Maryland 2022 Regular Session

Maryland House Bill HB140 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1
2	2
3	3	EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
4	4	[Brackets] indicate matter deleted from existing law.
5	5	hb0140
6	6
7	7	HOUSE BILL 140
8	8	N1 2lr0597
9	9	HB 352/21 – ENT (PRE–FILED)
10	10	By: Delegate Holmes
11	11	Requested: September 29, 2021
12	12	Introduced and read first time: January 12, 2022
13	13	Assigned to: Environment and Transportation
14	14
15	15	A BILL ENTITLED
16	16
17	17	AN ACT concerning 1
18	18
19	19	Real Property – Condominiums and Homeowners Associations – Governing 2
20	20	Bodies and Annual Meetings 3
21	21
22	22	FOR the purpose of increasing the number of meetings the board of directors or the 4
23	23	developer of a condominium or a homeowners association must convene each year 5
24	24	and requiring that unit owners or lot owners have an opportunity to comment; 6
25	25	requiring the developer of a condominium to appoint certain persons to the board of 7
26	26	directors for the council of unit owners and to establish a board of directors if no 8
27	27	board of directors has been established; requiring a declarant to appoint certain 9
28	28	persons to the governing body of a homeowners association and to establish a 10
29	29	governing body of the homeowners association if no governing body has been 11
30	30	established; requiring a developer or a declarant to deliver certain notices regarding 12
31	31	a certain bond; requiring a council of unit owners and a homeowners association to 13
32	32	maintain certain books and records; making certain provisions of law applicable to 14
33	33	the accounts of a condominium or a homeowners association; and generally relating 15
34	34	to the governing bodies of condominium councils of unit owners and homeowners 16
35	35	associations. 17
36	36
37	37	BY repealing and reenacting, with amendments, 18
38	38	Article – Real Property 19
39	39	Section 11–109(a) and (c), 11–116, 11B–106.1, 11B–111, 11B–111.6(d), and 20
40	40	11B–112(a) 21
41	41	Annotated Code of Maryland 22
42	42	(2015 Replacement Volume and 2021 Supplement) 23
43	43
44	44	BY repealing and reenacting, without amendments, 24
45	45	Article – Real Property 25
46	46	Section 11–109(b), 11–114.1(d), 11–132, and 11B–101(a), (c), and (d) 26
47	47	Annotated Code of Maryland 27
48	48	(2015 Replacement Volume and 2021 Supplement) 28 2 HOUSE BILL 140
49	49
50	50
51	51
52	52	SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 1
53	53	That the Laws of Maryland read as follows: 2
54	54
55	55	Article – Real Property 3
56	56
57	57	11–109. 4
58	58
59	59	(a) (1) The affairs of the condominium shall be governed by a council of unit 5
60	60	owners which, even if unincorporated, is constituted a legal entity for all purposes. 6
61	61
62	62	(2) The council of unit owners shall [be comprised of] COMPRISE all unit 7
63	63	owners. 8
64	64
65	65	(b) The bylaws may authorize or provide for the delegation of any power of the 9
66	66	council of unit owners to a board of directors, officers, managing agent, or other person for 10
67	67	the purpose of carrying out the responsibilities of the council of unit owners. 11
68	68
69	69	(c) (1) A meeting of the council of unit owners or board of directors may not be 12
70	70	held on less notice than required by this section. 13
71	71
72	72	(2) The council of unit owners shall maintain a current roster of names and 14
73	73	addresses of each unit owner to which notice of meetings of the board of directors shall be 15
74	74	sent at least annually. 16
75	75
76	76	(3) Each unit owner shall furnish the council of unit owners with his name 17
77	77	and current mailing address. A unit owner may not vote at meetings of the council of unit 18
78	78	owners until this information is furnished. 19
79	79
80	80	(4) A regular or special meeting of the council of unit owners may not be 20
81	81	held on less than 10 nor more than 90 days’: 21
82	82
83	83	(i) Written notice delivered or mailed to each unit owner at the 22
84	84	address shown on the roster on the date of the notice; or 23
85	85
86	86	(ii) Notice sent to each unit owner by electronic transmission, if the 24
87	87	requirements of § 11–139.1 of this title are met. 25
88	88
89	89	(5) Notice of special meetings of the board of directors shall be given: 26
90	90
91	91	(i) As provided in the bylaws; or 27
92	92
93	93	(ii) If the requirements of § 11–139.1 of this title are met, by 28
94	94	electronic transmission. 29
95	95
96	96	(6) Except as provided in § 11–109.1 of this title, a meeting of a governing 30
97	97	body shall be open and held at a time and location as provided in the notice or bylaws. 31 HOUSE BILL 140 3
98	98
99	99
100	100
101	101	(7) (i) 1. This [paragraph] SUBPARAGRAPH does not apply to any 1
102	102	meeting of the governing body that occurs at any time before the meeting at which the unit 2
103	103	owners elect officers or a board of directors in accordance with paragraph [(16)] (18) of this 3
104	104	subsection. 4
105	105
106	106	[(ii)] 2. Subject to [subparagraph (iii) of this paragraph] 5
107	107	SUBSUBPARAGRAPH 3 OF THIS SUBPARAGRAPH and to reasonable rules adopted by the 6
108	108	governing body under § 11–111 of this title, a governing body shall provide a designated 7
109	109	period of time during [a] EACH meeting to allow unit owners an opportunity to comment 8
110	110	on any matter relating to the condominium. 9
111	111
112	112	[(iii)] 3. During a meeting at which the agenda is limited to specific 10
113	113	topics or at a special meeting, the unit owners’ comments may be limited to the topics listed 11
114	114	on the meeting agenda. 12
115	115
116	116	[(iv)] (II) The [governing body] BOARD OF DIRECTORS OR THE 13
117	117	DEVELOPER shall convene at least [one meeting] TWO MEETINGS each year at which 14
118	118	[the]: 15
119	119
120	120	1. THE agenda is open to any matter relating to the 16
121	121	condominium; AND 17
122	122
123	123	2. THE UNIT OWNERS HAVE AN OPPORTUNITY TO 18
124	124	PROVIDE COMMENT . 19
125	125
126	126	(8) (i) Unless the bylaws provide otherwise, a quorum is deemed 20
127	127	present throughout any meeting of the council of unit owners if persons entitled to cast 25 21
128	128	percent of the total number of votes appurtenant to all units are present in person or by 22
129	129	proxy. 23
130	130
131	131	(ii) If the number of persons present in person or by proxy at a 24
132	132	properly called meeting of the council of unit owners is insufficient to constitute a quorum, 25
133	133	an additional meeting of the council of unit owners may be called for the same purpose if: 26
134	134
135	135	1. The notice of the initial properly called meeting stated: 27
136	136
137	137	A. That the procedure authorized by this paragraph might be 28
138	138	invoked; and 29
139	139
140	140	B. The date, time, and place of the additional meeting; and 30
141	141
142	142	2. A majority of the unit owners present vote in person or by 31
143	143	proxy to call for the additional meeting. 32
144	144	4 HOUSE BILL 140
145	145
146	146
147	147	(iii) 1. An additional meeting called under subparagraph (ii) of 1
148	148	this paragraph shall occur not less than 15 days after the initial properly called meeting. 2
149	149
150	150	2. Not less than 10 days before the additional meeting, a 3
151	151	separate and distinct notice of the date, time, place, and purpose of the additional meeting 4
152	152	called under subparagraph (ii) of this paragraph shall be: 5
153	153
154	154	A. Delivered, mailed, or sent by electronic transmission if the 6
155	155	requirements of § 11–139.1 of this title are met, to each unit owner at the address shown 7
156	156	on the roster maintained under paragraph (2) of this subsection; 8
157	157
158	158	B. Advertised in a newspaper published in the county where 9
159	159	the condominium is located; or 10
160	160
161	161	C. If the condominium has a website, posted on the homepage 11
162	162	of the website. 12
163	163
164	164	3. The notice shall contain the quorum and voting provisions 13
165	165	of subparagraph (iv) of this paragraph. 14
166	166
167	167	(iv) 1. At the additional meeting, the unit owners present in 15
168	168	person or by proxy constitute a quorum. 16
169	169
170	170	2. Unless the bylaws provide otherwise, a majority of the 17
171	171	unit owners present in person or by proxy: 18
172	172
173	173	A. May approve or authorize the proposed action at the 19
174	174	additional meeting; and 20
175	175
176	176	B. May take any other action that could have been taken at 21
177	177	the original meeting if a sufficient number of unit owners had been present. 22
178	178
179	179	(v) This paragraph may not be construed to affect the percentage of 23
180	180	votes required to amend the declaration or bylaws or to take any other action required to 24
181	181	be taken by a specified percentage of votes. 25
182	182
183	183	(9) At meetings of the council of unit owners each unit owner shall be 26
184	184	entitled to cast the number of votes appurtenant to his unit. Unit owners may vote by proxy, 27
185	185	but the proxy is effective only for a maximum period of 180 days following its issuance, 28
186	186	unless granted to a lessee or mortgagee. 29
187	187
188	188	(10) Any proxy may be revoked at any time at the pleasure of the unit owner 30
189	189	or unit owners executing the proxy. 31
190	190
191	191	(11) A proxy who is not appointed to vote as directed by a unit owner may 32
192	192	only be appointed for purposes of meeting quorums and to vote for matters of business 33 HOUSE BILL 140 5
193	193
194	194
195	195	before the council of unit owners, other than an election of officers and members of the 1
196	196	board of directors. 2
197	197
198	198	(12) Only a unit owner voting in person or by electronic transmission if the 3
199	199	requirements of § 11–139.2 of this title are met or a proxy voting for candidates designated 4
200	200	by a unit owner may vote for officers and members of the board of directors. 5
201	201
202	202	(13) Unless otherwise provided in the bylaws, a unit owner may nominate 6
203	203	himself or any other person to be an officer or member of the board of directors. A call for 7
204	204	nominations shall be sent to all unit owners not less than 45 days before notice of an election 8
205	205	is sent. Only nominations made at least 15 days before notice of an election shall be listed 9
206	206	on the election ballot. Candidates shall be listed on the ballot in alphabetical order, with 10
207	207	no indicated candidate preference. Nominations may be made from the floor at the meeting 11
208	208	at which the election to the board is held. 12
209	209
210	210	(14) Election materials prepared with funds of the council of unit owners 13
211	211	shall list candidates in alphabetical order and may not indicate a candidate preference. 14
212	212
213	213	(15) Unless otherwise provided in this title, and subject to provisions in the 15
214	214	bylaws requiring a different majority, decisions of the council of unit owners shall be made 16
215	215	on a majority of votes of the unit owners listed on the current roster present and voting. 17
216	216
217	217	(16) IF THERE IS A BOARD O F DIRECTORS FOR THE COUNCIL OF UNIT 18
218	218	OWNERS ALREADY ESTAB LISHED BY THE DEVELO PER, WITHIN 30 DAYS AFTER THE 19
219	219	DATE ON WHICH UNITS REPRESENTING 25% OF THE VOTES IN THE CONDOMINIUM 20
220	220	HAVE BEEN CONVEYED B Y THE DEVELOPER TO M EMBERS OF THE PUBLIC FOR 21
221	221	RESIDENTIAL PURPOSES , THE DEVELOPER SHALL APPOINT AT LEAST ONE MEMBER 22
222	222	TO THAT BOARD OF DIR ECTORS WHO IS: 23
223	223
224	224	(I) A UNIT OWNER; AND 24
225	225
226	226	(II) NOT OTHERWISE AFFILIATED WITH THE DEVELOPER . 25
227	227
228	228	(17) IF NO BOARD OF DIRECT ORS FOR THE COUNCIL OF UNIT OWNERS 26
229	229	HAS BEEN ESTABLISHED BY THE DEVELOPER WIT HIN 30 DAYS AFTER THE DATE ON 27
230	230	WHICH UNITS REPRESEN TING 25% OF THE VOTES IN THE CONDOMINIUM HAVE BEEN 28
231	231	CONVEYED BY THE DEVELOPER TO MEMBERS OF THE PUBLIC FOR RE SIDENTIAL 29
232	232	PURPOSES, THE DEVELOPER SHALL ESTABLISH A BOARD OF DIRECTORS FOR THE 30
233	233	COUNCIL OF UNIT OWNE RS AND SHALL APPOINT AT LEAST ONE MEMBER TO THAT 31
234	234	BOARD OF DIRECTORS W HO IS: 32
235	235
236	236	(I) A UNIT OWNER; AND 33
237	237
238	238	(II) NOT OTHERWISE AFFILIATED WITH THE DEVELOPER . 34
239	239	6 HOUSE BILL 140
240	240
241	241
242	242	[(16)] (18) (i) A meeting of the council of unit owners to elect a board of 1
243	243	directors for the council of unit owners, as provided in the condominium declaration or 2
244	244	bylaws, shall be held within: 3
245	245
246	246	1. 60 days from the date that units representing 50 percent 4
247	247	of the votes in the condominium have been conveyed by the developer to members of the 5
248	248	public for residential purposes; or 6
249	249
250	250	2. If a lesser percentage is specified in the declaration or 7
251	251	bylaws of the condominium, 60 days from the date the specified lesser percentage of units 8
252	252	in the condominium are sold to members of the public for residential purposes. 9
253	253
254	254	(ii) 1. Before the date of the meeting held under subparagraph 10
255	255	(i) of this paragraph, the developer shall deliver to each unit owner notice that the 11
256	256	requirements of subparagraph (i) of this paragraph have been met. 12
257	257
258	258	2. The notice shall include the date, time, and place of the 13
259	259	meeting to elect the board of directors for the council of unit owners. 14
260	260
261	261	(iii) If a replacement board member is elected, the term of each 15
262	262	member of the board of directors appointed by the developer shall end 10 days after the 16
263	263	meeting is held as specified in subparagraph (i) of this paragraph. 17
264	264
265	265	(IV) 1. WITHIN 15 DAYS AFTER THE DA TE OF THE MEETING 18
266	266	HELD UNDER SUBPARAGR APH (I) OF THIS PARAGRAPH , THE DEVELOPER SHALL 19
267	267	DELIVER TO EACH MEMB ER OF THE BOARD OF DIRE CTORS FOR THE COUNCI L OF 20
268	268	UNIT OWNERS WHO IS A UNIT OWNER AND WHO I S NOT AFFILIATED WIT H THE 21
269	269	DEVELOPER NOTICE OF: 22
270	270
271	271	A. ANY BOND PROVIDED BY THE DE VELOPER TO A 23
272	272	GOVERNMENTAL UNIT IN CONNECTION WITH THE DEVELOPMENT ; AND 24
273	273
274	274	B. THE NAME, ADDRESS, AND PHONE NUMBER OF THE 25
275	275	GOVERNMENTAL UNIT TH AT SERVES AS THE BON D HOLDER. 26
276	276
277	277	2. AT LEAST 30 DAYS BEFORE A DEVELO PER REQUESTS 27
278	278	TO BE RELEASED FROM A BOND PROVIDED BY THE DEVE LOPER TO A 28
279	279	GOVERNMENTAL UNIT , THE DEVELOPER SHALL DELIVER TO EACH MEMB ER OF THE 29
280	280	BOARD OF DIRECTORS F OR THE COUNCIL OF UN IT OWNERS WHO IS A U NIT OWNER 30
281	281	AND WHO IS NOT AFFILIATED WITH THE DEVELOPER NOTICE OF: 31
282	282
283	283	A. THE INTENTION TO BE R ELEASED FROM THE BON D; 32
284	284	AND 33
285	285	HOUSE BILL 140 7
286	286
287	287
288	288	B. THE NAME, ADDRESS, AND PHONE NUMBER OF THE 1
289	289	GOVERNMENTAL UNIT TH AT SERVES AS THE BON D HOLDER. 2
290	290
291	291	[(iv)] (V) Within 30 days from the date of the meeting held under 3
292	292	subparagraph (i) of this paragraph, the developer shall deliver to the officers or board of 4
293	293	directors for the council of unit owners, as provided in the condominium declaration or 5
294	294	bylaws, at the developer’s expense: 6
295	295
296	296	1. The documents specified in § 11–132 of this title; 7
297	297
298	298	2. The condominium funds, including operating funds, 8
299	299	replacement reserves, investment accounts, and working capital; 9
300	300
301	301	3. The tangible property of the condominium; and 10
302	302
303	303	4. A roster of current unit owners, including mailing 11
304	304	addresses, telephone numbers, and unit numbers, if known. 12
305	305
306	306	[(v)] (VI) In Prince George’s County and Montgomery County, the 13
307	307	replacement reserves delivered under subparagraph [(iv)2] (V)2 of this paragraph shall be 14
308	308	equal to at least the reserve funding amount recommended in the reserve study completed 15
309	309	under § 11–109.4 of this title as of the date of the meeting. 16
310	310
311	311	[(vi)] (VII) 1. This subparagraph does not apply to a contract 17
312	312	entered into before October 1, 2009. 18
313	313
314	314	2. A. In this subparagraph, “contract” means an 19
315	315	agreement with a company or individual to handle financial matters, maintenance, or 20
316	316	services for the condominium. 21
317	317
318	318	B. “Contract” does not include an agreement relating to the 22
319	319	provision of utility services or communication systems. 23
320	320
321	321	3. Until all members of the board of directors of the 24
322	322	condominium are elected by the unit owners at a transitional meeting as specified in 25
323	323	subparagraph (i) of this paragraph, a contract entered into by the officers or board of 26
324	324	directors of the condominium may be terminated, at the discretion of the board of directors 27
325	325	and without liability for the termination, not later than 30 days after notice. 28
326	326
327	327	[(vii)] (VIII) If the developer fails to comply with the requirements of 29
328	328	this paragraph, an aggrieved unit owner may submit the dispute to the Division of 30
329	329	Consumer Protection of the Office of the Attorney General under § 11–130(c) of this title. 31
330	330
331	331	11–114.1. 32
332	332	8 HOUSE BILL 140
333	333
334	334
335	335	(d) A copy of the fidelity insurance policy or fidelity bond shall be included in the 1
336	336	books and records kept and made available by the council of unit owners under § 11–116 of 2
337	337	this title. 3
338	338
339	339	11–116. 4
340	340
341	341	(a) The council of unit owners shall keep books and records BEGINNING ON THE 5
342	342	DATE THE COUNCIL OF UNIT OWNERS IS ESTAB LISHED, in accordance with good 6
343	343	accounting practices on a consistent basis. 7
344	344
345	345	(b) On the request of the unit owners of at least 5 percent of the units, the council 8
346	346	of unit owners shall cause an audit of the books and records to be made by an independent 9
347	347	certified public accountant, provided an audit shall be made not more than once in any 10
348	348	consecutive 12–month period. The cost of the audit shall be a common expense. 11
349	349
350	350	(c) (1) (i) 1. Except as provided in paragraph (3) of this subsection, all 12
351	351	books and records, including insurance policies, kept by the council of unit owners shall be 13
352	352	maintained in Maryland or within 50 miles of its borders and shall be available at some 14
353	353	place designated by the council of unit owners for examination or copying, or both, by any 15
354	354	unit owner, a unit owner’s mortgagee, or their respective duly authorized agents or 16
355	355	attorneys, during normal business hours, and after reasonable notice. 17
356	356
357	357	2. ALL BOOKS AND RECORDS KEPT BY THE COUNCIL OF 18
358	358	UNIT OWNERS SHALL BE MAINTAINED SEPARATE AND APART FROM THE B OOKS AND 19
359	359	RECORDS OF THE DEVELOPER OR OF ANY OTHER PERSON . 20
360	360
361	361	(ii) If a unit owner requests in writing a copy of financial statements 21
362	362	of the condominium or the minutes of a meeting of the board of directors or other governing 22
363	363	body of the condominium to be delivered, the board of directors or other governing body of 23
364	364	the condominium shall compile and send the requested information by mail, electronic 24
365	365	transmission, or personal delivery: 25
366	366
367	367	1. Within 21 days after receipt of the written request, if the 26
368	368	financial statements or minutes were prepared within the 3 years immediately preceding 27
369	369	receipt of the request; or 28
370	370
371	371	2. Within 45 days after receipt of the written request, if the 29
372	372	financial statements or minutes were prepared more than 3 years before receipt of the 30
373	373	request. 31
374	374
375	375	(2) Books and records required to be made available under paragraph (1) 32
376	376	of this subsection shall first be made available to a unit owner not later than 15 business 33
377	377	days after a unit is conveyed from a developer and the unit owner requests to examine or 34
378	378	copy the books and records. 35
379	379	HOUSE BILL 140 9
380	380
381	381
382	382	(3) Books and records kept by or on behalf of a council of unit owners may 1
383	383	be withheld from public inspection, except for inspection by the person who is the subject 2
384	384	of the record or the person’s designee or guardian, to the extent that they concern: 3
385	385
386	386	(i) Personnel records, not including information on individual 4
387	387	salaries, wages, bonuses, and other compensation paid to employees; 5
388	388
389	389	(ii) An individual’s medical records; 6
390	390
391	391	(iii) An individual’s personal financial records, including assets, 7
392	392	income, liabilities, net worth, bank balances, financial history or activities, and 8
393	393	creditworthiness; 9
394	394
395	395	(iv) Records relating to business transactions that are currently in 10
396	396	negotiation; 11
397	397
398	398	(v) The written advice of legal counsel; or 12
399	399
400	400	(vi) Minutes of a closed meeting of the board of directors or other 13
401	401	governing body of the council of unit owners, unless a majority of a quorum of the board of 14
402	402	directors or governing body that held the meeting approves unsealing the minutes or a 15
403	403	recording of the minutes for public inspection. 16
404	404
405	405	(d) (1) Except for a reasonable charge imposed on a person desiring to review 17
406	406	or copy the books and records or who requests delivery of information, the council of unit 18
407	407	owners may not impose any charges under this section. 19
408	408
409	409	(2) A charge imposed under paragraph (1) of this subsection for copying 20
410	410	books and records may not exceed the limits authorized under Title 7, Subtitle 2 of the 21
411	411	Courts Article. 22
412	412
413	413	11–132. 23
414	414
415	415	On transfer of control by the developer to the council of unit owners, the developer 24
416	416	shall turn over documents including: 25
417	417
418	418	(1) Copies of the condominium’s filed articles of incorporation, recorded 26
419	419	declaration, and all recorded covenants, bylaws, plats, and restrictions of the condominium; 27
420	420
421	421	(2) Subject to the restrictions of § 11–116 of this title, all books and records 28
422	422	of the condominium, including financial statements, minutes of any meeting of the 29
423	423	governing body, and completed business transactions; 30
424	424
425	425	(3) Any policies, rules, and regulations adopted by the governing body; 31
426	426
427	427	(4) The financial records of the condominium from the date of creation to 32
428	428	the date of transfer of control, including budget information regarding estimated and actual 33 10 HOUSE BILL 140
429	429
430	430
431	431	expenditures by the condominium and any report relating to the reserves required for major 1
432	432	repairs and replacement of the common elements of the condominium; 2
433	433
434	434	(5) A copy of all contracts to which the condominium is a party; 3
435	435
436	436	(6) The name, address, and telephone number of any contractor or 4
437	437	subcontractor employed by the condominium; 5
438	438
439	439	(7) Any insurance policies in effect and all prior insurance policies; 6
440	440
441	441	(8) Any permit or notice of code violation issued to the condominium by the 7
442	442	county, local, State, or federal government; 8
443	443
444	444	(9) Any warranty in effect; 9
445	445
446	446	(10) Drawings, architectural plans, or other suitable documents setting 10
447	447	forth the necessary information for location, maintenance, and repair of all condominium 11
448	448	facilities; and 12
449	449
450	450	(11) Individual owner files and records, including assessment account 13
451	451	records, correspondence, and notices of any violations. 14
452	452
453	453	11B–101. 15
454	454
455	455	(a) In this title the following words have the meanings indicated, unless the 16
456	456	context requires otherwise. 17
457	457
458	458	(c) “Declarant” means any person who subjects property to a declaration. 18
459	459
460	460	(d) (1) “Declaration” means an instrument, however denominated, recorded 19
461	461	among the land records of the county in which the property of the declarant is located, that 20
462	462	creates the authority for a homeowners association to impose on lots, or on the owners or 21
463	463	occupants of lots, or on another homeowners association, condominium, or cooperative 22
464	464	housing corporation any mandatory fee in connection with the provision of services or 23
465	465	otherwise for the benefit of some or all of the lots, the owners or occupants of lots, or the 24
466	466	common areas. 25
467	467
468	468	(2) “Declaration” includes any amendment or supplement to the 26
469	469	instruments described in paragraph (1) of this subsection. 27
470	470
471	471	(3) “Declaration” does not include a private right–of–way or similar 28
472	472	agreement unless it requires a mandatory fee payable annually or at more frequent 29
473	473	intervals. 30
474	474
475	475	11B–106.1. 31
476	476	HOUSE BILL 140 11
477	477
478	478
479	479	(A) IF THERE IS A BOARD O F DIRECTORS FOR THE HOMEOWNERS 1
480	480	ASSOCIATION ALREADY ESTABLISHED BY THE D ECLARANT, WITHIN 30 DAYS AFTER 2
481	481	THE DATE THAT AT LEAST 25% OF THE CURRENTLY SUB DIVIDED LOTS THAT MA Y BE 3
482	482	PART OF THE DEVELOPM ENT AFTER ALL PHASES ARE COMPL ETE HAVE BEEN 4
483	483	CONVEYED TO MEMBERS OF THE PUBLIC FOR RE SIDENTIAL PURPOSES , THE 5
484	484	DECLARANT SHALL APPO INT AT LEAST ONE MEM BER TO THAT BOARD OF 6
485	485	DIRECTORS WHO IS: 7
486	486
487	487	(1) A LOT OWNER; AND 8
488	488
489	489	(2) NOT OTHERWISE AFFILIA TED WITH THE DECLARA NT OR A 9
490	490	VENDOR OF LOTS IN TH E DEVELOPMENT . 10
491	491
492	492	(B) IF NO BOARD OF DIRECT ORS FOR THE HOMEOWNERS A SSOCIATION HAS 11
493	493	BEEN ESTABLISHED BY THE DECLARANT WHEN A T LEAST 25% OF THE CURRENTLY 12
494	494	SUBDIVIDED LOTS THAT MAY BE PART OF THE D EVELOPMENT AFTER ALL PHASES 13
495	495	ARE COMPLETE HA VE BEEN CONVEYED TO MEMBERS OF THE PUBLI C FOR 14
496	496	RESIDENTIAL PURPOSES , THE DECLARANT SHALL ESTABLISH A BOARD OF 15
497	497	DIRECTORS AND SHALL APPOINT AT LEAST ONE MEMBER TO THAT BOARD OF 16
498	498	DIRECTORS WHO IS : 17
499	499
500	500	(1) A LOT OWNER; AND 18
501	501
502	502	(2) NOT OTHERWISE AFFILIA TED WITH THE DECLARANT OR A 19
503	503	VENDOR OF LOTS IN TH E DEVELOPMENT . 20
504	504
505	505	[(a)] (C) A meeting of the members of the homeowners association to elect a 21
506	506	governing body of the homeowners association shall be held within: 22
507	507
508	508	(1) 60 days from the date that at least 75% of the total number of lots that 23
509	509	may be part of the development after all phases are complete are sold to members of the 24
510	510	public for residential purposes; or 25
511	511
512	512	(2) If a lesser percentage is specified in the governing documents of the 26
513	513	homeowners association, 60 days from the date the specified lesser percentage of the total 27
514	514	number of lots in the development after all phases are complete are sold to members of the 28
515	515	public for residential purposes. 29
516	516
517	517	[(b)] (D) (1) Before the date of the meeting held under subsection [(a)] (C) of 30
518	518	this section, the declarant shall deliver to each lot owner notice that the requirements of 31
519	519	subsection [(a)] (C) of this section have been met. 32
520	520
521	521	(2) The notice shall include the date, time, and place of the meeting to elect 33
522	522	the governing body of the homeowners association. 34
523	523	12 HOUSE BILL 140
524	524
525	525
526	526	[(c)] (E) The term of each member of the governing body of the homeowners 1
527	527	association appointed by the declarant shall end 10 days after the meeting under subsection 2
528	528	[(a)] (C) of this section is held, if a replacement board member is elected. 3
529	529
530	530	[(d)] (F) Within 30 days from the date of the meeting held under subsection [(a)] 4
531	531	(C) of this section, the declarant shall deliver the following items to the governing body at 5
532	532	the declarant’s expense: 6
533	533
534	534	(1) The deeds to the common areas; 7
535	535
536	536	(2) Copies of the homeowners association’s filed articles of incorporation, 8
537	537	declaration, and all recorded covenants, plats, restrictions, and any other records of the 9
538	538	primary development and of related developments; 10
539	539
540	540	(3) A copy of the bylaws and rules of the primary development and of other 11
541	541	related developments as filed in the depository of the county in which the development is 12
542	542	located; 13
543	543
544	544	(4) The minute books, including all minutes; 14
545	545
546	546	(5) Subject to the restrictions of § 11B–112 of this title, all books and 15
547	547	records of the homeowners association, including financial statements, minutes of any 16
548	548	meeting of the governing body, and completed business transactions; 17
549	549
550	550	(6) Any policies, rules, and regulations adopted by the governing body; 18
551	551
552	552	(7) The financial records of the homeowners association from the date of 19
553	553	creation to the date of transfer of control, including budget information regarding estimated 20
554	554	and actual expenditures by the homeowners association and any report relating to the 21
555	555	reserves required for major repairs and replacement of the common areas of the 22
556	556	homeowners association; 23
557	557
558	558	(8) A copy of all contracts to which the homeowners association is a party; 24
559	559
560	560	(9) The name, address, and telephone number of any contractor or 25
561	561	subcontractor employed by the homeowners association; 26
562	562
563	563	(10) Any insurance policies in effect; 27
564	564
565	565	(11) Any permit or notice of code violations issued to the homeowners 28
566	566	association by the county, local, State, or federal government; 29
567	567
568	568	(12) Any warranty in effect and all prior insurance policies; 30
569	569
570	570	(13) The homeowners association funds, including operating funds, 31
571	571	replacement reserves, investment accounts, and working capital; 32
572	572	HOUSE BILL 140 13
573	573
574	574
575	575	(14) The tangible property of the homeowners association; 1
576	576
577	577	(15) A roster of current lot owners, including their mailing addresses, 2
578	578	telephone numbers, and lot numbers, if known; 3
579	579
580	580	(16) Individual member files and records, including assessment account 4
581	581	records, correspondence, and notices of any violations; and 5
582	582
583	583	(17) Drawings, architectural plans, or other suitable documents setting 6
584	584	forth the necessary information for location, maintenance, and repairs of all common areas. 7
585	585
586	586	[(e)] (G) In Prince George’s County and Montgomery County, the replacement 8
587	587	reserves delivered under subsection [(d)(13)] (F)(13) of this section shall be equal to at 9
588	588	least the reserve funding amount recommended in the reserve study completed under § 10
589	589	11B–112.3 of this title as of the date of the meeting. 11
590	590
591	591	[(f)] (H) (1) This subsection does not apply to a contract entered into before 12
592	592	October 1, 2009. 13
593	593
594	594	(2) (i) In this subsection, “contract” means an agreement with a 14
595	595	company or individual to handle financial matters, maintenance, or services for the 15
596	596	homeowners association. 16
597	597
598	598	(ii) “Contract” does not include an agreement relating to the 17
599	599	provision of utility services or communication systems. 18
600	600
601	601	(3) Until all members of the governing body are elected by the lot owners 19
602	602	at a transitional meeting under subsection [(a)] (C) of this section, a contract entered into 20
603	603	by the governing body may be terminated, at the discretion of the governing body and 21
604	604	without liability for the termination, not later than 30 days after notice. 22
605	605
606	606	(I) (1) WITHIN 15 DAYS AFTER THE DATE OF THE MEETING HELD UNDER 23
607	607	SUBSECTION (C) OF THIS SECTION , THE DECLARANT SHALL DELIVER TO EACH 24
608	608	MEMBER OF THE BOARD OF DIRECTORS WHO IS A LOT OWNER AND WHO IS NOT 25
609	609	AFFILIATED WITH THE DECLARANT NOTICE OF: 26
610	610
611	611	(I) ANY BOND PROVIDED BY THE DECLARANT TO A 27
612	612	GOVERNMENTAL UNIT IN CONNECTION WITH THE DEVELOPMENT ; AND 28
613	613
614	614	(II) THE NAME, ADDRESS, AND PHONE NUMBER OF THE 29
615	615	GOVERNMENTAL UNIT TH AT SERVES AS THE BON D HOLDER. 30
616	616
617	617	(2) AT LEAST 30 DAYS BEFORE A DECLAR ANT REQUESTS TO BE 31
618	618	RELEASED FROM A BOND PROVIDED BY THE DECL ARANT TO A GOVERNMEN TAL 32
619	619	UNIT, THE DECLARANT SHALL DELIVER TO EACH MEMB ER OF THE BO ARD OF 33 14 HOUSE BILL 140
620	620
621	621
622	622	DIRECTORS WHO IS A L OT OWNER AND WHO IS NOT AFFILIATED WITH THE 1
623	623	DECLARANT NOTICE OF: 2
624	624
625	625	(I) THE INTENTION TO BE R ELEASED FROM THE BON D; AND 3
626	626
627	627	(II) THE NAME, ADDRESS, AND PHONE NUMBER OF THE 4
628	628	GOVERNMENTAL UNIT TH AT SERVES AS THE BON D HOLDER. 5
629	629
630	630	[(g)] (J) If the declarant fails to comply with the requirements of this section, an 6
631	631	aggrieved lot owner may submit the dispute to the Division of Consumer Protection of the 7
632	632	Office of the Attorney General under § 11B–115(c) of this title. 8
633	633
634	634	11B–111. 9
635	635
636	636	Except as provided in this title, and notwithstanding anything contained in any of 10
637	637	the documents of the homeowners association: 11
638	638
639	639	(1) Subject to the provisions of item (4) of this section, all meetings of the 12
640	640	homeowners association, including meetings of the board of directors or other governing 13
641	641	body of the homeowners association or a committee of the homeowners association, shall 14
642	642	be open to all members of the homeowners association or their agents; 15
643	643
644	644	(2) All members of the homeowners association shall be given reasonable 16
645	645	notice of all regularly scheduled open meetings of the homeowners association; 17
646	646
647	647	(3) (i) [This item does not apply to any meeting of a governing body that 18
648	648	occurs at any time before] AFTER the lot owners, other than the developer, have a majority 19
649	649	of votes in the homeowners association, as provided in the declaration[;]: 20
650	650
651	651	[(ii)] 1. Subject to item [(iii)] 2 of this item and to reasonable rules 21
652	652	adopted by [a] THE governing body, [a] THE governing body shall provide a designated 22
653	653	period of time during [a] EACH meeting to allow lot owners an opportunity to comment on 23
654	654	any matter relating to the homeowners association; AND 24
655	655
656	656	[(iii)] 2. During a meeting at which the agenda is limited to specific 25
657	657	topics or at a special meeting, the lot owners’ comments may be limited to the topics listed 26
658	658	on the meeting agenda; and 27
659	659
660	660	[(iv)] (II) The [governing body] BOARD OF DIRECTORS OR THE 28
661	661	DECLARANT shall convene at least [one meeting] TWO MEETINGS each year at which 29
662	662	[the]: 30
663	663
664	664	1. THE agenda is open to any matter relating to the 31
665	665	homeowners association; AND 32
666	666	HOUSE BILL 140 15
667	667
668	668
669	669	2. THE LOT OWNERS HAVE A N OPPORTUNITY TO 1
670	670	PROVIDE COMMENT ; 2
671	671
672	672	(4) A meeting of the board of directors or other governing body of the 3
673	673	homeowners association or a committee of the homeowners association may be held in 4
674	674	closed session only for the following purposes: 5
675	675
676	676	(i) Discussion of matters pertaining to employees and personnel; 6
677	677
678	678	(ii) Protection of the privacy or reputation of individuals in matters 7
679	679	not related to the homeowners association’s business; 8
680	680
681	681	(iii) Consultation with legal counsel on legal matters; 9
682	682
683	683	(iv) Consultation with staff personnel, consultants, attorneys, board 10
684	684	members, or other persons in connection with pending or potential litigation or other legal 11
685	685	matters; 12
686	686
687	687	(v) Investigative proceedings concerning possible or actual criminal 13
688	688	misconduct; 14
689	689
690	690	(vi) Consideration of the terms or conditions of a business 15
691	691	transaction in the negotiation stage if the disclosure could adversely affect the economic 16
692	692	interests of the homeowners association; 17
693	693
694	694	(vii) Compliance with a specific constitutional, statutory, or judicially 18
695	695	imposed requirement protecting particular proceedings or matters from public disclosure; 19
696	696	or 20
697	697
698	698	(viii) Discussion of individual owner assessment accounts; 21
699	699
700	700	(5) If a meeting is held in closed session under item (4) of this section: 22
701	701
702	702	(i) An action may not be taken and a matter may not be discussed if 23
703	703	it is not permitted by item (4) of this section; and 24
704	704
705	705	(ii) A statement of the time, place, and purpose of a closed meeting, 25
706	706	the record of the vote of each board or committee member by which the meeting was closed, 26
707	707	and the authority under this section for closing a meeting shall be included in the minutes 27
708	708	of the next meeting of the board of directors or the committee of the homeowners 28
709	709	association; and 29
710	710
711	711	(6) (i) If the number of lot owners present in person or by proxy at a 30
712	712	properly called meeting is insufficient to constitute a quorum, an additional meeting of the 31
713	713	lot owners may be called for the same purpose if: 32
714	714
715	715	1. The notice of the initial properly called meeting stated: 33 16 HOUSE BILL 140
716	716
717	717
718	718
719	719	A. That the procedure authorized by this item (6) might be 1
720	720	invoked; and 2
721	721
722	722	B. The date, time, and place of the additional meeting; and 3
723	723
724	724	2. A majority of the lot owners present vote in person or by 4
725	725	proxy to call for the additional meeting; 5
726	726
727	727	(ii) An additional meeting called under item (i) of this item shall 6
728	728	occur not less than 15 days after the initial properly called meeting; 7
729	729
730	730	(iii) 1. Not less than 10 days before the additional meeting, a 8
731	731	separate and distinct notice of the date, time, place, and purpose of the additional meeting 9
732	732	called under item (i) of this item shall be: 10
733	733
734	734	A. Delivered, mailed, or sent by electronic transmission, if 11
735	735	the requirements of § 11B–113.1 of this title are met, to each lot owner at the address shown 12
736	736	on the roster maintained by the homeowners association; 13
737	737
738	738	B. Advertised in a newspaper published in the county where 14
739	739	the homeowners association is located; or 15
740	740
741	741	C. If the homeowners association has a website, posted on the 16
742	742	homepage of the website; and 17
743	743
744	744	2. The notice shall contain the quorum and voting provisions 18
745	745	of item (iv) of this item; 19
746	746
747	747	(iv) 1. At the additional meeting, the lot owners present in 20
748	748	person or by proxy constitute a quorum; and 21
749	749
750	750	2. Unless the bylaws provide otherwise, a majority of the lot 22
751	751	owners present in person or by proxy: 23
752	752
753	753	A. May approve or authorize the proposed action at the 24
754	754	additional meeting; and 25
755	755
756	756	B. May take any other action that could have been taken at 26
757	757	the original meeting if a sufficient number of lot owners had been present; and 27
758	758
759	759	(v) This item (6) may not be construed to affect the percentage of 28
760	760	votes required to amend the declaration or bylaws or to take any other action required to 29
761	761	be taken by a specified percentage of votes. 30
762	762
763	763	11B–111.6. 31
764	764	HOUSE BILL 140 17
765	765
766	766
767	767	(d) A copy of the fidelity insurance policy or fidelity bond shall be included in the 1
768	768	books [and], records, AND ACCOUNTS kept and made available by or on behalf of the 2
769	769	homeowners association under § 11B–112 of this title. 3
770	770
771	771	11B–112. 4
772	772
773	773	(a) (1) (I) THE HOMEOWNERS ASSOCI ATION SHALL MAINTAIN BOOKS 5
774	774	AND RECORDS BEGINNING ON THE DAT E THE HOMEOWNERS ASS OCIATION IS 6
775	775	ESTABLISHED. 7
776	776
777	777	(II) ALL BOOKS AND RECORDS KEPT BY THE HOMEOWNE RS 8
778	778	ASSOCIATION SHALL BE MAINTAINED SEPARATE AND APART FROM THE B OOKS AND 9
779	779	RECORDS OF THE DECLARANT OR OF ANY OTHER PERSON . 10
780	780
781	781	[(1)] (2) (i) Subject to the provisions of paragraph [(2)] (3) of this 11
782	782	subsection, all books and records kept by or on behalf of the homeowners association shall 12
783	783	be made available for examination or copying, or both, by a lot owner, a lot owner’s 13
784	784	mortgagee, or their respective duly authorized agents or attorneys, during normal business 14
785	785	hours, and after reasonable notice. 15
786	786
787	787	(ii) Books and records required to be made available under 16
788	788	subparagraph (i) of this paragraph shall first be made available to a lot owner no later than 17
789	789	15 business days after a lot is conveyed by the declarant and the lot owner requests to 18
790	790	examine or copy the books and records. 19
791	791
792	792	(iii) If a lot owner requests in writing a copy of financial statements 20
793	793	of the homeowners association or the minutes of a meeting of the governing body of the 21
794	794	homeowners association to be delivered, the governing body of the homeowners association 22
795	795	shall compile and send the requested information by mail, electronic transmission, or 23
796	796	personal delivery: 24
797	797
798	798	1. Within 21 days after receipt of the written request, if the 25
799	799	financial statements or minutes were prepared within the 3 years immediately preceding 26
800	800	receipt of the request; or 27
801	801
802	802	2. Within 45 days after receipt of the written request, if the 28
803	803	financial statements or minutes were prepared more than 3 years before receipt of the 29
804	804	request. 30
805	805
806	806	[(2)] (3) Books and records kept by or on behalf of a homeowners 31
807	807	association may be withheld from public inspection, except for inspection by the person who 32
808	808	is the subject of the record or the person’s designee or guardian, to the extent that they 33
809	809	concern: 34
810	810
811	811	(i) Personnel records, not including information on individual 35
812	812	salaries, wages, bonuses, and other compensation paid to employees; 36 18 HOUSE BILL 140
813	813
814	814
815	815
816	816	(ii) An individual’s medical records; 1
817	817
818	818	(iii) An individual’s personal financial records, including assets, 2
819	819	income, liabilities, net worth, bank balances, financial history or activities, and 3
820	820	creditworthiness; 4
821	821
822	822	(iv) Records relating to business transactions that are currently in 5
823	823	negotiation; 6
824	824
825	825	(v) The written advice of legal counsel; or 7
826	826
827	827	(vi) Minutes of a closed meeting of the governing body of the 8
828	828	homeowners association, unless a majority of a quorum of the governing body of the 9
829	829	homeowners association that held the meeting approves unsealing the minutes or a 10
830	830	recording of the minutes for public inspection. 11
831	831
832	832	SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 12
833	833	October 1, 2022. 13
834	834