On February 16, the Court of Special Appeals ruled in favor of Montgomery Village Foundation (MVF), reiterating that the three condominiums’ termination of their Supplemental Declarations was invalid. The decision upholds the previous decisions of Circuit Court Judges Mason and Bonifant in favor of MVF. The Court’s ruling came just two weeks after the oral argument of the case on February 2. The Court found that the Supplementary Declarations that created Normandie-on-the-Lake II, Herons Cove and Thomas Choice Gardens condominiums are subject to the first declaration that Kettler Brothers, Inc. created for Whetstone in 1967. And that therefore, the termination approvals by only 2/3 of each condominium, rather than 2/3 of all MVF members, are not valid. The Court’s opinion, in pertinent part stated that: “…Nothing in those Supplementary Declarations purports to authorize those communities to secede from Montgomery Village absent the consent of two-thirds of the property owners of the entire Village.”
The Court of Special Appeals further found the condominiums’ assertion that only their Supplementary Declarations should be given effect unpersuasive, saying: “…To adopt appellants' restrictive view would leave facilities and amenities created and maintained by the Foundation in those communities and paid for, in part, by assessments from the other owners in the Village in the control of others, possibly to the exclusion of those who helped pay for them. More significant, it would permit a few of the later-added communities to affect the dismantling of Montgomery Village and thwart what was contemplated by the 1965 Town Sector Zone, the more recent Montgomery Village Overlay Zone, and the 2016 Master Plan for the Village. The conclusions reached by the Circuit Court and the judgments entered on those conclusions were correct.”
The three condominiums may appeal or request reconsideration of the Court’s decision within 30 days of its filing. Following that period, MVF will begin collection of the judgments it has been awarded against Herons Cove and Normandie-on-the-Lake II. Thomas Choice Gardens is a defendant in the suit because it filed a termination, but no judgment was awarded against them because they have continued to pay assessments to MVF.
2021 General Assembly Session
As February comes to a close in the General Assembly session, a few bills have emerged that are likely to significantly affect Montgomery Village HOAs and condominiums.
Reserve Studies: Legislators will decide whether to require HOAs, condominiums, and co-ops to obtain reserve studies, and budget for the reserve amounts recommended in the studies in these communities’ annual budgets. Reserve studies will be required to be updated every 5 years. Currently, reserve studies are only required in Prince George’s County; HB567, introduced this year, will also require reserve studies in Montgomery County. Concurrently, HB313 has been introduced to require communities throughout all of Maryland to obtain reserve studies and budget for reserves annually.
MVF has long used reserve studies as planning and budgeting tools, and has encouraged all of the communities it manages to do so as well.
Establishing Quorum for Annual Meetings: Most communities are required by their governing documents to have an annual meeting of members in order to transact basic association business, such as electing a board of directors. Establishing a quorum of members for annual meetings has been a problem for many communities. Montgomery Village’s Senator Nancy King has introduced SB0535 this session, which will make it easier for associations to establish a quorum.
Using an existing Maryland law for corporations as a model, Senator King’s bill allows associations to advertise the annual meeting on their website or in a newspaper, along with a notice to members that if a quorum cannot be achieved at that meeting, a subsequent meeting will be held, and the members who attend that meeting will be deemed to be a quorum. In the past, some Montgomery Village communities have used the process for corporations, and SB0535 will extend the availability of the process to all associations.
Maryland Swimming Pool and Spa Standards: For many Montgomery Village residents, MVF’s pools are a highlight of the services to the community. The year-round maintenance and planning to operate the pools happen largely behind the scenes, but requires tremendous expertise from the staff in complying with public health safety regulations that affect all aspects of pool operation, from construction and repair, through water quality and lifeguard standards.
This year, legislation is proposed that would make two fundamental changes: (1) adoption of The International Swimming Pool and Spa Code to current Maryland pool and spa regulations, and (2) replace the Maryland Health Department with the Maryland Department of Labor to oversee compliance with the new code. MVF’s pool staff is monitoring these bills in light of concerns that, if adopted, the bills will undo several years of work that the health department and various pool industry work groups (on which MVF has representation) have done to strengthen and improve Maryland’s pool regulations and to adopt portions of the CDC’s Model Aquatic Health Code. The bills are SB254 and HB109.
Other bills MVF is monitoring include:
- HB0110/SB0144 – Requires common ownership communities to permit electric car charging stations.
- HB248 – Prohibits communities from regulating composting by unit owners. MVF is working with the sponsor to allow reasonable restrictions as to location of composting activity.
- HB 0322 – Prohibits communities from unreasonably restricting low impact landscaping, such as combinations of rocks and vegetation that do not require watering.
- HB0367 – Requires community mangers to be licensed (the bill does not require MVF mangers to be licensed because they only provide services to MVF-affiliated communities).
- HB772 – Permits debtors, such as delinquent MVF owners, to retain up to $2,600 in bank accounts that a creditor seeks to garnish after obtaining a judgment.
- HB0826 – Creates a dispute resolution process for HOAs and condominiums whose governing documents do not include a process.
- HB1023 – Expands the authority of associations to permit boards and committees to meet virtually.
- HB1305 – Reduces required insurance coverage on detached condominium units.
As the session continues, MVF will continue to provide information about bills that could affect Village communities.