2023 Maryland Legislative Update
Date: September 19, 2023
By:
Ian A. Douglas
Mandatory Insurance Coverage (HB 98) for Condominiums
This new law will have a significant impact on the insurance required to be held by condominium associations in Maryland with detached units. Specifically, Maryland Real Property Article, Sec. 11-114, now allows for the exclusion of detached, residential units from the master property insurance policy that a condominium association maintains. Notably, the law continues to require Maryland condominium associations to insure all common elements and units which have shared elements; however, the law no longer requires, or rather permits, a Maryland condominium association to choose whether or not it will include detached residential units in its master property insurance policy going forward.
Owners of detached residential units are now subject to a new requirement to have the entirety of their detached residential unit covered under a property insurance policy that they purchase. However, a plain reading of the law appears to indicate that an owner’s obligation is satisfied if their condominium association elects to include the detached residential unit in its master property insurance policy despite no longer being required to do so.
Unlawfully Restrictive Covenants (HB 182) Modification by Counties of Municipalities
This law extends the authority to modify or amend any “unlawfully restrictive covenant” of a Maryland condominium or cooperative association to the local county or municipal authority. Specifically, pursuant to this new change found in Maryland Real Property Article, Sec. 3-112, a covenant or restriction on ownership based on race, religious belief or national origin may be amended by the county of municipal authority within which the condominium or cooperative association is located upon thirty (30) days’ notice of such modification mailed to the membership by first class mail with instructions on how to object to such modification, and no such objections being received.
Judgement Garnishments & Sheriff’s Sales (HB 42 & SB277) Automatic Amount Exempt from Bank Garnishment and Sheriff’s Sales Extinguishes Subordinate Liens
These two amendments are sure to impact efforts to collect delinquent assessments from nonpaying owners.
Automatically, pursuant to Maryland Courts and Judicial Proceedings Article, Sec. 11-504, the first $500.00 in any banking deposit account is exempt from a garnishment issued to collect upon a court awarded judgment. This automatic exemption is triggered without any action by any party and shall be included in the court’s instructions on the garnishment.
On the other hand, the legislature has clarified the impact of enforcing a judgment by having the property sold by auction at a Sheriff’s Sale. Specifically, the sale of real property by a Sheriff’s Sale now expressly extinguishes any lien on or ownership-interest in the real property subordinate to the judgment being enforced by the Sheriff’s Sale. This amendment to Maryland Courts and Judicial Proceedings Article, Sec. 11-502, may result in subordinate lienholders paying a superior judgment to stop the Sheriff’s Sale and preserve their liens.
Please contact a Whiteford, Taylor & Preston, LLP community association attorney with any questions that you may have on any of these new laws or for more specific advice based on your association’s individual needs and concerns.
The information contained here is not intended to provide legal advice or opinion and should not be acted upon without consulting an attorney. Counsel should not be selected based on advertising materials, and we recommend that you conduct further investigation when seeking legal representation.