Maryland Condominium Act requires that the buyer receive all of the condominium association’s operating documents

by | Apr 21, 2017 | Firm News, General Info | 0 comments

When a person enters into a contract to purchase a condominium unit in Maryland, the seller is required to provide the purchaser with the Declaration of the condominium association, the Amendments to the Declaration, the Bylaws; and the rules and regulations of the condominium.  See Maryland Real Property Code section 11-135(a)(1-3).  These documents are known as the “Resale Package”.

The seller is also required to provide the buyer with a “Resale Disclosure Certificate” containing additional information about the condominium association and the unit being sold.  The condominium association is responsible for preparing the first ten items in the “Resale Disclosure Certificate”; and the seller is responsible for providing the remaining information.  See Maryland Real Property Code section 11-135(a)(4-6).

The seller must provide the “Resale Package” and “Resale Disclosure Certificate” to the buyer 15-days prior to closing.  The buyer then has 7-days from receipt of the “Resale Package” and “Resale Disclosure Certificate” to cancel the contract.  Maryland Real Property Code section 11-135(f).

The seller or his or her real estate agent requests that the condominium association or its property management company prepare the “Resale Package” and “Resale Disclosure Certificate”.   Most often, the “Resale Package” and “Resale Disclosure Certificate” have been or will be uploaded to a cloud service by the property management company; and the seller will pay a fee to download the documents from the cloud.  The seller (or his or her real estate agent) will then transmit the documents to the buyer or the buyer’s real estate agent.

A problem may arise if the all of the condominium associations’ operating documents have not been uploaded to the cloud service.  For example, there may be a new Amendment to the Declaration that prohibits pets or limits the type or size of pets.  At the time of purchase, the buyer will not be aware of the restrictions or prohibitions contained in the new Amendment; and the buyer might not discover the restrictions or prohibition contained in the  new Amendment for many years.

For example, the pet Amendment may authorize current unit owners to keep their existing pets, but prohibit any new pets.  From the new owner’s perspective, he or she believes that the condominium association is pet friendly, because many of his or her neighbors have dogs.  The new owner owner will only discover the pet prohibition Amendment when he or she acquires a puppy and is cited by the condominium association for violating its rules.

The new member will object on the grounds that the “Resale Package” did not contain the pet prohibition Amendment and that he or she would have cancelled the contract to purchase the unit if he or she had received the pet prohibition Amendment.  The Board of Directors of the condominium association or its attorney will nevertheless claim that the pet prohibition Amendment is enforceable against the new unit owner on the erroneous grounds that the new unit owner had constructive or imputed notice of the Amendment, because the Amendment was recorded in the land records of the local county.

In fact, the pet prohibition Amendment is not enforceable against the new owner, because the condominium association violated the Maryland Condominium Act and the Maryland Consumer Protection Act by failing to provide the seller with a complete and accurate “Resale Package”.    Otherwise, the requirement that the buyer receive all of the condominium association’s operating documents as part of the “Resale Package” in order to make an informed decision as to whether or not to purchase the condominium unit would be nullified if the buyer could be charged with constructive or imputed notice of the pet prohibition Amendment.

 

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