BALTIMORE — More than a million people are estimated to reside within a homeowners association or condominium board in Maryland, and yet, there aren't many requirements to manage these communities.
Delegate Marvin Holmes Jr. (D-Prince George’s County) is determined to change that.
Since 2013, he has sponsored a bill requiring property managers to undergo training and obtain a license.
“The only thing you need to be a community manager in the state of Maryland is you go to Staples and get a business card that says you’re a community manager, that’s the only thing you need. And to me, that’s ludicrous for an organization, a property management company that’s responsible in some cases for hundreds of thousands of dollars, and in other cases, which has been proven by so many community property managers that have been taken to court by the Attorney General’s Office, in the millions of dollars, and those funds still have not been recovered,” Holmes said.
Holmes believes his legislation can cut down on the number of HOA complaints and once again introduced his bill during this year's General Assembly session.
“Quite frankly, I believe in it in the core of my being,” said Holmes who has received calls from desperate homeowners all over the state, including Kim Glaude’ in Harford County.
HOA horror stories
“The misappropriation of funds, we could only go back for three years,” said Glaude’ who, along with her neighbors, discovered HOA funds missing or misspent.
In 2017, a Board member faced criminal charges for embezzling funds.
“It was a little over $100,000,” Glaude’ recounted.
According to court documents, the Board member made ATM withdrawals totaling $57,000, and used HOA funds for retail purchases, unauthorized credit card charges, and to pay bills.
Glaude’ has since collected horror stories from other homeowners including a dispute in Charles County involving a fence.
“The fence inadvertently encroached on the HOA’s common area, and the appellants made several efforts at their own expense to correct the issue,” Jessica Blumberg argued for the property owners in a Maryland Court of Special Appeals hearing in January.
However, the HOA continued its litigation affirming that the fence still exceeded the boundaries. The Circuit Court for Charles County awarded the HOA a judgment of nearly $40,000, which includes more than $17,000 in attorney’s fees.
The homeowners then filed an appeal with Maryland's second highest court.
“You’re saying the whole dispute is over an inch?” asked Maryland Court of Special Appeals Judge Melanie Shaw Geter.
“Yes. At the end of this case, the dispute was over an inch, less than an inch, your honor,” Blumberg responded.
“It only matters that they are encroaching and if they are encroaching, they are encroaching,” added Scott Silverman, the attorney representing the HOA.
The Maryland Court of Special Appeals hasn't yet issued an opinion.
Assistance for homeowners
“People are really looking for help,” said Holmes.
The Maryland Office of the Attorney General currently handles these disputes, however, the Consumer Protection Division works as a mediator, not an enforcer.
If passed, House Bill 26 would create the State Board of Common Ownership Community Managers in the Maryland Department of Labor to oversee licensing.
Licenses would be required for anyone who provides management services and accepts compensation, including homeowners serving on boards.
And to qualify for a license, applicants must complete a training program approved by the Board.
“Just to elect someone on the Board because they’ve been in the community a long period of time that’s not enough. They must know the laws because they’re handling large sums of money and you’re making decisions for everyone in the community,” said Glaude’.
Associa, an HOA management company testified against the bill.
“The intent is to raise consumer protection and what we have seen from data from across the country is that licensure bills like this actually don't accomplish that goal,” said Lee Greenwood, director of government affairs for Associa.
The Community Associations Institute (CAI), which provides certifications and training required for a license provided its response to the bill.
In an email to WMAR-2 News Mallory Sofastaii, a spokesperson wrote:
“The current national best practice of community association managers is to earn national certification, participate in annual education training and invest in appropriate insurance coverage. This bill creates an unnecessary, excessive, and redundant cost to taxpayers…HB 26 does not provide for the property industry-developed professional certifications or designation programs for community managers, which allows the community association industry to self-regulate.
In addition to individual fees attached to each license and the community association registration fee, this bill will cost CAI members and Maryland taxpayers more than $100,000 over the next year for the state to establish this Common Interest Community Association Board.
In addition, the estimated fees associated with this legislation could result in a licensing fee for managers that is greater than $500 per year which is an unnecessary and unreasonable barrier to entry for someone trying to enter the field of community association management.
The reason for professional licensing is to protect consumers from incompetency and unethical practices. This bill does not meet this criteria, and will not offer these protections.”
“Some of my colleagues often tell me the best legislation is no legislation. I don’t always agree with that but that is what some of my colleagues are suggesting,” said Holmes.
Meanwhile, Glaude’ has lived in her community over 20 years. She believes the law could make it more harmonious, and Delegate Holmes is set on making it happen.
“I am not going away. I am not going away because this is something I truly believe in,” Holmes said.
Resolving HOA disputes
If you have a dispute in your common ownership community, Delegate Holmes recommends first reviewing the governing documents. These bylaws detail how the association is run including rules, voting rights, and procedures.
And if something's going on that shouldn't be, Holmes said to raise a flag then don't stop until your concern is addressed.
HB26 needs a favorable vote from the Environment and Transportation Committee to move forward. For the past two years, the bill passed the House but didn’t make it out of the Senate.
Delegate Holmes is also sponsoring several other bills regulating common ownership communities, including requiring common ownership communities to conduct reserve studies and to update them every five years, increase the number of board meetings, and establishing a bill of rights for residential owners.
Click here to view the Maryland Homeowners Association Act.
Consumers can also file a complaint with their HOA with the Maryland Office of the Attorney General by contacting the Consumer Protection Division at 410-528-8662 or by email at email@example.com.