Category Archives: Real Estate

Maryland condominium associations may not use condominium amenities to enforce condominium assessment payment

The Maryland Court of Appeals issued a decision on June 23, 2017, discussing the extent to which a condominium association may impose restrictions on a unit owner’s right to access common amenities of the condominium.    In Elvation Towne Condominium Regime II, Inc. v. Rose, the court looked at a condominium association with a “suspension-of-privileges” rule, by which the association prohibited unit owners from parking overnight on the property or using the pool during periods when the owner was delinquent in paying condominium fees.  The unit owners bringing this case were alleged to be in arrears in making require payments of assessments, so the association not only sued the owners for the amount owed in the District Court of Maryland, but also barred them from overnight parking or use of the pool.  The owners brought their own suit against the condominium association in Circuit Court, seeking a declaratory judgment striking down the prohibition against use of common amenities.

The Court of Appeals held that a Maryland condominium association may restrict access to common areas and amenities as a means to enforce payment of condominium fees, but only if this enforcement mechanism is expressly provided for in the condominium’s declaration.  This was not the case here, because the action was taken based only on a rule enacted by the condominium’s board. Therefore, the court would not allow this enforcement mechanism against these particular owners.

In making this decision, the court wrestled with whether a “suspension-of-privileges” rule constitutes a taking of property, requiring more than a rule-making under the Maryland Condominium Act.  The court held that, when a rule disparately affects a portion of unit owners by revoking a property interest they acquired when they purchased their units, without affecting the rights of other unit owners, there is a taking of property.  The court went on to find that restricting a condominium owner’s access to community-held property is a significant infringement of the owner’s property rights, which may only be authorized by a provision in the condominium’s declaration, and not be a rule making.

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Tenants may raise unsafe conditions as defense to eviction

A decision that Maryland’s highest appellate court handed down in late November 2016 clarifies the remedies available to residential tenants when confronted with serious health or safety deficiencies in their rental units.  Maryland residential tenants that suffer under serious conditions or defects are protected by what is commonly known as the rent escrow statute, which obligates landlords to repair and eliminate fire hazards or conditions that constitute a serious and substantial threat to the life, health, or safety of occupants.  The law not only provides a tenant with a cause of action to gain correction of the condition, but also provides an affirmative defense that may be asserted by the tenant. If the tenant can show that the landlord was aware of the defect but failed to correct the defect, the tenant may be entitled to an abatement or reduction of the rent, among other relief.

In its recent decision, the Maryland Court of Appeals reviewed a situation in which a landlord filed an ejectment action against a residential tenant for failure to pay rent, and sought possession of the rental unit. At trial, the tenant attempted to raise, as a defense, claims that there were serious defects in the rental property, including a leak that resulted in a threat to shut off water service to the property. The trial court refused to accept the tenant’s evidence of a serious conduction at the property, holding that such a defense may only be raised in a rent escrow action filed separate from the landlord’s action for ejectment.  The trial court then entered a monetary judgment in favor of the landlord for unpaid rent, and awarded possession of the property to the landlord.  The tenant appealed.

In ruling on the tenant’s appeal, the Court of Appeals held that a residential tenant is not required to bring a separate rent escrow action to raise health and safety deficiencies as a defense.  Instead, residential tenants may raise such a defense in a suit brought by a landlord for unpaid rent and possession.  This establishes a clear avenue for residential tenants to fight against loss of possession when serious safety conditions can be shown through evidence at trial.  The court’s decision may be reviewed here.

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New law restricts IDOTs and increases commercial financing costs in Maryland

One means by which the budget and taxation bill that recently cleared the Maryland Legislature will increase state tax revenues is by substantially restricting the utility of indemnity deeds of trust (“IDOTs”) as a legally sanctioned means to avoid the current payment of mortgage recordation taxes on commercial real estate loans.  Under current law, the owner of commercial property can establish a separate business entity to act as the borrower on a commercial real estate loan, and the owner can guaranty the loan and secure the guaranty with an IDOT.  The separate entity that is established to borrow the funds can be a subsidiary of the property owner.  When this structure is used to have separate entities serve as borrower and guarantor on a loan, no current recordation tax is owed on the IDOT.  Once the new law goes into effect on July 1, 2012, it will be applicable to all IDOTs over one million dollars recorded on or after July 1, 2010, and will make IDOTs unattractive for most commercial deals.  Although state tax revenues will thereby increase, so will the costs of commercial real estate financing in Maryland.

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Court of Appeals pit bull decision effectively forces landlords to evict pit bulls, or their owners

The Maryland Court of Appeals’ recent decision in Tracey v. Solesky has put landlords on notice.  If there is a pit bull in a rental unit, the landlord now will be running a substantial risk if it does not force the tenant to remove the dog, or evict the dog owner.  The Court held that, if someone is attached by a pit bull or a pit bull cross, the plaintiff can establish a prima facie case of negligence merely by proving the breed of the dog, and the fact that the defendant knew or had reason to know that the dog was a pit bull or a cross-bred pit bull.  A prima facie case is thereby established not only as to the dog’s owner, but also with regard to any other persons who had the right to control the dog’s presence in the rental unit, such as a landlord who has the right to prohibit such dogs.   With this decision, it is no longer necessary to prove that the particular pit bull dog as known to be dangerous.  The dog owner, and the owner’s landlord, can now be held responsible even if the dog had no history of attacking or biting anyone.  Prior to this decision, dogs in Maryland were said to have “one free bite,” in that if the dog bit someone and its owner had no knowledge that the dog had a propensity to attack people, the owner was not been responsible for this first violent incident.  This rule no longer applies to pit bulls.

With this new “strict liability” rule for pit bulls and pit bull crosses, it’s hard to imagine a situation in which a landlord with knowledge of the law will permit a tenant to have this breed in a housing unit.  Likewise, the dog owners themselves are now at substantially higher risk.

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