Sunday, June 9, 2013

Maryland Governor OKs New State Statute Designed To Eliminate Inflated Fee 'Extortion-Type' Rackets Involving HOAs Pursuing Its Homeowner-Members With Lien Enforcement/Foreclosure Over Excessive Fines, Padded Legal Fees

From the website of the Maryland Homeowners’ Association, Inc., a non-profit, all-volunteer, statewide organization that works to protect the rights of homeowners in condominium associations, homeowner associations and cooperatives:

  • A new bill limiting foreclosures and attorney fees passed the Senate 46-0 (SB 161) and the House 134-4 (HB 286) and has been signed by the Governor. The law will be effective October 1, 2013.

    Basically, HB 286 and SB 161 are identical consumer protection bills whose purpose is to:

    1. Stop the financial abuse of Maryland HOA and condo owners when attorneys advise boards to run up legal fees over trivial matters and then pass those fees onto targeted HOA and condo owners.

    2. Prohibit foreclosure on any property based merely on fines and/or legal fees.

    The new law is a partial response to recent association scandals, such as a Maryland condominium association that ran up attorney fees of $200,000 to fight a condo owner's lawsuit involving $225 or the homeowner who was asked to pay $50,000 in attorney fees and fines for not getting proper approval for a new driveway that others in the community already had in place
  • According to this new law, only "reasonable costs and attorney's fees directly related to the filing of the lien and not exceeding the amount of the delinquent assessments may be the subject of a lien.”

    For example, if $1000 of assessments is owed, the lien can only ask for $1000 in reasonable legal fees. Other HOA/Condo stipulations of collecting money owed would still be available to a governing body.
Source: Bill to limit association attorney fees and foreclosures becomes MD law.

Thanks to Cynthia Stephens for the heads-up on this new law.

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