Homeowners Act Legislation

What is the process to discuss the legislation and what's coming up?

• Columbia Association (CA) staff met Aug. 30 with village board members and village managers to discuss the specifics of proposed state legislation that would reclassify CA and the 10 village community associations as "nonprofit community service corporations."
• In addition, CA hosted two public forums on Oct. 16 for Columbia residents to testify about the legislation. The sessions were recorded, and questions from the sessions have been listed and answered in the comments section on this page.
• In response to comments on the proposed legislation made by the villages, residents and board members, CA has made revisions to the proposed legislation (updated draft) which were the subject of discussion at the CA Board Meetings on Oct. 25, Nov. 8 and Nov. 20.
• The CA Board External Relations Committee hosted a presentation and Q&A session on the proposed bill with members of the Howard County delegation, the Howard County Council and Columbia's village boards on Nov. 1 at 7pm. CA staff made a presentation to the board on the proposed legislation, held a question and answer session and heard testimony from residents. The PowerPoint presentation from that meeting is available at this link.
• The chart at this link displays the applicability of HOA Act sections under current law and under the proposed legislation (updated October 29, 2012)
• The CA Board has tabled discussion of the proposed legislation until January to allow the villages time to review the legislation with their attorney. If approved by the board, the legislation is expected to be introduced in the state legislature in the future.

Why is this legislation being proposed?

• CA existed for decades before the creation of the Maryland Homeowners Association (HOA) Act, and is a unique entity that does not fit well within the umbrella of that act.
• CA consists of about 37,000 properties. In contrast, the average size of the associations covered by the HOA Act is about 131 properties, significantly less than 1 percent the size of CA.
• When new legislation is introduced to amend the HOA Act, it often is in response to a problem at a much, much smaller homeowners association that does not have the kind of structure or internal controls that CA does.
• The legislation would protect CA and the villages from changes in the law that, while beneficial for the average HOA, could adversely affect CA and the villages should they not be able to obtain an amendment to some future HOA bill.

How will this legislation help?

• Proposed amendments to the HOA Act are now being introduced at least 20 times a year, bills that could have detrimental consequences for CA and the villages.
• One proposed amendment sought to require homeowners associations to provide printed budgets to every homeowner. For many smaller associations, that would be 20 to 30 printed budgets of a few pages each. For CA, that would be 37,000 printed budgets, each one 326 pages long and more than an inch thick — at a total cost of more than $500,000. CA already posts the budget on its website and provides copies to the 10 villages for the community to access.
  
• Another proposal would have required all homeowners associations to follow a dispute resolution process that allows anyone in violation of the association’s rules to have an opportunity for a hearing before the board. This would have required CA and the village boards to conduct hearings on every single covenant violation case, in which the violators would be allowed to present evidence, and to present and cross-examine witnesses. This would have potentially required hundreds of hearings, leaving boards with little time to attend to other board business.
  
• Reclassifying CA and the villages would save a large percentage of the time and legal fees presently spent reviewing and acting on the increasingly numerous HOA bills introduced at every session of the General Assembly. Approximately 75 percent of the HOA Act bills filed in the 2012 legislative session would not have been applicable to CA and the villages if the proposed reclassification were already in effect.
  
  It would have been unnecessary to respond to those bills — reviewing the legislation, determining its impact on CA and the villages, deciding how best to address each proposed bill, crafting an amendment or exception to the bill, speaking with state delegates and senators, and sometimes even testifying at hearings.
  

What does this mean for me?

Nothing will be different in the way CA and the villages conduct their operations. You actually will have greater protections, because the proposed legislation that would reclassify CA as a “nonprofit community service corporation” contains the same kind of transparency provisions already in the HOA Act — but worded so that they actually make sense for CA and the villages.

In fact, CA has long been operating in a manner far more transparent than the HOA Act would require. The HOA Act says that meetings of a homeowners association must be open to all “members.” That makes sense for most homeowners associations, in which the “members” are the property owners. CA, however, only has 10 members — its directors. Despite that fact, for decades CA’s board meetings have been open to the public.

The draft legislation says meetings will be open to all individuals living, working or owning property in the community. It also says that those people, rather than just property owners, may inspect and copy CA’s books and records. That means CA has included provisions allowing greater rights to the community. Importantly, these protections won’t just be codified in CA’s bylaws, but will be state law.

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