CA’s Proposed CBA Legislation Does Not Divorce Itself of the Lobbying Concerns of the Homeowners Association Act

The Columbia Association’s proposal to create a new entity under state law- a community benefit association has a number of valid points. CA is unique as a homeowner’s association and provisions in the Homeowners Association Act (HOA) that apply to smaller organizations do not make sense for CA. CA points out that “while CA has received some amendments or exceptions in the past, there is no guarantee that we will continue to succeed.” Yet, rather than totally divorce itself from the HOA’ provisions, CA’s bill ironically continues to wed itself to regulation and amendments of the HOA by incorporating by reference many provisions of the HOA:

(B) ONLY THE PROVISIONS OF §§ 11B-101, 11B-102(G), 11B-104, 11B-105, 11B-106, 11B-106.2, 11B-107, 11B-108, 11B-109, 11B-110, 11B-112.1, 11B-112.2, 11B-113, 11B-113.1, 11B-113.2, 11B-113.3, 11B-113.4, 11B-113.5, 11B-114, AND 11B-117 OF THE REAL PROPERTY TITLE OF THE CODE APPLY TO A COMMUNITY BENEFIT ASSOCIATION. THE OTHER SECTIONS OF ARTICLE 11B OF THE REAL PROPERTY TITLE OF THE CODE DO NOT APPLY TO A COMMUNITY BENEFIT ASSOCIATION.

Thus, CA will continue to be subject to the amendments of the HOA. Just this legislative session, SB612 and HB709 propose to add a new section 11B-106.2 and renumber the existing section to 11B-106.4. CA will have to ensure that all amendments like this one in the future are also made in the CBA; otherwise, the reference in the CBA to 11B-106.2 will not be the intended provision. The lobbying issues that the CBA provisions were meant to remove will still remain.

The bill adds a new paragraph 11B-102(g) which states that ” (G) EXCEPT AS PROVIDED IN SUBSECTION 5-6D-02(B) OF THE CORPORATIONS AND ASSOCIATIONS ARTICLE OF THE CODE, THIS TITLE DOES NOT APPLY TO A COMMUNITY BENEFIT ASSOCIATION. ” This is the total opposite of the language in paragraph (e) which specifically excludes condominiums and cooperative housing corporations from the HOA. There are many parallel provisions between the HOA and the Condo Act, but each is a separate law. Some legislation addresses both of the parallel provisions. Thus, when making amendments to these laws, the General Assembly is forced to specifically amend each of them. Similarly, the CBA must be a separate and parallel statute to the HOA and not be tied to it by reference. If future amendments are made to the CBA, the General Assembly must specifically intend to do so.

Of most importance to many assessment payers is the provision that limits increases in the annual charge: section  11B-113.4. CA states in its Board packet regarding the CBA that ” SECTION 11B-113.4 will apply to a CBA.” Unlike its acknowledgment regarding section 11B-116 somehow CA naively forgets that this section only applies to Columbia:

(c)  Applicability of section. —  This section only applies to a development that: (1)  Contains at least 13,000 acres of land and has a population of at least 80,000

No other homeowners association in Maryland is of this size or population. The next clause of paragraph (c) continues “and (2) Is governed by a homeowners association that levies an annual charge on property within the development.”

An argument could be made that the provisions of the HOA and CBA are in conflict because when CA becomes a CBA rather than an HOA there will not a homeowners association to which section 11B-113.4 will apply. However, a “Homeowners association” is defined to be “a person having the authority to enforce the provisions of a declaration.” Section 11B-101 (i). Regardless, what point is served by CA creating a new section CBA provision but leave the provision that only applies to Columbia dangling in the HOA and serving no other entity in Maryland?

Therefore, any CBA legislation must copy each and every provision of the HOA that is to be made applicable to CA so that the General Assembly does not continue to make amendments to the HOA with unintended consequences to CA.