The Montgomery County Council has focused a lot of attention on the regulation of common ownership communities. Recently approved legislation mandates board member training and certification of payments of common ownership fees for rental of units in such communities in the county. Board members and property owners need to be aware of the impact of these pending changes, which are detailed below.
Mandated Training for Board Members
On February 3, 2015, the Council approved legislation that requires all members of a board of directors of a common ownership community to complete a mandatory training program on board member responsibilities, which training must occur with 90 days of being elected or appointed. The new law becomes effective on January 1, 2016.
Bill 45-14 requires the Commission of Common Ownership Communities (CCOC) to develop and provide board training. Based on early estimates, approximately 5,000 volunteer board members will require training. This applies to common ownership communities including homeowners’ associations, residential condominiums, and cooperatives.
There is no exclusion for developer-appointed board members. Board members appointed or elected before the legislation’s effective date are required to complete the training within 90 days after being elected for a new term. The community is required to certify annually that it has complied with the training requirements.
The bill’s fiscal impact statement anticipates an increase in the annual CCOC fee, from $3.00 to $3.50 per unit, to underwrite the cost of developing the training program and the accompanying administration. It is anticipated that an online training session will be made available and that training will require at least two hours.
The implementation of this legislation will likely increase the annual budgets for such communities in Montgomery County and will no doubt reduce the number of community members willing to serve on the board.
New Rental Restrictions
The Council also unanimously passed legislation on March 3, 2015, to require property owners applying for a rental housing license to certify to the Department of Housing and Community Affairs (DHCA) that their payments of common ownership fees are current; the bill also authorizes DHCA to deny, suspend, revoke, or refuse to renew a rental housing license if dues are not current. This legislation follows CCOC reports that many communities in the county are facing an increasing drop in revenue due in part to the failure of owners who rent their units to pay their monthly assessments. The bill includes no exceptions for developer-owned units. It is expected that the bill will be signed by the County Executive soon, and it will be effective 91 days after signature.
