The condominium owner (CO) complained that the condominium association (CA) did not have the authority to amend the governing documents to require her to use a Lease Addendum which gave the CA the right to evict her tenants, and further, to impose a $100 fee and other restrictions on moving into or out of the CA. The CA claimed it had the right to make such rules under Section 11-109(d) of the Maryland Condominium Act.
The evidence at the hearing showed that the CO owns and rents out two units in the CA, and does not live in the CA. In January, 1992, the CA gave written notice to the members that it proposed to amend its rules and the CO sent a written objection to the proposals. Among the rules adopted by the CA's board of directors over the objections of the CO was a rule giving the CA the right to evict any owner's tenants for certain reasons, and another rule charging anyone moving into or out of the CA a $100 fee. The CO asked the CA to state its legal authority to enact such rules, which the CA refused to give her. The CO refused to comply with the new rules.
The hearing panel noted that under Section 11-109(d), the CA had the right to adopt reasonable rules and regulations, to charge fees for the use of the common elements, and to impose fines for violations of the rules. The hearing panel held that the authority granted by that law did not include the legal authority to assign rents to be paid to the CA instead of to the CO or other landlord, and did not include the legal authority to allow the CA to evict a tenant. The panel reasoned that the CA's Declaration specified how unpaid assessments could be collected, and the procedure specified referred to obtaining and enforcing a lien on the owner's unit; the CA could also sue for a judgment, and it could enforce the judgment by garnishing the rent payments. The panel further reasoned that nothing in the Declaration or the Condominium Act specifically grant condominium associations the right to evict tenants or to require unit owners to assign the rents to the association; and the right of an association to regulate its common elements does not give it the right to interfere with the private property of the unit owners unless that right is specified in the governing documents or the law.
The hearing panel further held the rule requiring 10 days advance notice for moving into or out of the CA was invalid. The panel noted that although it must uphold the decisions of the board of directors under the "business judgment" rule, that rule requires that the decision involved must be reasonable and supported by facts. In this case, there were no facts brought out at the hearing to support the rule. The evidence showed that the CA had no elevators and no on-site manager, that moves were infrequent and there were no conflicts with each other. The CA manager admitted that the likelihood of a moving conflict was unlikely. The panel also held that the restriction of moves to between the hours of 8 am and 8 pm was unreasonable because the CA failed to provide any facts to support the rule, and in fact conceded it was not aware of any complaints about moves that took place after 8 pm.
Finally, the hearing panel held that the imposition of a fee of $100 for moving into or out of the CA was invalid because it was unreasonable. The CA's own witnesses conceded that they had no financial data to show why the fee was needed, they could not show what costs, if any, the CA incurred as the result of a move, and that the wear and tear caused by a move was already included in the calculation of the annual assessment. The panel ruled that the CA failed to show that a move caused any excess wear and tear not already covered by the annual assessment.
The panel therefore ordered that the disputed rules were invalid and unenforceable