CCOC Case Summary
#154-G, Hunting Woods Homeowners Association v. Marhamati (October 7, 1992) (Panel: Stevens, Mechak, Pruitt)
The homeowners association (HOA) complained that the homeowner (HO) was operating a beauty salon in her home without approval and in violation of the HOA rules.
The evidence at the hearing showed that the HOA is composed of single-family homes and townhouses, and that its Declaration states that "the lots shall be used for residential purposes exclusively", with an exception for professional offices, which were defined as rooms used for office purposes by a member of any recognized profession, but not as "clinics". The Declaration further prohibited all other "business, commercial, manufacturing, mercantile, storing, vending or other such non-residential purposes". The HO claimed that she had a conversation with the board president and was given oral permission to conduct a beauty salon in her home; but the board president denied giving permission and stated she knew she did not have the authority to grant such a request. The HO installed a beauty salon in her home and began to distribute advertising for it; on learning of this, the HOA asked her to cease the operation and to submit an application for a professional office. She did so, and the HOA eventually denied the application as inconsistent with the Declaration. It appears that the HO did not comply and the HOA warned her of the violation. The HO refused to cease doing business and the HOA filed this complaint with the Commission.
The hearing panel ruled that even if the board president had given consent to the business, she did not have the legal authority to do so, and her consent, if there was any, was invalid. The panel noted that the HOA board determined that the operation of a beauty salon was not a permitted use under the Declaration and that under the "business judgment" rule of Black v. Fox Hills North Community Association, 90 Md.App. 75 (1992), the court must uphold the decision of a board of directors unless there is proof of "fraud, self-dealing or unconscionable conduct" by the board. The panel held that there was no evidence of misconduct by the board and therefore its decision was valid. However, the panel denied the HOA's request for attorney's fees on the grounds that there were no facts justifying that award.
The panel ordered the HO to stop operating the beauty salon.