Monday, March 25, 2013

Senate Bill 1062 - Condominiums and Homeowners Associations - Attorney's Fees

Position: CALL Senate Judicial Proceedings Committee to Ask for Unfavorable Report

Hearing: Tuesday, March 26, 2013

CAI's Maryland Legislative Action Committee alerts you to a piece of legislation that has been introduced at the last minute and will be heard by the Senate Judicial Proceedings Committee Tuesday, March 26. This bill is VERY problematic for Maryland condominiums and homeowner associations (collectively: community associations or CAs) as it will place all in a precarious position with regard to recovering legal fees expended in collection and enforcement matters.

SB1062 would prohibit CAs from demanding or attempting to collect fees which are not "reasonable" in relation to the amount in "controversy" (the amount you are trying to recover) when what is "reasonable" is not determined until much later when presented to a court. A Board of Directors for a CA, typically comprised of non-attorneys, relies on attorneys to assist in collection of delinquent fees or in the enforcement of covenant/rules violations. The CA has no basis to making the "reasonableness" determination for fees incurred but will now be placed in a precarious position well before a matter may be adjudicated.

There is case law already addressing the issue of what a reasonable fee is in relation to the amount in controversy:

Monmouth Meadows Homeowners Ass'n v. Hamilton; 416 MD. 325; 7 A.3rd 1; 2011
  • The amount in controversy is already one of the factors in determining a reasonable fee under Monmouth with regard to a contract provision allowing a charge to a third party as well as under the court rules of professional conduct regarding charge to a client.
Suntrust Bank v. Goldman et al; 201 Md. App. 390; 29 A.3d 724
  • Involving attorney fee provisions in loan documents.
What can you do?

You are encouraged to contact the chairman and members of the Judicial Proceedings Committee (see below) and ask that the "report SB1062 as UNFAVORABLE". Also contact your individual elected representatives in the Maryland General Assembly. Click here to be sent to our action center, where you can find the information to contact your legislators.

Brian Frosh, Chair  -- (410) 841-3124 -- brian.frosh@senate.state.md.us

Lisa Gladden, Vice Chair -- (410) 841-3697 -- lisa.gladden@senate.state.md.us

James Brochin  -- (410) 841-3648 -- jim.brochin@senate.state.md.us

Jennie Forehand -- (410) 841-3134 -- jennie.forehand@senate.state.md.us

Joseph Getty -- (410) 841-3683 -- joseph.getty@senate.state.md.us

Nancy Jacobs -- (410) 841-3158 -- nancy.jacobs@senate.state.md.us

C. Anthony Muse -- (410) 841-3092 -- anthony.muse@senate.state.md.us

Victor Ramirez -- (410) 841-3745 -- victor.ramirez@senate.state.md.us

Jamin Raskin -- (410) 841-3634 -- jamie.raskin@senate.state.md.us

Christopher Shank -- (410) 841-3903 -- christopher.shank@senate.state.md.us

Norman Stone -- (410) 841-3587 -- norman.stone@senate.state.md.us

Robert Zirkin -- (410) 841-3131 -- bobby.zirkin@senate.state.md.us


A quick and concerted effort is necessary.

Sincerely,

Craig F. Wilson, Jr., CMCA, AMS, PCAM

Vice Chair