This document summarizes a presentation on 2014 Maryland legislative updates and 2013-2014 case law related to community associations. It discusses bills on dog liability, foreclosure procedures, and cooperative association transparency. It also summarizes two court cases, one upholding a board's decision not to enforce a violation due to lack of bad faith, and another finding a cooperative not liable for secondhand smoke exposure. The presentation was given by attorneys Jason Fisher and Ruth Katz of Lerch, Early & Brewer, Chtd to provide community association professionals information on new laws and legal precedents.

1. 2014 Maryland
Legislative and Case Law
Update
Spring 2014
Jason Fisher, Esquire
Ruth Katz, Esquire
Lerch, Early & Brewer, Chtd.
www.lerchearly.com

2. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
 Introductions
 2014 Legislative Update
 2013-2014 Current Case Law
Update
Overview
2

3. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
Speakers
3
 Jason Fisher is an attorney at Lerch, Early & Brewer
who co-chairs the firm's practice focused exclusively on
community associations. He provides skilled
representation to community and homeowners
associations, condominiums and co-operatives in
Maryland and the District of Columbia, and is
recognized as a leader in the community associations
field.
 Ruth Katz is an attorney at Lerch Early & Brewer. Ruth
is primarily focused on litigation issues faced by
homeowners associations, condominiums and
cooperatives. She is active in WMCCAI and serves as
co-chair of CAI’s Maryland Legislative Committee.
301-657-0743
jefisher@
lerchearly.com
301-657-0188
rokatz@
lerchearly.com

4. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
Notable Failed Bills
Manager Licensing – withdrawn
by sponsor
Resale Package Fee Cap
 Different bills passed House and Senate
 Died in Conference Committee
4

5. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
HB 73 – Injury Caused by Dog
 Liability of the Dog Owner
 If a dog causes injury, it is presumed that an
owner knew, or had reason to know, that the
dog had dangerous or vicious tendencies, and
the owner of the dog is therefore liable for
damages caused by the dog.
 With limited exceptions, the owner of a dog is
liable if the dog was running at large.
5

6. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
HB 73 – Injury Caused By Dog
Cont.
 Liability of condominium, homeownerand
cooperative associations.
 In an action against a person other than the owner of
a dog, liability reverts to pre-Trace y v. So le sky –
meaning that in order to be held liable it has to be
shown that the association knew, or had reason to
know, of the dog’s dangerous tendencies.
 One Bite Rule.
 Impact on current rules/policies.
 This is emergency legislation. It takes effect
as soon as it is signed by the governor (in
June).6

7. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
Injury Caused By Dog Cont.
 Other notable dog related bill is HB 422.
HB422 states that a county or municipality
may not adopt breed-specific laws or
ordinances. (Only affects laws or ordinances
adopted after Oct. 2014.)
 THIS BILL DOES NOT APPLY TO ANYONE
OTHER THAN MUNICIPALITIES OR
COUNTIES.
7

8. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
HB 602 – Foreclosure on Lien
 A common ownership community may foreclose only on a lien
that consists solely of:
 Period (annual) assessments
 Special assessments
 Interest
 Reasonable costs and attorneys’ fees directly related to the
filing of the lien that do not exceed the amount of
delinquent assessments (excluding interest).
 The lien being foreclosed upon may not consist of any late
fees, fines, attorneys’ fees relating to fines, or other collection
fees.
 Lerch Early’s approach.
8

9. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
SB865 Maryland Cooperative –
Transparency and Members Rights
 Meetings – similar to condominium
 Must be open to members and agents
 Closed sessions of the board
 Discussion of employees/personnel
 Protecting the privacy and reputation of individuals in matters
not related to the cooperative’s business
 Consultation with staff personnel, consultants, attorneys,
board members and other persons in connection with pending
or potential litigation or other legal matters
 Considering the terms or conditions of a business transaction
in the negotiation stage of the disclosure could adversely
affect the economic interest of the cooperative
9

10. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
Cooperative cont.
Conducting investigative proceeding possible or actual
criminal misconduct
Complying with a specific constitutional, statutory, or
judicially imposed requirement protecting particular
proceedings or matters from public disclosure
Discussion of owner assessment account
 Notice of all regular meetings must be provided to the
owners
 Depository created as of January 1, 2016
 Public offering statement and proprietary lease (not rules)
10

11. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
Cooperative Cont.
 Late Charge – proprietary lease or bylaws may
provide for a late charge of no more than $15 or
one-tenth of the total amount of any delinquency
 Dispute Resolution (Similar to Maryland
Condominium Act)
 May not impose a fine, suspend voting, bring an action to evict or
infringe on any other rights of a member for a violation of the
rules or propriety lease unless:
 10-day cease and desist
 Notice of hearing – at least 10 days in advance of the hearing
 If court action is required, prevailing party is entitled to its attorneys’
fees
11

12. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
Cooperative Cont.
 Eviction fornon-payment
 Delinquent for3 months
 Must go through the dispute resolution
process
12

13. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
2013-2014 Case Law Update
13

14. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
He nry v. Be lPre Asso ciatio n, Inc.
Court of Special Appeals, No. 2325, filed Jan 10, 2014
 Issue: Whether a HOA acted in bad faith when it voted
not to take enforcement action on a property owner’s
covenant violation when the deciding vote was from a
board member that had an identical violation on his
property.
 Holding: The court reaffirmed the business judgment
rule (absent fraud or bad faith, a court will not interfere
with a discretionary decision) and stated that in this case
the board’s decision not to enforce against an owner did
not personally benefit or harm the other violating board
member.14

15. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
He nry v. Be lPre Asso ciatio n,
Inc.
Court of Special Appeals, No. 2325, filed Jan 10, 2014
 Bad faith is defined as not acting in good
faith. Good faith is:
 The absence of a desire to obtain
personal benefit for some person other
than the corporation.
 Not approving an action that a director
knows is in violation of the law.
15

16. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
Schum an v. Gre e nbe lt Ho m e s, Inc .
69 A.3d 512 (2013), Court of Special Appeals
 Issue: Is a co-op liable for failing to
prevent an occupant from smoking
despite receiving complaints of
secondhand smoke?
 Holding: Co-op found not liable for failing
to prevent secondhand smoke exposure.
16

17. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
Schuman v. Greenbelt Homes, Inc.
69 A.3d 512 (2013), Court of Special Appeals
 Smoking is not a nuisance pe r se – in essence,
smoking in and of itself, without additional facts
surrounding the specifics of the smoking, does
not create a nuisance. Each case is therefore
fact specific.
 The court held that in this case the facts did not
rise to the level of substantially and
unreasonably interfering with another’s use and
enjoyment of their property.
17

18. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
For more information
18
Lerch, Early & Brewer, Chtd.
3 Bethesda Metro Center, Suite 460
Bethesda, MD 20814
(301) 986-1300
www.lerchearly.com
Thank yo u fo r yo ur participatio n.