landscaping you can add to your lot, and even what color paints you can use, etc.; and the community can enforce those rules against you even if you don't bother to read them. In a community association, you are not free to do everything you want. In many cases, you will need to get permission first. If you cannot live with those types of restrictions, then buying the home might not be advisable. If you do buy the home, you must be prepared to obey the rules. As a prospective buyer, it is your responsibility to know the rules.
I bought a home in an HOA and now the HOA is telling me I have to remove a shed that was there when I bought the home. Can they do this?
They probably can. Under most HOA and condominium rules, the owner of the lot or unit is the one responsible for complying with the rules. Even if you were not aware that the shed was a violation and you did not create the violation, you are still responsible for making sure that your lot complies with the rules.
Associations are supposed to state in the resale package if there are any outstanding violations in the unit or on the lot. If you know of such violations you can make the seller fix them before settlement. However, if the resale package you received contains a statement from the HOA that there were no violations on the lot at the time it was up for sale, then it's possible that the HOA could be found to have waived the violation by not informing you of it when it should have. This is why you should demand the resale package before you go to settlement.
What about buying into a cooperative?
The law regulating cooperatives does not require that sellers of used units give buyers a resale package. You can still ask the seller to give you a copy of the rules to read, and a copy of the most recent budget and audits. You should also ask if any major expenses are under consideration. Get that information in writing.
What should I do if I want to sell a condominium, or a house in an HOA?
Be sure to talk to your agent, if you have one, to make sure the agent knows your home is covered by community association rules and will give the appropriate information to prospective buyers.
Before you put your home up for sale, or at least as soon as you have a contract for the sale of your home, ask your association to give you a resale package, which you can then copy and give to prospective buyers. There will be a fee for this. The law requires the association to give you the package within 20 days after it gets a written request for it. If you don't want to delay the sale of your home while you're waiting to get the package, you must ask for it as soon as you can. If you don't provide a resale package, and your buyer discovers after settlement that you failed to tell him of important facts such as violation notices on the property or major assessment increases, you face a potential lawsuit for failure to disclose material facts and for damages
What are my association's powers? Can the board do what it is doing?
The State and County laws regulating common ownership communities are, for the most part, very general and do not go into much detail about what an association can or cannot do. The laws generally leave the details of association governance to the declaration of covenants and the bylaws. Most questions about the powers and duties of an association and its board of directors can be answered by carefully reading those important documents.
What are "governing documents" and how do I find them?
"Governing documents" are the legal papers creating your association and spelling out how it operates. They usually consist of the incorporation papers, the Declaration of Covenants (which creates the governing structure of the association and the covenants that run with the land, and identifies all the lots or units in the association), the bylaws (which create most of the details of how the association will be run), and the various rules and regulations that the Board or members adopt, including the details of the architectural change approval system. Usually, you should get a copy of these at settlement from your seller (unless you already received a resale package before settling).
Condominiums file their covenants and bylaws in the land records of the Circuit Court. HOAs usually only file their covenants in the land records, and they are required to file their bylaws and all their rules and regulations in the Homeowner Association Depository, which is located in the Civil Files Room of the Montgomery County Circuit Court.
Can I go to the meetings of my association's board of directors?
Yes. By law, most meetings of condominium association and HOA boards of directors must be open for all association members to attend. (There is no comparable law for cooperatives, but you should check to see what the cooperative's own rules say.) The rule requiring open meetings applies to the board and its committees. In addition, members have the right to comment on any matter related to the meeting agenda within a designated period of time that the board must reserve during the meeting. However, they do not have the right to speak while the board is discussing agenda items during the business portion of its meeting unless the board allows them to.
The board or its committee can close a meeting for these reasons only: 1) discussion of personnel and employment matters; 2) protection of personal privacy in matters not related to the association's business; 3) discussions with its attorney; 4) discussions of pending or potential litigation; 5) investigations of possible criminal misconduct; 6) when another law requires confidentiality of the information; and 7) the discussion of individual member assessment accounts. HOAs can also close their meetings to discuss contracts that are still in the negotiation stage. If a board closes a meeting, its minutes of the meeting must state specifically why the meeting was closed and the vote of the directors to close it.
The board just raised everyone's assessments by $200 per month. Can they do this?
As a general rule, any limits on the power of the board to raise the annual assessments or to adopt special assessments are found in the covenants or bylaws. You have to read your governing documents to find out how assessments are set and what the limits are. The law does not set "assessment controls." Some documents limit increases to 10% or 15% per year, others tie the maximum increase to the annual cost-of-living index.
Neither the Maryland Homeowners Association Act nor the Cooperative Housing Act covers this topic. Section 11-109.2 of the Condominium Act says that a board cannot exceed the assessment level of its previously adopted budget by more than 15% without approval from a majority of the unit owners. However, if the reason for the increase is to pay to repair a condition that is a health or safety threat, or that could cause damage to the condominium, then the board can go above the 15% ceiling on assessment increases by whatever amount necessary to pay for the repairs without obtaining the approval of the unit owners. Most condominium bylaws will have a section on this topic.
If you want to learn more about this topic, read your community's governing documents, and then ask to inspect all the documents that show the reason for the increase and the steps taken by the board to adopt it. (You have the right to inspect your association's documents. See #10 below.) After you do this, if you still have reason to think the board raised the assessments in violation of the governing documents, you can file a complaint about that with the CCOC.
Do I have the right to inspect the records of my association?
Yes. Members have the right to inspect, on request, most of the records of their community association. Therefore, you can demand to see the association's bank accounts, checks, invoices, audit reports, rules, and many other records.
There are exceptions to these "open records" provisions under state law. These exceptions include: 1) personnel records (but records of salaries, wages, bonuses and other compensation must be available for inspection); 2) an individual's personal financial records; 3) an individual's medical records; 4) records concerning contracts in the negotiation stage (but not contracts approved by the board); 5) the written advice of the association's attorney; and 6) minutes of closed meetings. These records can be withheld by the association. The association has the right to charge a "reasonable" fee to make the records available for inspection or to copy them.
What does my condominium's master insurance cover? Who fixes my unit if it is damaged?
Section 11-114 of the Maryland Condominium Act covers the condo's duty to have master insurance and it also specifies the extent of the condo's duty to make repairs inside the private units. Generally, the condominium must maintain the common elements, and the unit owners must maintain the units they own. However, if any unit is damaged and the damage comes from the common elements, the condominium must repair the unit at its own cost. If the damage comes from a private unit, the condominium must still repair the damage but it can charge the first $5000 of any master insurance deductible to the owner of the unit that caused the damage. If there is any damage greater than that $5000, the condominium must pay to fix it at its own cost.
For example, if your neighbor's hot water heater leaks into your unit, the condominium must repair your unit and it can bill up to $5000 to your neighbor, even if the neighbor is not negligent. If your hot water heater leaks, and damages both your unit and another unit, the condominium must repair both units but it can charge you up to $5000 for the costs of those repairs even if you're not negligent. If your unit is damaged by a water leak from a roof owned by the condo, the condominium must make all repairs at its own cost (up to the amount of the deductible, at which point the master insurance must contribute).
The duty of the condominium association and the master insurance to repair does not include liability for the unit owner's personal property, or for any improvements installed by the unit owners, such as new wall-to-wall carpeting, or an upgraded hardwood floor. Every unit owner should have his own homeowner's insurance to protect his own property, to cover his liability for the first $5000 of any repairs he might be responsible for, and to cover any other items not covered by the master insurance. This extra coverage is often referred to as an "HO6 policy."
A tree fell into my yard. Who is responsible for removing it and repairing the damage to my property?
You are, unless the tree was obviously sick or dead before it fell and the owner of the tree knew it and didn't do anything about it. As a general rule, the owner of a tree is not responsible for the damage that tree causes as long as the owner is not negligent. Negligence means the owner knows that the tree had a problem - for example, it was entirely dead, or obviously dying, and failed to do anything about it before the damage occurred. This is why every homeowner needs his own homeowner's insurance.
There is an exception for condominium owners whose units are damaged when a tree falls against their building. They will probably be covered at least partially by the condominium's duty to repair under the master insurance law (see above).
Who is supposed to clear snow from the sidewalks and parking lots in my community? My documents say these are all common areas.
Montgomery County law (Section 49-17 of the County Code) requires all homeowners to remove snow from the sidewalks in front of their homes, even if the sidewalk is owned by an association. This law overrides the association's rules. However, if you live in a multi-unit building with just one entrance, then the association must clear the sidewalk in front of the building.
The association must clear the roads and parking lots that it owns. The law says it should do so within 24 hours after the snow ends. If the association does not do so, you can contact the Office of Housing Code Enforcement at 311 to file a complaint.
Can the association tow my car or truck?
Yes, if the rules allow it to do so and the association also complies with Chapter 30C ("Motor Vehicle Towing and Immobilization on Private Property") of the Montgomery County Code. Many associations have rules that ban commercial vehicles, un-drivable vehicles, trailers, campers, boats, and sometimes, pickup trucks. The governing documents should state what vehicles are prohibited, and there should be special rules for parking and towing. In addition, some association’s rules allow them to revoke parking passes and reserved parking if the member is behind in paying the assessments. The rules may allow the association to tow the offending vehicle at the owner's cost. The association cannot tow in violation of its own rules. County law also allows associations to tow vehicles from the common areas if the vehicle is parked in violation of warning signs, or if the association posts a violation notice on the vehicle and the violation is not corrected within 48 hours.