PHED-PS Item 1
March 10,2016
Worksession
MEMORANDUM
March 8, 2016
TO:
FROM:
Planning, Housing and Economic Development/Public Safety Committee
Josh Hamlin, Legislative Attorney
ff
SUBJECT:
Worksession:
Bill 50-15, Common Ownership Communities - Commission on
Common Ownership Communities - Composition - Dispute Resolution
Bill 50-15, Common Ownership Communities - Commission on Common Ownership
Communities - Composition - Dispute Resolution, sponsored by Lead Sponsor Council President
on behalf of the County Executive, was iritroduced on December 8, 2015. A public hearing was
held on January 21, 2016.
Bill 50-15 would:
(l)
make mediation of certain disputes regarding common ownership
communities mandatory;
(2) alter the composition of the three member hearing panel;
(3) alter the composition of the Commission on Common Ownership
Communities to include members of the public;
(4) transfer duties assigned to the Office of Consumer Protection to the
Department of Housing and Community Affairs;
(5) provide for certain transition provisions; and
(6) generally amend County law concerning common ownership communities.
By memorandum dated November 23, 2015, the Executive requested the Council's
consideration of Bill 50-15. The memorandum details the proposed changes to the law, and the
justification for the changes (See ©12-13).
Background
A
[very] briefhistory ofthe Commission on Common Ownership Communities}
The genesis ofthe Commission on Common Ownership Communities (CCOC) was a Task
Force created by the County Council in 1987 to consider the issues facing homeowners
For a more comprehensive look at the history, structure, and functions of the CCOC, see the March 10,2015 Office
of Legislative Oversight report, "An Evaluation of the Commission on Common Ownership Communities" at:
http://www.montgomerycountymd.gov/OLOlResources/Files/2015
Reports/OLOReport2015­
8CommissiononCommonOwnershipCommunities.pdf
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associations, condominium associations, and housing cooperatives (collectively, common
ownership communities, or COCs).2
In
1989, the Task Force issued its Report containing several
recommendations, including the establishment of the CCOc. The CCOC was established in 1991
by Bill 42-89, and charged with advising the County government on, among other things, how to
ensure proper establishment and operation ofCOCs, the promotion ofeducation and understanding
of the rights and obligations of living in a COC, and reducing the number and divisiveness of
disputes. The CCOC was also empowered to hear and resolve certain disputes between and among
COCs, unit owners, and unit occupants.
3
The number of County residents living in COCs
dramatically in the 1990s, now numbering approximately 340,000 according to the OLO report.
The fact that over a third of County residents now live in a COC demonstrates the importance of
the CCOC being able to function efficiently and effectively.
The CCOC operates within the County's Office of Consumer Protection (OCP), which was
part of the Department of Housing and Community Affairs (DHCA) until 2005.
In
2005, OCP
became an independent office, and the CCOC remained within
it.
4
The CCOC is staffed by one
full-time OCP staffer, who is responsible for all CCOC-related work, including outreach,
education, and dispute resolution. The CCOC has always been part of a County agency, first
DCHA, and currently OCP.
It
has not ever been an independent entity.5
The CCOC itself has 15 members who are appointed by the County Executive and
confirmed by the County Council for three year terms. Of these members, eight are residents of
COCs, and seven are professionals whose work is associated with COCs, such as developers, real
estate professionals, attorneys, community managers, and the like. At least one of the
"professional" members must be a community association manager. The current membership list
is at ©15, and indicates that there are five vacancies, four of which have occurred fairly recently.
One of the vacancies was created by the expiration of a term in early 2015. Three professional
members resigned in November of 2015, and one resident member resigned in February of this
year. All but the most recent vacancy have been advertised, with the early 2015 vacancy being
advertised three times.
The sole source ofrevenue for the CCOC is the association fee of$3 per property unit. The
fee is collected as part of the annual registration process under
§
IOB-7. The annual registration
and collection of registration fees is performed by DCHA, and the amount of the fee is set by
regulation
6
under
§
lOB-7(b). According
to
the OLO report, the fee generated $408,770 in
FY2014. The CCOC's actual expenditures in FY2014 were $410,684, which includes both
personnel and operating expenses for OCP and DHCA.
7
Laws governing Common Ownership Communities
There are three types of Common Ownership Communities: homeowners associations, condominiums, and housing
cooperatives.
3
"Dispute" is comprehensively defined in
§
lOB-8(4) (see ©16).
4
See 2005 L.M.C., ch. 26
5
CCOC leadership and some other speakers at the public hearing have asserted that the CCOC
should be
an
independent County entity.
6
COMCOR 10B.07.02.01
7
See page 5 of the OLO Report referenced in footnote
1.
2
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There are a number of laws, both State and County, governing, or applicable to, the
operation of COCs. There are separate titles of the Real Property Article of the Maryland Code
governing homeowners associations (HOAs), condominiums, and housing cooperatives. In
addition to these specific provisions, State law permits a director or officer of an HOA,
condominium association, or cooperative to represent the COC in a hearing or other matter to
resolve a dispute. The "business judgment rule" is also applicable in disputes involving COCs.
The business judgment rule is a set of legal principles designed to protect the decision-making
process of organizations, when the decision is made in good faith and upon a reasonable basis.
County law governing COCs is in Chapter
lOB
of the Code; regulations adopted pursuant to
Chapter
lOB
are in the Code ofMontgomery County Regulations at Chapter
lOB.
These State and
County laws are described in more detail in the OLO Report (see ©26-29).
Key findings and recommendations ofthe OLO Report
In preparing its 2015 Report, OLO interviewed numerous stakeholders, and distributed two
surveys. One of the surveys sought to determine overall satisfaction with the CCOC and its
services, while the other specifically sought input on the dispute resolution process. OLO received
211 responses to the first survey, which represented a 16% response rate; 76% of respondents
identified as either an owner or tenant of a property in a COC, and 43% identified as a
representative or board member of a COCo The second survey was targeted to 211 parties who
had participated in the CCOC dispute resolution process from January 2012 through December
2014. Of this group, 56 responded; 28 of these were owners or tenants, 22 were representatives
of an association, and 6 were other stakeholders.
The results of the first survey indicated a fairly high degree of familiarity with the CCOC,
general satisfaction with CCOC staff, somewhat less satisfaction with available resources, and a
need for more education for both associations and residents. The second survey, concerning
dispute resolution, presented a somewhat more problematic picture. Two-thirds of respondents
felt the information provided for filing and responding to a complaint was adequate, and that the
process was easy, but nearly a third did not feel that it was easy to contact staff. Of those
respondents who participated in mediation, just over half were satisfied with the process. Notably,
40% ofthe 18 respondents who participated in the CCOC hearing process reported that the hearing
was not fair and impartial.
In addition to the surveys and stakeholder interviews, OLO reviewed case files for all
closed cases that had been filed with the CCOC between January 23, 2012 and February 3, 2015.
This review revealed that 47% of cases were resolved before mediation, 29% were resolved
through mediation, 12% with a hearing, and 11 % were withdrawn or dismissed for lack of
jurisdiction. The average time to close a case during this period was 169 days.
From the information gathered through the surveys, interviews, and case reviews, OLO
identified three specific recommendations. First, OLO recommended that the Council request that
the Executive "review the CCOC's allocation of resources and ensure that the CCOC perform all
tasks mandated by Chapter lOB of the Code, including more informal dispute resolution
(mediation), education, and policy work." This recommendation generally addresses the finding
that the CCOC overemphasizes formal dispute resolution at the expense of its other statutory
responsibilities, and lacks the staff support to fully meet these responsibilities.
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The second OLO recommendation was that the Council request that the Executive
"develop an electronic case management system for all CCOC complaints and a database
inventorying all relevant information regarding COCs." This recommendation reflects the
problems with the current, primarily paper-based, dispute resolution process which impairs the
efficiency of both the dispute resolution process and the educational and informational functions
of the CCOC. Both this and the ftrst recommendation would likely require additional resources,
both staff and ftscal, to carry out.
The third recommendation in the OLO report was that "absent signiftcant drawbacks,
including organizational capacity to absorb the CCOC, relocate the CCOC from OCP to DHCA."
In making this recommendation, OLO stated its view "that relocating the CCOC to DHCA could
provide administrative and information technology resources and support that OCP simply cannot
provide." OLO noted that these additional resources would be particularly helpful if the CCOC
expanded its educational and policy efforts, as OLO recommended.
County Executive's 2015 Memo and eeoc's response
In an October 30, 2015 memorandum to PHED Committee Chair Nancy Floreen and PS
Committee Chair Marc Eirich (see ©30-33), the County Executive transmitted his
recommendations to amend Chapter lOB, including the mandatory mediation, change in CCOC
composition, and relocation ofthe CCOC to DHCA that would ultimately be embodied in Bill SO­
lS. The Executive also indicated an intention to increase the CCOC annual registration fee from
$3 to $5 per unit. The additional funds would be used to improve and expand the CCOC's
functions. As mentioned above, that fee is set by regulation, and no fee increase is included in Bill
50-15.
The CCOC responded to the Executive's recommendations by memorandum dated
November 16,2015 (see ©34-40). The CCOC expressed concern that the recommendations had
been made without consultation with the CCOC itself, and recommended further discussion on the
matters of mandatory mediation and altering the composition of the CCOC. The CCOC also
expressed a view that neither OCP nor DHCA was the appropriate place for the CCOC, instead
believing the CCOC should be a more independent body. The CCOC addressed the Executive's
recommended fee increase to open a discussion about its concerns that it has little control pver the
funds that are raised through the fee, due in part to the fact that 60% of the fee revenues are spent
on administrative expenses. As part ofthis discussion, the CCOC referenced its request for certain
services and information from DHCA in September 2015 (see ©41-48).
Bill 50-15
Bill 50-15 would make three distinct changes to the existing law. One of these changes, the
relocation of the CCOC to DHCA, would affect all of the CCOC's operations, while the other two
would speciftcally impact its dispute resolution function. The changes the Bill would make are:
(1)
It would move all of CCOC from the Office of Consumer Protection (OCP) into
DHCA. This proposed move was prompted by the March 2015 OLO Report, which
was mentioned by the Executive in his transmittal memo. In that report, OLO stated
its belief "that relocating the Commission to DHCA could provide administrative
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and information technology resources and support that the Office of Consumer
Protection simply cannot provide."
(2)
It
would require the use of mediation to resolve complaints prior to those
complaints proceeding to an administrative hearing. Under the existing law,
mediation is optional. The justification for this change, offered by the Executive,
is that it "will facilitate the prompt resolution of complaints without the formalities
and costs associated with a quasi-judicial administrative hearing," and that
mediation is a better means of resolving what generally are "conflicts between
neighbors" than is an adversarial proceeding.
It
would change the composition of both the Commission as a whole and of the
hearing panels convened to adjudicate disputes not resolved through mediation.
Bill 50-15 would alter the composition of the Commission, which now consists of
8 owner/resident members and 7 professional/manager members, to be made up of
5 owners/residents, 5 professionals/managers, and 5 members from the public at­
large.
It
would also change the makeup of the hearing panels, which now consist
of one member from each of the existing member-groups and a volunteer panel
chair that is an attorney practicing Common Ownership Community law, to be
comprised of 1 member from each of the proposed new member-groups.
(3)
The proposed elimination of the volunteer attorney-panel chairs is in response to a
conflict of interest identified by the Ethics Commission in the dual role these
attorneys may have in serving on a CCOC hearing panel in one instance while
representing a client before a hearing panel in another case. In its report, OLO
provided an excellent summary of the Ethics Commission advice and
determinations regarding the CCOC (©49-51). Most pertinent to Bill 50-IS's
proposed change is correspondence between the Ethics Commission and the CCOC
beginning in February 2014 (©52-66), and culminating with a letter of guidance
dated April 10, 2014 (©67-70). In that letter, the Ethics Commission concluded
that volunteer panel members
(i.e.,
the attorney panel chairs) are prohibited from
compensated representation of businesses with a matter before a CCOC panel.
The CCOC then requested a waiver of conflict of interest restrictions on
volunteer attorney panel chairs (©71-82) which was declined by the Ethics
Commission (©83-88). As it currently stands, the Ethics Commission's April 2014
conclusion that volunteer panel members are prohibited from representing, for
compensation, businesses before a CCOC panel, still applies.
Public Hearing and Correspondence
There were 17 speakers at the January 21 public hearing on Bill 50-15. DHCA Director
Clarence Snuggs spoke on behalf of the Executive (©89), and reiterated the justifications offered
by the Executive in his transmittal memorandum. Director Snuggs emphasized DHCA's expertise
in matters related to COCs, and synergy that would be present with DHCA's administration of
both the Commission on Landlord-Tenant Affairs and the CCOC two entities with similar
organizational structures and functions. Dr. Rand Fishbein, Chair of the CCOC, conveyed the
CCOC's "strenuous and united opposition" to the Bill (©90-92). Dr. Fishbein expressed concern
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that the "bill was conceived in secret with absolutely no consultation with the Commission." Dr.
Fishbein objected to all three changes proposed in the Bill, and stated that the problems facing the
CCOC are "ftmdarnentally resource-based
not process-based." David Frager testified in
opposition to the Bill on behalf of the Leisure World Board of Directors (©93-94), expressing
particular concern about changing the composition of the CCOC to include at-large members, and
that mandating mediation would impair the informal (pre-mediation) resolution of disputes.
Katalin Peter of the Greater Capital Area Association of Realtors (GCAAR), testified in
general support of the Bill, but sought certain clarifications (©95-96). Pete Young, Vice-President
of the Montgomery Village Foundation (MVF) Board of Directors expressed MVF's objections to
the Bill (©97-99), both to the composition changes and the proposed mediation requirement, as
well as objecting to any increase in the COC registration fee (which is not proposed in the Bill).
Vicki Vergagni, President ofthe Board of Directors and on-site community manager ofGlen Waye
Gardens Condominium testified in opposition to the Bill (© 100-107), requesting that the Bill be
tabled pending a collaborative effort of all stakeholders to determine the best way forward. CCOC
member Mark Fine echoed CCOC Chair Fishbein's assertion that the problem was one of
resources, not process (©108-109). CCOC Vice-Chair Amy Winegar also spoke in opposition to
the Bill (©11O-111), questioning whether the five the public at-large member positions proposed
in the Bill could be filled. Mitchell Farrah, representing the Washington Metropolitan Chapter
Community Association Institute (WMCCAI) testified in opposition to all ofthe changes proposed
in the Bill (©112-114).
Greg Friedman, a volunteer panel chair for the CCOC, opposed the changes in the
composition of the CCOC (©115-116), saying that they would deprive the panels of necessary
expertise in conducting hearings, and questioning the likelihood of filling the five proposed at­
large positions. Paul Bessel, a Leisure World resident, testified in support of the Bill but
recommended that the Bill be amended to require all CCOC members to receive proper training
(©117-123). Dinah Stevens, another volunteer panel chair, testified in opposition to the proposed
changes (©124-127), and described her experiences chairing hearing panels. Steven Muse, a
resident ofFountain Hills Community Association, testified in support of the Bill (©128-130), and
illustrated the impartiality problems identified by OLO in its report. Jackie Simon testified in
support of moving the CCOC to DHCA, but opposed the Bill's other proposed changes (©131­
132). Condominium resident Katharine Borgogni opposed the Bill (©133), expressing particular
concern about replacing volunteer panel chairs with members of the public with no particular
expertise in COC matters.
Kathleen Hastings testified in general support of the Bill (© 134-137), but recommended
additional measures to assist homeowners in the event of a breach of a mediation agreement and
the licensing of community managers. Vernard McBeth testified in support ofrequiring mediation
prior to advancing to a hearing panel, expressed ambivalence to the relocation of the CCOC to
DHCA, and supported altering the composition of the CCOC but suggested an alternative model
(©138-139).
The Council received a number of pieces of correspondence concerning Bill 50-15,
virtually all of it in opposition to the Bill's proposed changes (see, for example, email from
Lawrence Dorney at ©140-144). The reasons offered in the correspondence for opposing the bill
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generally reflected those offered in the public hearing testimony. Also, the Bill was the subject of
an online petitionS which, as of March 7, had 240 supporters with over 90 comments.
Issues for Committee Discussion
1.
Should the CCOC be moved into DHCA?
The flISt significant change proposed in this Bill is the consolidation of all of CCOC's
operations within DHCA - a move of all but its survey and fee collection functions from OCP.
The 2015 OLO Report includes the specific recommendation that, "[a]bsent significant drawbacks,
including the organizational capacity to absorb the Commission, relocate the Commission on
Common Ownership Communities from the Office of Consumer Protection to the Department of
Housing and Community Affairs." OLO recognized that the CCOC "is not a perfect fit in any
County department," a point that has been echoed by the CCOC itself. However, in OLO's view,
the size and existing administrative and technology infrastructure of DHCA could better serve the
CCOC, and is certainly no less appropriate a home for the CCOC
than
is OCP. The Executive, in
his October 30, 2015 memorandum to the PHED and PS Committee Chairs, asserted that CCOC
issues are in fact more closely aligned with the work ofDHCA (see ©32).
OLO's recommendation was qualified, however, by the prefatory language "absent
significant drawbacks, including the organizational capacity to absorb the Commission." This
qualification, of course, raises the question of whether DHCA is capable of absorbing the
Commission without compromising its ability to function. At the public hearing, there was
testimony reflecting a skepticism of this capacity. DHCA Director Clarence Snuggs testified
however, that DHCA
has
expertise in many of the issues facing the CCOC, and that relocating the
CCOC to DHCA would create greater synergy between the COC program, the CCOC, and existing
housing programs provided by DHCA.
As with the other provisions of the Bill, this proposed change generated a great deal of
resistance at the public hearing. Most of this opposition was grounded in a belief that DHCA
would be no better a fit for the CCOC than is OCP. CCOC Chair Dr. Rand Fishbein stated concern
that a move would result in the CCOC being "transformed into an advocacy voice for the County's
affordable housing program." Absent further changes in Chapter
lOB
(which are not proposed in
this Bill), staff does not see how the CCOC can veer too far from its statutory responsibilities and
functions.
Dr. Fishbein also asserted in his testimony, as did the CCOC in its memorandum analyzing
Bill 50-15 (see ©145-158), that this proposed change in Bill would give the Director ofDHCA
additional "pre-emptory authority to intervene, at his sole discretion, in the Commission's quasi­
judicial process." In general, the Bill substitutes references to "the Office" (OCP) with the
"Director" (DHCA). Dr. Fishbein's objection may stem in part from this change, which is
consistent with County legislative drafting convention: offices or departments don't act other than
through their officials and employees. The "Director" is the appropriate actor in this case, and
may under County law delegate these responsibilities to appropriate DHCA employees.
Functionally, however, the Director ofDHCA is not in these instances given any more power than
is currently wielded by the Director of OCP.
htt;ps:llwww.change.orglorganizationslwwwstopbill50-15com
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The CCOC memorandum analyzing the Bill does include objections to proposed changes
related to the mediation of disputes (see ©152-154). In particular, the CCOC objects to provisions
requiring the CCOC to dismiss a dispute if it finds "there are no reasonable grounds to conclude
that a violation of applicable law or any association document has occurred," after the Director
makes the same fmding (see lines 83-90 at ©5). This proposed change does not give any additional
authority the designated County staff, but only removes the discretion of the CCOC to choose not
to dismiss a dispute after
the
eeoc
finds
no reasonable grounds to continue. Also, the Bill retains
the existing law's language permitting the CCOC to order staff to investigate further, in the absence
of such a finding. The CCOC retains the authority for making the finding of "no reasonable
grounds," and Council staff does not believe that there is any need for discretion over whether to
dismiss once this finding has been made.
The CCOC also objects to the Bill's provision allowing the Director to determine that
"mediation would be fruitless." (see lines 118-123 at ©6). This provision must be considered in
the context of mediation being a required step
in
the dispute resolution process. Also, the result
of such a determination by the Director is the requirement that a hearing be scheduled by the
CCOC. Ultimately, this measure only ensures that time and energy is not wasted on mediation,
and does not in any way divest the CCOC of hearing authority over a dispute.
Council staff agrees with the OLO recommendation, and believes that there are significant
potential benefits to relocating the CCOC to DHCA. Staff also notes that one of the underlying
conflicts in this matter, which is not a part of this Bill, is the accounting of funds collected as the
CCOC registration fee. Currently, the CCOC is served primarily by OCP, but registration and fee
collection is conducted by DHCA. Having all CCOC functions served by a single County agency
should make any answer to these underlying accounting questions easier, as all collected
registration fees should be spent within that agency's budget.
Council Staff recommendation: relocate the CCOC into DHCA as proposed in the BilL
2.
Should mediation of disputes before the CCOC be mandatory?
According to the Executive's transmittal memo, Bill 50-15 would "make mediation a
mandatory component of dispute resolution when complaints are filed with the CCoc."
Specifically, the pertinent provisions of the Bill would require the Director, "after finding
reasonable grounds to conclude that a violation of applicable law or an association document has
occurred," to "attempt to resolve the matter through mediation" (see lines 98-101 at ©5). The
Executive has stated that requiring mediation, which is currently optional, "will facilitate the
prompt resolution of complaints without the formalities and costs associated with a quasi-judicial
hearing" (see ©31). This objective is consistent with OLO's recommendation # 1, which would
include "more informal dispute resolution (mediation)." The proposed change is illustrated in a
comparison of the CCOC dispute resolution flow chart from the OLO Report (©159) and the
modified flow chart incorporating mandatory mediation (©160).
There was correspondence and testimony at the public hearing objecting to this proposed
change. Much of the objection to requiring mediation was due to a concern that under the
existing
system,
nearly half of disputes are resolved informally prior to mediation.
9
Opponents of the
In
its 2015 Report, OLO found that 47% of the 178 closed cases examined were resolved
prior to
mediation.
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proposed changed expressed concern that requiring mediation might discourage parties from
attempting to resolve disputes informally, thereby having the effect of making the dispute
resolution process
less
efficient. Dr. Fishbein of the eeoc articulated this view in his testimony
(see ©91), as did the eeoc in its memorandum (see ©152-154).
The OLO Report provides some important context to the consideration of this issue. As
described above, OLO examined the case files of 178 eeoc cases closed between 2012 and early
2015.
10
It
found that 47% of these cases were resolved before mediation, 29% were resolved
through mediation, 12% with a hearing, and 11% were withdrawn or dismissed for lack of
jurisdiction. These numbers seem to bear out the assertion by the eeoc that it is committed to
the informal resolution of cases, including through
voluntary
mediation.
It
also illustrates that,
assuming the purpose of the proposed change is to reduce the number of disputes requiring a
hearing, the room for improvement is relatively small (12% of disputes). The concern that an
inflexible mediation mandate may have an effect the opposite of that intended, as well as the fact
that there is relatively little room for improvement, seems to indicate that caution is warranted in
making changes to the process is warranted.
It
is also important to understand that the changes proposed in Bill 50-15 would only make
mediation a necessary step prior to resolution by a hearing panel, and would not on their face
preclude parties from resolving the matter prior to mediation (as did the parties in 47% of the cases
that OLO examined). Finally, it should be noted that nothing in the current law impairs the ability
of the parties to engage in voluntary mediation, but neither does it direct staff to attempt informal
resolution.
I 1
Council staff believes that an emphasis on informal resolution disputes is consistent with
the eeoc's founding principles, but cannot discount the possibility that an inflexible mediation
requirement may result in fewer cases being resolved prior to mediation. This may result in a
greater administrative burden and longer resolution time for cases that might have otherwise been
resolved before mediation. A more flexible statutory recognition of the importance of informal
resolution of disputes, and a requirement that such informal resolution, including mediation, be
attempted before a dispute proceeds to the hearing process, may be possible. Such a provision
might help ensure that cases that would otherwise be resolved prior to mediation, continue to be
so resolved. This could be accomplished by amending lines 98-101 of the Bill at ©5 as follows:
(c)
[Any party may request mediation.] If the Director, after reviewing
£!
dispute and
any
investigation, finds reasonable grounds to conclude that
,g
violation of applicable law or an association document has occurred,
the Director must attempt to resolve the matter through informal
negotiation including. in the
Dir~ctor'
s discretion. mediation.
The fact that open cases could not be reviewed, and the lack of electronic case tracking records are acknowledged
weaknesses of this data.
11
COMCOR lOB.06.01.01 does provide that "[m]ediation may be requested by the Complainant or Respondent at
any time, or may be recommended by the Staff at any time, or may be recommended, ordered or terminated by the
Hearing Panel or Panel Chairperson at a Prehearing Conference."
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Parties would still be required to attend a mediation conference if scheduled by the Director, but
the Director would be able to exercise discretion in scheduling such mediation, within the confmes
to the more general requirement to attempt informal resolution. This would also be consistent with
the provision of the Bill mentioned earlier that would allow the Director to make a determination
that mediation is fruitless, and would not require the administrative burden and delay that required
scheduling such a dispute for mediation would entail.
3.
Should the composition of the
eeoc,
and its hearing panels, be altered?
The component of Bill 50-15 that has generated the most resistance in correspondence and
public hearing testimony is the proposed change to the composition of the CCOC and its three­
person hearing panels. The proposed change in the composition of the CCOC proposes to solve
this problem oflack ofimpartiality by eliminating the use of the volunteer panel chairs altogether,
and providing that CCOC membership consists of 15 members, with five from each of three
member groups: owners/residents, professionals/managers, and members ofthe public at-large that
are not from the first two groups (see lines 23-38 at ©2-3). Under the Bill, hearing panels would
now be composed of one member from each of the member groups, and chaired by a member
designated by the CCOC Chair (see lines 132-141 at ©7).
The root of this proposed change is a determination by the County Ethics Commission that the use
of attorneys who practice before the CCOC as non-member, volunteer panel chairs under the
existing law represented a conflict of interest. The Ethics Commission's determination was
triggered, at least in part, by four complaints alleging unfairness in the hearing process (see ©69).
The proposed change would remove the issue that led to that determination, thereby addressing
the imbalance, real or perceived, on the hearing panels.
In
his October 30, 2015 memorandum,
the Executive said that the proposed change would resolve the conflict ofinterest issue, and pointed
out the proposed new makeup of the CCOC is modeled on the Commission on Landlord-Tenant
Mfairs,12 also administered by DHCA, consistent with the recommendations of the 1989 Task
Force Report that was the basis for the CCOC (see ©31).
The ethics issue is summarized in the OLO report (see ©49-51), and the correspondence
between the CCOC and the Ethics Commission is at ©52-88. Essentially, the Ethics Commission
determined that the volunteer panel chairs are "public employees" for the purposes ofthe County's
Code of Ethics,13 and that panel chairs who also represent clients before CCOC panels have a
conflict of interest under the Code of Ethics. Since the Ethics Commission's guidance letter of
April 10, 2014, the CCOC has complied with the Ethics Commission's determinationY The
The Commission on Landlord-Tenant Affairs (COLTA) is established under County Code
§
29-9. COLTA has 12
members and 3 alternate members. Ofthese, four members plus one alternate must be landlords, managers or attorneys
representing landlords, or representatives ofa landlord organization; four members plus one alternate must be tenants
of rental housing, attorneys who represent tenants, or representatives of a tenant organization; and four members plus
one alternate must be members of the public at-large that are neither landlords, tenants, or professionals representing
landlords or tenants.
13
The Ethics Commission made this determination despite the fact that the volunteer panel chairs are neither County
"employees" in the traditional sense, nor are they appointed members of the CCOC. As noted above the panel chairs
professional arbitrators on a list maintained by the CCOC; they are selected by the CCOC according to the CCOC's
"Panel Chair Guidelines (see ©61-62).
14
The CCOC did, on July 9,2015, request a waiver of the conflict of interest provisions for panel chairs. The Ethics
Commission denied the CCOC's request (see ©71-88).
12
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Ethics Commission determination made about half of the volunteer panel chairs on the list at that
time ineligible to serve in that capacity, but the CCOC has continued with a list of seven attorneys
who do not have a conflict of interest as identified by the Ethics Commission. Council staff does
not believe, nor has there been any assertion, that the CCOC's ability to conduct hearing panels
has been compromised by this reduction in available panel chairs. As stated above, the CCOC has
been proceeding in compliance the Ethics Commission determination for nearly two years.
This proposal generated by far the most intense opposition at the public hearing and in
correspondence. Most of the objection centered on the concept of having people with no interest
in or relationship to COCs making quasi-judicial decisions concerning these communities would
be inappropriate, particularly given the specialized nature of the State laws governing the various
types of COCs. Also, the assertion was made more than once that it was necessary to have an
attorney present to conduct the hearing and write the opinion, and that not having an attorney
would jeopardize CCOC decisions appealed to Circuit Court. Paul Bessel offered a counterpoint
to this view, asserting that with proper training, the at-large members would
be
perfectly capable
of making informed decisions, and non-attorneys could write well-reasoned, defensible opinions
and orders (see ©117-123). Finally, other opponents questioned whether there would even be five
qualified at-large volunteers willing to serve.
I5
While CCOC Chair Fishbein stated his view that all of Bill 50-15 is "toxic" and its
enactment would likely destroy the CCOC, Council staff believes that it is only this proposed
change that
may
present an existential threat to the CCOC. Staff believes that, while the training
suggested by
Mr.
Bessel may mitigate the absence of "skin in the game" and professional training
in the field, this is by no means a certainty. Additionally, while staff believes that it is likely that
sufficient numbers of qualified volunteers could be found to fill the at-large positions, this too is
uncertain. In general, a better approach may be to consolidate the CCOC's operations in DHCA
and provide a statutory focus on informal resolution of disputes as discussed in issues 1 and 2
above, and not radically remake the CCOC until the anticipated benefits of those changes can be
evaluated. Once CCOC has been integrated into DHCA, any need, or lack of need, to radically
reshape the membership should be more visible.
Council staff believes that in the absence of a change in the composition ofthe CCOC and
its hearing panels, it is still advisable to add to the law language that would give clear effect to the
Ethics Commission's determination regarding certain panel chairs' conflict of interest. This could
be achieved by retaining §lOB-12 as
it
currently exists
with the addition of a new subsection as
shown below:
lOB-12. Hearing Panel.
(a)
If a hearing is scheduled, the chair of the Commission must convene a
3-member panel to hear the dispute.
Council staff inquired of the Executive branch as to whether the at-large member position on COLTA had presented
challenges to fill. The response was that while there were challenges, these were likely due to additional requirements
for volunteers to fill those positions, rather than their "disinterested" status.
11
IS
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· (b)
The chair must choose 2 members of the panel from the voting
members of the Commission. The persons selected must represent the
2 different membership groups ofthe Commission. The 2 Commission
members must designate the third member from a list of volunteer
arbitrators trained or experienced in common ownership community
issues maintained by the Commission. The third member must chair the
panel. If a suitable arbitrator is not available, the chair of the
Commission must designate the third panelist from among the voting
members ofthe Commission, and must designate the chair ofthe panel.
(c)
(d)
Each panelist must not have any interest in the dispute to be heard.
Each volunteer arbitrator must not any parties in disputes before other
hearing panels convened under this Chapter.
!£U
If the Commission chair decides that a hearing should be held by a
hearing examiner instead ofa hearing panel, the chair, with the approval
of the Commission, may designate the Office of Zoning and
Administrative Hearings to conduct the hearing.
[[(e)]]ill
If the parties to a dispute agree that the hearing should be held
and the dispute decided by a hearing examiner instead of a hearing
panel, the chair must designate the Office ofZoning and Administrative
Hearings or another hearing examiner to conduct the hearing and issue
a decision.
This action would not address concerns about imbalance and the impartiality of CCOC hearing
panels as completely as the proposed change in the composition of the CCOC.
It
would, however,
enshrine in law the Ethics Commission's determination, ensuring that adherence to it continues,
and put all parties on notice ofthe fact that panel chairs did not also represent clients before hearing
panels.
4.
Other issues raised at the public hearing
Council staff is not recommending any additional changes in the Bill, but is including for
informational purposes additional resources related to issues not directly addressed in the Bill, but
that were raised either in the public hearing or in subsequent correspondence.
12
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• Delay in filling vacancies:
At the public hearing, CCOC Vice-Chair Aimee Winegar
indicated that the CCOC was facing a critical shortage of volunteers due to vacancies not
being filled in a timely manner (see ©110-111), and by memorandum dated February 12,
2016, the CCOC requested immediate action to fill existing vacancies on the CCOC (see
©161-163). The CCOC membership roster is included in this packet (©15) and shows
when these vacancies occurred. Whatever the reason for any delay in filling the vacancies
(if there has been a delay at all), Council action on this Bill should allow any such
appointments to proceed without delay.
• Increase in registration feelfinancing issues
A number of people objected to an increase
in the CCOC registration fee, as is described in the Executive's October 30 memorandum
(see ©32), and many seemed to believe that this fee would be increased under this Bill. As
described above, the fee is set by method (2) regulation. Also, by memorandum to
Constantia Latham, Fariba Kasiri, and Marc Hansen dated September 10,2015 (see ©164­
170), the CCOC proposed a number of staff enhancements, and questioned the disposition
of registration fees collected. The question of the disposition of registration fees was also
raised at the public hearing, and CCOC Chair Fishbein's assertion that the CCOC's issues
are "resource-based" rather
than
"process based" rests largely on that question. As
mentioned above, Council staff believes that consolidation of all of CCOC's operations
within DHCA will facilitate a resolution to the CCOC's concerns.
• Annual Survey
On February 4, 2016, the CCOC sent a memorandum to OCP Director Eric
Friedman expressing concerns about the annual information survey sent out by DHCA
(©171-173). It appears to Council staff that any problems with the annual collection of
registration fees and information by DHCA may be avoided, or at least more directly
resolved if the CCOC's operations are consolidated within DHCA.
This packet contains:
Bill
50-15
Legislative Request Report
Transmittal Memo from County Executive
County Attorney's Bill Review Memo, Jan. 82016
CCOC Membership List
County Code, Chapter lOB, Article 2. Dispute Resolution
OLO Report, pages
9-12
County Executive Memo to PHED and PS Chairs, Oct.
30, 2015
CCOC Response to Executive's Memo, Nov.
16,2015
CCOC Memo to DHCA, Sep.
24,2015
OLO Summary of Ethics Commission Advice
Ethics Commission - CCOC Correspondence, Feb. - Apr.
2014
Ethics Commission Letter of Guidance, Apr.
10,2014
CCOC Waiver Request, Jul. 9,
2015
Ethics Commission Advisory Opinion
15-08-011
Public Hearing Testimony
Clarence Snuggs
Rand Fishbein
David Frager
Katalin Peter
Pete Young
13
Circle
#
1
10
12
14
15
16
26
30
34
41
49
52
67
71
83
89
90
93
95
97
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Vicki Vergagni
Mark Fine
Aimee Winegar
Mitchell Farrah
Greg Friedman
Paul Bessel
Dinah Stevens
Steven Muse
Jackie Simon
Katharine Borgogni
Kathy Hastings
Vernard McBeth
Lawrence Dorney email, Mar. 6, 2016
CCOC Analysis of Bill 50-15
OLO CCOC Dispute Resolution Flow Chart
Dispute Resolution Flow Chart - Mediation Required
CCOC Memo, Feb. 12,2016 re: Commission Vacancies
CCOC Memo to Latham, Kassiri, and Hansen, Sep. 10, 2015
CCOC Memo to Eric Friedman, Feb. 4 2016
F:\LAW\BILLS\l 550 CCOC\PHED-PS Memo.Docx
100
108
110
112
115
117
124
128
131
133
134
138
140
145
159
160
161
164
171
14
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Bill No.
50-15
Concerning: Common
Ownership
Communities - Commission on
Common Ownership Communities ­
Composition - Dispute Resolution
Revised:
Draft No.
Introduced:
December 8,2015
Expires:
June 8, 2017
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective:
_~-:--
_ _ _ _ _ __
Sunset Date: -'-='No=n=ec...-_ _ _ __
Ch. _ _, Laws of Mont Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Council President at the Request ofthe County Executive
AN
ACT to:
(1)
(2)
(3)
(4)
(5)
(6)
make mediation of certain disputes regarding common ownership
communities mandatory;
alter the composition of the three member hearing panel;
alter the composition of the Commission on Common Ownership
Communities to include members of the public;
transfer duties assigned to the Office of Consumer Protection to the
Department of Housing and Community Affairs;
provide for certain transition provisions; and
generally amend County law concerning common ownership communities.
By amending
Montgomery County Code
Chapter lOB, Common Ownership Communities
Sections 1OB-2, 1OB-3, lOB-4, lOB-5, 1OB-7A, lOB-9A, lOB-II, lOB-12, lOB-13, 1OB-14,
and 10B-19.
Boldface
Underlining
[Single boldface brackets]
DQuble underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law zmqffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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BILL No. 50-15
1
Sec 1. Sections 10B-2, 10B-3, 10B-4, 10B-5, 10B-7A, 10B-9A, lOB-II, 10B-12, 10B­
13, 10B-14, and 10B-19 are amended as follows:
Article 1. Commission on Common Ownership Communities.
2
3
4
*
10B-2. Definitions.
*
*
5
6
7
In this Chapter, the following words have the following meanings:
[(a)]
Commission
Communities.
[(b)]
Common ownership community
includes:
(1)
a development subject
to
a declaration enforced by a homeowners'
association, as those terms are used in state law;
(2)
(3)
a residential condominium, as that term is used in state law; and
a cooperative housing project, as that term is used in state law.
means
the
Commission
on
Common
Ownership
8
9
10
11
12
13
14
*
*
*
15
16
[(c)] [Office means the Office of Consumer Protection.1
Department
means
the Department of Housing and Community Affairs.
17
18
19
20
Director
means the Director of the Department of Housing and
Community Affairs or the Director's designee.
10B-3. Commission on Common Ownership Communities.
(a)
The County Executive must appoint, subject to confirmation by the
Council, a Commission on Common Ownership Communities. The
Commission consists of 15 voting members.
21
22
23
24
(1)
[Eight] Five members should be selected from unit or lot owners
or residents of self-managed and professionally managed
condominiums,
cooperative
self-managed
and
professionally
and
managed
and
25
26
housing
corporations,
self-managed
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BILL
No. 50-15
27
28
professionally managed homeowners' associations, and may
include members or former members ofgoverning boards.
(2)
[Seven] Five members should be selected from persons who are
members of professions associated with common ownership
communities (such as persons involved in housing development
and real estate sales and attorneys who represent community
associations, developers, housing management or tenants),
including at least one person who is a professional community
association manager.
29
30
31
32
33
34
35
36
37
38
39
40
41
ill
Five members should be selected from the public at large who
would not meet the criteria for selection under subsection (a)(1) or
(aX2).
(b)
Designees of the County Council (if the Council selects a designee),
Planning Board, Department ofEnvironmental Protection, Department of
Permitting Services, Department ofTransportation, [Office ofConsumer
Protection,] and Department ofHousing and Community Affairs are ex­
officio nonvoting members ofthe Commission.
42
43
44
45
46
47
*
(i)
*
*
The [Office] Department must provide the Commission with staff, offices
and supplies as are appropriated for it.
0)
The Commission must submit an annual report by September 1 to the
County Executive and the County Council summarizing its activities,
needs, and recommendations, and the extent to which the goals of this
Chapter are being met.
48
49
50
51
10B-4. Administrative support.
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BILL
No. 50-15
52
53
54
In
selecting staff to carry out the [Office's] Department's responsibilities under
this Chapter, the Director must consider the recommendations of the
Commission.
IOB-5.
Duties of the [Office] Department of [Consumer Protection] Housing and
55
56
Community Affairs.
The [Office] Department, in consultation with the Commission, must:
57
58
*
IOB-7A.
Notification requirements.
*
*
59
60
61
The governing body of a community association must, at least annually,
distribute information in a form reasonably calculated to notify all owners about
the availability of dispute resolution, education, and other services to owners
and residents of common ownership communities through the [Office]
Department and the Commission. The governing body may satisfy this
requirement by including with any annual notice or other mailing to all members
of the community association any written materials developed by the [Office]
Department to describe the Commission's services.
62
63
64
65
66
67
68
69
Article 2. Dispute Resolution.
*
IOB-9A.
Request for relief from
stay.
*
*
*
*
70
71
72
*
(b)
The special panel must consist of 3 voting members of the Commission
designated by the chair, and must include [at least] one representative of
each membership category.
73
74
75
76
77
*
(a)
*
*
lOB-It.
Mediation; dismissal before hearing.
The [Office] Director may investigate facts and assemble documents
relevant to a dispute filed with the Commission, and may summarize the
f:\Iaw\bills\1550 ccoclbiU 3.docx
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BIU No. 50-15
79
issues in the dispute. The [Office] Director may notifY a party if, in [its]
the Director's opinion, a dispute was not properly filed with the
Commission, and may inform each party of the possible sanctions under
Section 10B-13(d).
(b)
Ifthe [Office] Director, after reviewing a dispute, finds that, assuming all
facts alleged by the party [which] that filed the dispute are true, there are
no reasonable grounds to conclude that a violation of applicable law or
any association document has occurred,
[it]
the Director may so inform
the Commission. The Commission[, in its discretion, may] must dismiss
a dispute if it fmds that there are no reasonable grounds to conclude that
a violation of applicable law or any association document has occurred,
or it may order the [Office] Director to investigate further. The
Commission may reconsider the
di~missal
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
of a dispute under this
subsection if any party, in a motion to reconsider filed within 30 days
after the dispute is dismissed, shows that:
(1)
the Commission erroneously interpreted or applied applicable law
or an association document; or
(2)
material issues offact [which] that are necessary to a fair resolution
of the dispute remain unresolved.
(c)
[Any party may request mediation.] If the Director, after reviewing
~
96
97
98
99
dispute and any investigation. finds reasonable grounds to conclude that
~
100
101
violation of applicable law or an association document has occurred,
the Director must attempt to resolve the matter through mediation. Each
~
named in the dispute or its representative must attend any mediation
102
103
104
105
conference scheduled
Qy
the Director under this Section unless excused
Qy
the Director. If the
~
that files the dispute refuses or fails to
participate in the mediation, the Director must dismiss the dispute. If the
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Bill No. 50-15
106
107
108
109
110
111
112
113
114
115
~
that is the subject of the dispute refuses or fails to participate in the
mediation, the Director must refer the dispute to the Commission for
resolution. The
~
that is the subject ofthe dispute may not appear at
the hearing, and the hearing panel may award relief to any
ImtlY
that the
facts on the record warrant.
(
d)
[If a party requests mediation, the Commission must notify all parties of
the filing and of the mediation session.] Unless otherwise agreed to
Qy
the parties in writing,
~
mediation conference is infonnal and nothing said
or done during
~
mediation conference is admissible in any subsequent
hearing under this article.
(
e)
116
117
[The Commission must provide a qualified mediator to meet with the
parties within 30 days after a party requests mediation to attempt to settle
the dispute.] The Commission must promptly schedule
~
118
hearing under
119
120
121
122
123
124
125
126
127
128
129
130
Section lOB-13 if either:
ill
mediation has not occurred within 90 days
after the Director found reasonable grounds to believe
~
violation
occurred; or
ill
the Director decides at any time that mediation would be
fruitless. The Director may extend the mediation deadline
Qy
mutual
consent ofthe parties.
[(
f)
Ifany party refuses to attend a mediation session, or ifmediation does not
successfully resolve the dispute within 10 days after the first mediation
session is held, the Commission must promptly schedule a hearing under
Section lOB-13 unless a hearing has already been held under Section
10B-13.]
lOB-12. Hearing Panel.
(a)
If a hearing is scheduled, the chair ofthe Commission must convene a 3­
member panel to hear the dispute.
131
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BILL
No.
50-15
132
133
134
135
136
137
138
139
140
141
(b)
The chair must choose [21
J
members of the panel from the voting
members ofthe Commission. The persons selected must represent the [21
J
different membership groups of the Commission. [The 2 Commission
members must designate the third member from a list of volunteer
arbitrators trained or experienced in common ownership community
issues maintained by the Commission. The third member must chair the
panel. Ifa suitable arbitrator is not available, the chair ofthe Commission
must designate the third panelist from among the voting members of the
Commission, and must designate the chair of the paneL1 The chair must
designate one panel member to serve as panel chair.
142
143
144
*
lOB-13. Administrative hearing.
*
*
*
*
*
(d)
145
146
The hearing panel may award costs, including reasonable attorney's fees,
to any party if the other party:
147
148
(1)
filed or maintained a frivolous dispute, or filed or maintained a
dispute in bad faith;
(2)
[unreasonablY1 refused to participate in mediation of a dispute[, or
149
150
151
152
unreasonably withdrew from ongoing mediation]; or
(3)
substantially delayed or hindered the dispute resolution process
without good cause.
The hearing panel may also require the losing party in a dispute to pay all
or part of the filing fee.
(e)
[the] The hearing panel must apply state and County laws and all relevant
caselaw to the facts ofthe dispute, and may order the payment ofdamages
and any other relief that the law and the facts warrant. The decision ofthe
153
154
155
156
157
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BILL
No.
50-15
158
159
160
161
162
163
164
hearing panel is binding on the parties, subject to judicial review under
Section 2A-ll.
*
(i)
*
*
The Commission, acting through the [Office] Department and the County
Attorney, may enforce a decision of the hearing panel by taking any
appropriate legal action.
*
*
*
*
165
166
167
lOB-14. Settlement of disputes; assistance to parties.
*
(b)
*
The [Office] Director may inform any party who has settled a dispute by
mediation, or any party who prevails in a hearing held under Section 10B­
13, about how the agreement or decision can be enforced.
168
169
170
171
172
173
174
lOB-19. Enforcement.
(a)
(b)
The [Commission] Department may enforce this Article by legal action.
In addition to any action by the [Commission] Department and any other
action authorized by law, including the filing of a dispute under Article
2, any person may file an action:
175
176
177
(1)
for injunctive relief to enforce this Article or correct any violation
of
it,
and
(2)
to recover damages for a loss sustained as a result of a violation of
this Article.
178
179
180
181
182
Sec. 2. Effective Date.
Sections 1OB-ll (c), (d), and (e), which mandate mediation of disputes, applies
to all disputes filed with the Commission after this Act takes effect as provided in
Charter Section 112.
Sec. 3. Transition.
183
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ccoclbill 3.docx
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BILL
No.
50-15
184
185
186
187
188
The fIrst three vacancies of members selected under Section 1OB-3(a)(1) and
the fIrst two vacancies of members selected under Section lOB-3(a)(2) must be fIlled
by members selected under Section lOB-3(a)(3).
Approved:
189
Nancy Floreen, President, County Council
Date
190
Approved:
191
Isiah Leggett, County Executive
Date
192
This is a correct copy ofCouncil action. '
193
Linda M. Lauer, Clerk of the Council
Date
194
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LEGISLATIVE REQUEST REPORT
Bill
SO-IS
Common Ownership Communities
-
Commission on Common Ownership Communities ­
Composition
-
Dispute Resolution
DESCRIPTION:
This legislation would: 1) make mediation a mandatory component of
dispute resolution when complaints are filed with the Commission on
Common Ownership Communities (CCOC); 2) change the
composition of the Commission by requiring that one third of the
Commissioners be selected from members of the general public; 3)
replace the volunteer arbitrators that currently chair hearing panels
with voting members of the Commission; and 4) transfer staff support
duties from the Office of Consumer Protection to the Department of
Housing and Community Affairs.
This legislation addresses three concerns that have arisen about the
operation of the current CCOC law. 1) Adjudication of disputes has
required parties to engage in hearings that require the parties to comply
with complex rules of procedure. 2) The CCOC does not have
adequate access to staff support and other resources to carry out its
mission as effectively as initially envisioned. 3) CCOC hearing panels
are currently chaired by outside volunteers that are not voting members
of the Commission and have been found, in some instances, by the
Ethics Commission to have a conflict of interest.
To improve the efficiency and effectiveness of the CCOC by
encouraging informal resolution of disputes between homeowners,
residents and governing bodies of common ownership communities;
to ensure that hearing panels are composed of individuals who
represent a balance of the interests involved in adjudication of
disputes; and to provide the CCOC with better access to administrative
support and technology resources.
Department of Housing and Community Affairs
To be requested.
To be requested.
To be requested.
N/A
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
Eric Friedman, Office ofthe Consumer Protection, 240-777-3636
Clarence Snuggs, Department of Housing and Community
Affairs,
240­
777-3600.
@
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APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
Only applicable in the City of Rockville.
N/A
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,:~::.;",
'I
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I
EXECUTIVE
.
~
OFFICE OF THE COUNTY
Isiah Leggett
.,
ROCKVIlLE. MARYLAND
208S()
I'
"
County Executive
MEMORANDUM
November 23. 2015
TO:
George Leventhal, President
Montgomery County Council
Isiah Leggett, County Executiv....­
Commission on Common Ownership Communities - Amendments to
Chapter lOB
FROM:
SUBJECT:
I am forwarding with this memorandum proposed legislation to amend
Chapter lOB, Common Ownership Communities. I believe that this legislation Will ,
enhance the ability ofthe,Commission()n COinmOIIQwp.er,ship
COqUnQ1liti~s
{ceo
C)
to
better fulfill the purposes for which it was eStablished 25 years ago.
As
you know, I
waS
a
member of the County Council when the CCOC was established, and I remember well the
intent and the need for creating this first-of-its kind commission. After 25 years, however,
revisions are needed.
Several factors contribute to the timeliness of these proposed legislative
changes. Over one-third of Montgomery County's residents now live in common'" '
ownership communities, and the CCOC has gathered considerable experience regarding a
multitude ofissues. The Office of Legislative Oversight recently submitted a report
evaluating the CCOC and offered several recommendations. including having the staff
support for CCOC
be
provided by the Department of Housing and Community Affairs.
Furthermore, Montgomery County's Ethics Commission has identified a conflict of
interest regarding the manner in which CCOC hearing panels are convened. Finally, a
review of the nature ofthe complaints filed, as compared to the mechanisms used to
process those complaints, indicates that the CCOC dispute resolution program has strayed
from its original intent to function as an alternative to court litigation.
In order to systematically address all of the above issues, and to ensure that
the CCOC
.will
continue to contribute to the quality of life in Montgomery County, the
legislation I am forwarding to the Council for its consideration would:
(1)
make mediation
a mandatory component of dispute resolution when complaints are filed with the CCOC;
(2) change the composition of the Commission by requiring that one-third ofthe
CommissiQners be selected from members of the general public; (3) replace
th~
volunteer
arbitrators who currently chair hearing panels with voting members 'of the Commission;
~
_ _/ 3 U .>40-77>-3'' T1Y
@
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...
... ::1
."
'!
I
... ' J
: .' .'.::'1
....
\
......
George Leventhal, President
November 23,2015
Page
2
and
(4)
transfer staff support duties from the Office ofConsumer Protection to the
Department of Housing
and
Community Affairs.
Executive staff stand
ready
to work with the Council on this important
legislation.
IL:tjs
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Isiah
Leggett
Marc
P.
Hansen
County Executive
County Attorney
OFFICE OF THE COUNTY ATTORNEY
MEMORANDUM
January 8, 2016
To:
Clarence Snuggs, Director
Department of Housing and Community Affairs
From: Walter Wilson
LULU/
Associate County Attorney
Via: Edward Lattner, Chief
Division of Government Operations
Re:
for
~.
6r/­
Bill 50-15 (Common Ownership Communities-Commission on Common Ownership
Communities-Composition-Dispute Resolution) CORRECTED
The County Executive's Office has requested that this office forward you our comments
concerning Bill 50-15. Under the proposed legislation, participation in mediation when a
complaint is filed with the Commission on Common Ownership Communities (CCOC) would
become mandatory for the parties to the dispute. The CCOC would continue to consist of 15
Commissioners. However, five of the Commissioners would be selected from the general public
while the other two membership categories that currently comprise the Commission-Le.,
common ownership professiorials and residents-would
be
represented by five individuals each.
The three-member hearing panels that adjudicate disputes not resolved through mediation would
no longer be chaired by volunteer arbitrators, but instead by voting members of the Commission.
Finally, the responsibility for providing the staff support and other resources needed by the
CCOC to carry out its mission effectively will be transferred from the Office of Consumer
Protection to the Department of Housing and Community Affairs.
Having reviewed Expedited Bill 50-15, I am satisfied that the legislation, as introduced,
does not raise any significant constitutional, preemption, or conflict concerns vis-a.-vis state or
federal law and is legally sound.
If
you have any questions or concerns regarding this
memorandum, please call me at (240) 777-6759.
cc:
Bonnie Kirkland, Assistant CAO
Marc Hansen
Josh Hamlin, Legislative Attorney
15·004520
Bill 50-iS OCA
review
101
Monroe
Street, Rockville, Maryland 20850·2580
(240) 777·6700. ITD (240) 777·2545. FAX (240) 777·6705
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COMMISSION ON COMMON OWNERSHIP COMMUNITIES
Membership Status as of
2/4/16
Membership Composition: 15 voting members. 7 Professionals (Housing Development/Real Estate
Sales, Attorneys, Association Managers) 8 Unit or Lot Holders or Residents
Active Members
First Name
Last Name
Member Type
Professional ­
Association
Manager
Professional ­
Association
Manager
Professional ­
Association
Manager
Status
TermStartDate
TermEndDate
NoOfTerms
Notes
Position
advertised
1/2016
Position
advertised
1/2016
Position
advertised
1/2016
Mr.
Richard
Brandes
Active
4/16/13
1/31/16
Second Term
Ms. Teresa (Terry)
Cromwell
Active
4/16/13
1/31/16
First Term
Ms. Aimee
Winegar
Active
4/16/13
1/31/16
First Term
First Full
Term
First Full
Term
Mr. James
Coyle
Unit or Lot Owner
Active
or Resident
Unit or Lot Owner
Active
or Resident
Unit or Lot Owner
Active
or Resident
Unit or Lot Owner
Active
or Resident
Unit or Lot Owner
Active
or Resident
Unit or Lot Owner
Active
or Resident
Unit or Lot Owner
Active
or Resident
4/1/14
1/31/17
Ms. Marietta
Ethier
4/1114
1/31/17
Mr. Mark
Fine
7/14/15
1/31/16
Partial Term
Dr.
Rand
Fishbein
4/16/13
1/31/16
First Term
Mr.
Bruce
Fonoroff
7/14/15
1/31/18
Second Term
Mr. Don
Weinstein
7/14/15
1/31/18
FirstTerm
Mr.
Kenneth
Zajic
4/1/14
1/31/17
Second Term
Vacancies
First Name
Last Name
Member Type
Status
TermStartDate
TermEndDate
NoOfTerms
Notes
Position advertised
Mr. Arthur
Dubin
Professional ­
Vacant
Real Estate Sales
Professional ­
Association
Manager
Professional ­
Association
Manager
Professional ­
Attorney
Vacant
4/24/12
1/31/15
Second Term
12/2014, 712015,
112016
Ms. Eugenia
Mays
4/1/14
1/31/17
First Term
RESIGNED
1112015.
Position
advertised
1/2016
RESIGNED
11/2015.
Position
advertised
112016
Ms. Gianna
Rahmani
Vacant
1017/14
1131/17
First Term
Mr. Thomas
Stone
Vacant
7/14/15
RESIGNED
1/31/18
Second Term
11/2015.
Position
advertised
112016
RESIGNED
2/2016.
Mr. David
Weinstein
Unit or Lot Owner
Vacant
or Resident
7/14/15
1/31/18
Second Term
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MONTGOMERY COUNTY CODE
Article 2. Dispute Resolution.
Sec.
lOB-So
Defined terms.
In this Article and Article 3, the following terms have the following meanings:
(1)
Association document
means:
(A)
the master deeds, declaration, incorporation documents, bylaws, and rules
of any common ownership community;
(B)
any written private agreement between any parties concerning the
operation of the community or maintenance or control of common or limited common property;
and
(C)
any similar document concerning the operation or governance of a
common ownership community. Association document does not include a lease covered by
Chapter 29 unless the lease provides that it may be enforced under this Chapter.
(2)
Common element
includes:
(A)
in a condominium or cooperative, all portions of the common ownership
community other than the units; or
(B)
in a homeowners' association, any real estate in a homeowners'
association community that is owned or leased by the association, other than a unit; and
(C)
in all common ownership communities, any other interest in real estate for
the benefit of owners which is subject to the declaration.
(3)
Community association
means the legal entity, incorporated or unincorporated,
that is responsible for the governance or common property of a common ownership community.
(4)
to:
(i)
require any person to take any action, or not to take any action,
involving a unit or common element;
1
Dispute
means any disagreement between 2 or more parties that involves:
(A)
the authority of a governing body, under any law or association document,
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MONTGOMERY COUNTY CODE
(ii)
require any person to pay a fee, fine, or assessment;
spend association funds; or
alter or add to a common element; or
(iii)
(iv)
(B)
the failure of a governing body, when required by law or an association
(i)
document, to:
properly conduct an election;
give adequate notice of a meeting or other action;
properly conduct a meeting;
properly adopt a budget or rules;
maintain or audit books and records;
allow inspection of books and records;
(ii)
(iii)
(iv)
(v)
(vi)
(vii) maintain or repair a common element if the failure results in
significant personal injury or property damage; or
(viii) exercise its judgment in good faith concerning the enforcement of
the association documents against any person that is subject to those documents.
(5)
Dispute
does not include any disagreement that only involves:
(A)
(B)
(C)
(D)
title to any unit or any common element;
the percentage interest or vote allocable to a unit;
the interpretation or enforcement of any warranty;
the collection of an assessment validly levied against a party; or
(E)
the exercise of a governing body's judgment or discretion in taking or
deciding not to take any legally authorized action.
Governing body ofa community association
means the council of unit owners,
board of directors, or any other body authorized by an association document to adopt binding
rules or regulations.
(6)
(7)
Owner
includes:
(A)
a unit owner in a condominium;
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MONTGOMERY COUNTY CODE
(B)
(C)
(8)
a lot owner in a homeowners' association, and
a member of a cooperative housing corporation.
Party
includes:
(A)
(B)
(C)
an owner;
a governing body; and
an occupant ofa dwelling unit in a common ownership community.
(9)
Unit or lot
includes:
(A)
any physical portion of a common ownership community with distinct
property boundaries that:
(i)
individuals,
(ii)
and sanitation, and
(iii)
those individuals; and
(B)
all legally enforceable rights and interests incidental to individual
ownership of real property in a common ownership community. (1990 L.M.C., ch. 33,
§
1; 2010
L.M.C., ch. 10, § 1.)
is designated for exclusive ownership, control, or occupancy by
contains permanent provisions for living, sleeping, eating, cooking,
provides complete, independent living facilities for one or more
Sec. lOB-9. Filing disputes; exhaustion of association remedies.
(a)
The Commission may hear any dispute between or among parties.
(b)
A party must not file a dispute with the Commission until the party makes a good
faith attempt to exhaust all procedures or remedies provided in the association documents.
(c)
However, a party may file a dispute with the Commission 60 days after any
procedure or remedy provided in the association documents has been initiated before the
association.
(d)
After a community association finds that a dispute exists, the association must
notify the other parties of their rights to file the dispute with the Commission. The association
must not take any action to enforce or implement its decision for 14 days after it notifies the
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MONTGOMERY COUNTY CODE
other parties of their rights.
(e)
Except as provided in Section IOB-9A, when a dispute is filed with the
Commission, a community association must not take any action to enforce or implement the
association's decision, other than filing a civil action under subsection
(f),
until the process under
this Article is completed.
(f)
Any party may file a civil action arising out of an association document or a law
regulating the association's powers and procedures at any time. The court may stay all
proceedings for at least 90 days after the court is notified that a dispute has been properly filed
under this Article so that a hearing under Section IOB-13 may be completed. Whether or not a
stay is issued, the court may hear the action
de novo
only if a hearing panel assigned to the
dispute has not issued a decision under Section 10B-13(e). (1990 L.M.C., ch. 33,
§
1; 2010
L.M.C., ch. 10,
§
1.)
Editor's note---Section lOB-9 is quoted in Campbell v. Lake Hallowell Homeowners
Association, 831 A.2d 465 (2003).
Sec. lOB-9A. Request for relief from stay.
(a)
At any time after a dispute is filed under Section 1OB-9, a community association
may submit a request to lift the automatic stay required under Section 1OB-9(e) to a hearing
panel appointed under Section lOB-12, or if no hearing panel has been appointed, a special
standing panel authorized to consider requests for relief from stays.
(b)
The special panel must consist of 3 voting members of the Commission
designated by the chair, and must include at least one representative of each membership
category.
An association that requests relief from a stay must serve a copy of its request on
(c)
any other party named in the dispute by certified mail or personal service. A certificate of
service must accompany any request submitted under this Section. A party served with a copy of
the request must file its opposition, if any, within 10 days after receiving service.
(d)
If a request for relief from a stay which states facts sufficient to show a need for
immediate action is not granted or denied within 20 days after the request was filed, the request
must be treated as granted.
(e)
Except as provided in subsection (d), a request for relief from stay may only be
granted if the assigned panel fmds that:
(1)
enforcing the stay would result in undue harm to the community
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MONTGOMERY COUNTY CODE
association; and
(2)
lifting the stay will not result in undue harm to the rights or interests of
any opposing party. (2010 L.M.C., ch. 10, §
1.)
Sec. IOB-IO. Production of evidence.
(a)
The Commission may:
(1)
compel the attendance at a hearing of witnesses and parties, administer
oaths, take the testimony of any person under oath and, in connection with any dispute, require
the production of any relevant evidence; and
(2)
issue summonses to compel the attendance of witnesses and parties and
the production of documents, records and other evidence in any matter to which this Article
applies.
If any person does not comply with any summons issued under this Article to
(b)
compel the attendance of persons or the production of documents, records or other evidence in
any matter to which this Article applies, the County Attorney, on behalf of the Commission, may
enforce the summons in a court with jurisdiction. Failure to comply with a Commission
summons is also a class A violation.
(c)
Any court with jurisdiction may, on request of the Commission, in accordance
with state law and the Maryland Rules of Procedure:
(1)
require compliance with a summons;
(2)
require the attendance of a named person before the Commission at a
specified time and place;
(3)
(4)
the court; or
(5)
prohibit the destruction of any records, documents, or other evidence until
a lawful investigation by the Commission is ended.
(d)
A court may punish any disobedience of any order entered under this Section as a
contempt of court. (1990 L.M.C., ch. 33,
§
1; 1994 L.M.C., ch. 9,
§
1.)
require the production of records, documents, or other evidence;
require the transfer of custody of records, documents, or other evidence to
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MONTGOMERY COUNTY CODE
Sec. lOB-H. Mediation; dismissal before hearing.
(a)
The Office may investigate facts and assemble documents relevant to a dispute
filed with the Commission, and may summarize the issues in the dispute. The Office may notify
a party if, in its opinion, a dispute was not properly filed with the Commission, and may inform
each party of the possible sanctions under Section 1OB-13(d).
(b)
If the Office, after reviewing a dispute, finds that, assuming all facts alleged by
the party which filed the dispute are true, there are no reasonable grounds to conclude that a
violation of applicable law or any association document has occurred, it may so inform the
Commission. The Commission, in its discretion, may dismiss a dispute if it finds that there are
no reasonable grounds to conclude that a violation of applicable law or any association document
has occurred, or it may order the Office to investigate further. The Commission may reconsider
the dismissal of a dispute under this subsection if any party, in a motion to reconsider filed
within 30 days after the dispute is dismissed, shows that:
(1)
the Commission erroneously interpreted or applied applicable law or an
association document; or
(2)
material issues of fact which are necessary to a fair resolution of the
dispute remain unresolved.
(c)
Any party may request mediation.
(d)
If a party requests mediation, the Commission must notify all parties of the filing
and of the mediation session.
(e)
The Commission must provide a qualified mediator to meet with the parties
within 30 days after a party requests mediation to attempt to settle the dispute.
(f)
If any party refuses to attend a mediation session, or if mediation does not
successfully resolve the dispute within 10 days after the first mediation session is held, the
Commission must promptly schedule a hearing under Section 10B-13 unless a hearing has
already been held under Section lOB-B. (1990 L.M.C., ch. 33, § 1; 1994 L.M.C., ch. 9, § 1;
1996 L.M.C., ch. 13, § 1; 2005 L.M.C., ch. 26, § 1.)
Editor's
note-200S L.M.C., ch. 26,
§§
2 and 3, state:
Sec. 2. Regulations. A regulation which implements a function transferred to the Office
of Consumer Protection by this Act continues in effect until otherwise amended or repealed, but
any reference to any predecessor department or office must be treated as referring to the Office
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MONTGOMERY COUNTY CODE
of Consumer Protection.
Sec. 3. Transition. This act does not invalidate or affect any action taken by the
Department of Housing and Community Affairs before this Act took effect. Any responsibility
or right granted by law, regulation, contract, or other document, and which is associated with a
function transferred by this Act from the Department of Housing and Community Affairs, is
transferred to the Office of Consumer Protection.
Sec. IOB-12. Hearing Panel.
(a)
If a hearing is scheduled, the chair of the Commission must convene a 3-member
panel to hear the dispute.
(b)
The chair must choose 2 members of the panel from the voting members of the
Commission. The persons selected must represent the 2 different membership groups ofthe
Commission. The 2 Commission members must designate the third member from a list of
volunteer arbitrators trained or experienced in common ownership community issues maintained
by the Commission. The third member must chair the panel. If a suitable arbitrator is not
available, the chair of the Commission must designate the third panelist from among the voting
members of the Commission, and must designate the chair ofthe panel.
(c)
Each panelist must not have any interest in the dispute to be heard.
(d)
If the Commission chair decides that a hearing should
be
held by a hearing
examiner instead of a hearing panel, the chair, with the approval of the Commission, may
designate the Office of Zoning and Administrative Hearings to conduct the hearing.
(e)
If the parties to a dispute agree that the hearing should be held and the dispute
decided by a hearing examiner instead of a hearing panel, the chair must designate the Office of
Zoning and Administrative Hearings or another hearing examiner to conduct the hearing and
issue a decision. (1990 L.M.C., ch. 33,
§
1; 1994 L.M.C., ch. 9,
§
1; 2010 L.M.C., ch. 10,
§ 1.)
Sec. IOB-13. Administrative hearing.
(a)
A hearing panel appointed under Section
IOB-I2
must hold a hearing on each
dispute that is not resolved by mediation under Section 1
OB-Il
unless the Commission finds
that:
(1)
the dispute is essentially identical to another dispute between the same
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MONTGOMERY COUNTY CODE
parties on which a hearing has already been held l.ll1der this Section; or
(2)
the dispute is clearly not within the jurisdiction of the Commission.
(b)
Sections 2A-I through 2A-II apply to a hearing held under this Section.
However, the parties need not be given more than 15 days' notice before the hearing is held, if
the Commission finds that an expedited hearing is necessary. At any hearing, a party or a witness
may be advised by counsel.
(c)
If any party, after proper notice, does not appear at the scheduled hearing, the
hearing panel may order any relief to another party that the facts on record warrant.
(d)
The hearing panel may award costs, including reasonable attorney's fees, to any
party ifthe other party:
(1)
bad faith;
filed or maintained a frivolous dispute, or filed or maintained a dispute in
(2)
unreasonably refused to participate in mediation of a dispute, or
unreasonably withdrew from ongoing mediation; or
(3)
good cause.
The hearing panel may also require the losing party in a dispute to pay all or part of the
filing fee.
(e)
the hearing panel must apply state and County laws and all relevant caselaw to the
facts of the dispute, and may order the payment of damages and any other relief that the law and
the facts warrant. The decision of the hearing panel is binding on the parties, subject to judicial
review under Section 2A-II.
(f)
If the hearing has been held under Section IOB-12(d) by the Office of Zoning and
Administrative Hearings, the hearing examiner must forward a recommended decision and order
to a Commission paneL The Commission panel may adopt, reverse, modify, or remand the
recommended decision before issuing its final order as provided in this Section.
(g)
An
appeal of a decision under this Section must be consolidated with any case
filed l.ll1der Section lOB-9(f) that arises out of the same facts.
(h)
The court hearing an appeal must sustain the decision of the hearing panel unless
the decision is:
(1)
inconsistent with applicable law;
substantially delayed or hindered the dispute resolution process without
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MONTGOMERY COUNTY CODE
(2)
(3)
not supported by substantial evidence on the record; or
arbitrary and capricious, considering all facts before the hearing panel.
(i)
The Commission, acting through the Office and the County Attorney, may
enforce a decision of the hearing panel by taking any appropriate legal action.
G)
In
addition to any other penalty allowed by law, any person who does not comply
with a final Commission order issued under this Chapter has committed a class A civil violation.
Each day that a person does not comply with a Commission order is a separate offense. (1990
L.M.C., ch. 33, § 1; 1994 L.M.C., ch. 9, § 1; 1996 L.M.C., ch. 13, § 1; 2005 L.M.C., ch. 26, § 1;
2013 L.M.C., ch. 29, § 1.)
Editor's note--2013 L.M.C., ch. 29, § 2, states, in part: The Amendments to Section
10B-13 contained in Section 1 of this Act apply to any dispute filed with the Commission after
the date this Act takes effect.
2005 L.M.C., ch. 26, §§ 2 and 3, state:
Sec. 2. Regulations. A regulation which implements a function transferred to the Office
of Consumer Protection by this Act continues in effect until otherwise amended or repealed, but
any reference to any predecessor department or office must be treated as referring to the Office
of Consumer Protection.
Sec. 3. Transition. This act does not invalidate or affect any action taken by the
Department of Housing and Community Affairs before this Act took effect. Any responsibility
or right granted by law, regulation, contract, or other document, and which is associated with a
function transferred by this Act from the Department of Housing and Community Affairs, is
transferred to the Office of Consumer Protection.
Sec. 10B-14. Settlement of disputes; assistance to parties.
(a)
Settlement of a dispute by mediation agreed to by the parties is binding, has the
force and effect of a contract, and may be enforced accordingly.
(b)
The Office may inform any party who has settled a dispute by mediation, or any
party who prevails in a hearing held under Section 10B-13, about how the agreement or decision
can be enforced. (1990 L.M.C., ch. 33, § 1; 1996 L.M.C., ch. 13, § 1; 2005 L.M.C., ch. 26, § 1.)
Editor's note--2005 L.M.C., ch. 26, §§ 2 and 3, state:
Sec. 2. Regulations. A regulation which implements a function transferred to the Office
of Consumer Protection by this Act continues in effect until otherwise amended or repealed, but
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MONTGOMERY COUNTY CODE
any reference to any predecessor department or office must be treated as referring to the Office
of Consumer Protection.
Sec. 3. Transition. This act does not invalidate or affect any action taken by the
Department of Housing and Community Affairs before this Act took effect. Any responsibility
or right granted by law, regulation, contract, or other document, and which is associated with a
function transferred by this Act from the Department of Housing and Community Affairs, is
transferred to the Office of Consumer Protection.
Sec. 10B-15. Regulations.
The County Executive must promulgate, under method (2), regulations for the dispute
resolution process. (1990 L.M.C., ch. 33,
§
1.)
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An Evaluation a/the Commission on Common Ownership Communities
Chapter III.
Governing Legal Authorities
State and County law establish standards for the formation, operation, and management of common
ownership communities. This chapter highlights current laws addressing common ownership
communities in three sections:
• Section A
briefly discusses the relevant State laws governing homeowner and condominium
associations, and cooperatives;
• Section B
details the provisions ofthe Montgomery County Code and Regulations that govern
over 1,000 associations in the County; and
• Section C
provides an overview of the Montgomery County Ethics Commission's decisions
relating to Commission activities and Chapter 1
DB
ofthe County Code.
A.
Maryland State Law
The following summarizes State laws that governs all three types of associations: condominium
associations, homeowners associations, and cooperatives.
Maryland Condominium
Act. This Act regulates the formation, management, and termination of
condominium associations in Maryland. While the Act addresses the management ofcondominiums on a
range of topics, it also establishes a dispute resolution process for condominium owners. As detailed in
the law, the association board must notify the owner of the alleged violation in writing, including: an
explanation of the violation; corrective actions; and a time period of no less than ten days to provide a
solution without further sanction. If the owner fails to correct the problem, the board must hold a
confidential hearing in which the alleged violator is afforded the opportunity to present a defense,
including the calling and cross examining of witnesses. At the close ofthe hearing the board is required
to submit its decision in writing.!
Maryland Homeowners Association Act.
This Act governs the formation and management of
homeowner associations (HOAs), including elections, closed and open meetings, and production ofthe
resale package.
2
Similar to the Condomfnium Act, this Act sets minimum standards for consumer
protection.
3
Although a county may enact a more stringent law, the Act grants enforcement duties to the
Division of Consumer Protection ofthe Office of Attorney General. The Act specifically identifies
election procedure violations as cases that fall under this provision. Enumerated are complaints
concerning date, place, and/or time of elections, manner in which nominations are made, ballot format,
use of proxies for an election, or manner in which quorum is defined.
4
management, and dispute resolution process for housing cooperatives. s While the Act provides statutory
oversight for meetings, voting, and board responsibilities, as of January 2015, the law also sets minimum
standards for a dispute resolution process.
6
The statute requires the governing body to serve the member
with a written demand to cease the allege violation, provide a time frame to correct the violation, and state
that failure to correct the violation could result in a sanction. If the violation is uncorrected, the governing
body must serve the alleged party with a notice of a hearing. At the hearing the member is afforded the
Md. Real Property Code Ann. § 11-113 (2014).
Md. Real Property Code Ann. §§ IlB-1O I 118.
3
See also
§
Il-l30 (2014).
4
§§ IlB-115,1l5.1 (2014).
5
Md. Corporations and Associations Code. Ann. § 5-6B.
6
§ 5-68-30.
!
2
Maryland Cooperative Housing Corporation Act.
This Act governs the sale, operations and
aLa
Report 2015-8
9
March 10, 2015
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An Evaluation ofthe Commission on Common Ownership Communities
opportunity to present evidence and cross examine witnesses. The governing body publishes the results
of the hearing in the community's newsletter and the decision may be appealed in the Maryland Court
system. The statute gives the governing body the right to sue for damages or injunctive relief. In
addition, the prevailing party is entitled to an award of attorney's fees as determined by the Court.
7
Maryland
Business Occupations
and
Business Code. This section permits the director or officer ofa
homeowner association, condominium association, or cooperative to represent the common ownership
community in a dispute, hearing, or other matter before a board or commission established to oversee
common ownership communities.
8
Business Judgment Rule. The Business Judgment Rule states the "decisions ofthe governing body of
an association and its members - usually the board ofdirectors are assumed to be correct and the courts
will therefore uphold them unless certain conditions are met.,,9 The rule is a body of principles created by
the Maryland Court of Appeals and Courts of Special Appeals that govern the degree to which a court can
review the decisions of a corporation's board of directors, etc. Maryland recognizes three distinct
business judgment rules.
• Protection oflndividual Members of the Governing Body. Individual board members are
protected from liability even if they make a decision that was later found to be a bad one or even
if it is later found in violation ofan association rule or law. Section lOB defines a dispute as a
disagreement over the authority of a governing body to do or fail to do something. The
Commission interprets this to mean the dispute must involve a decision of the entire board.
10
• Protection ofthe Board's Business Judgments. When challenging a board's decision, the
complainant must allege that the board either acted in bad faith or fraud, lacked legal authority to
take action based on the association governing documents or County and/or State Law, or the
decision was arbitrary and capricious. In addition, while the rule protects the board's right to
make a decision, it does not protect against the board's failure to make a decision at all. Section
IOB-8 recognizes that board's right to exercise judgment, but the board must make a decision
when required to do so and within the scope of its legal authority and made in good faith.
I I
• Protection ofthe Board's Decisions to Enforce its Rules. When a board acts to restrict a
resident's rights or penalize a member,
it
must have a reasonable basis for the decision and the
reason must be related to the overall purpose ofthe association. When the governing body can
prove that it acted within its authority and had a reasonable basis (related to the governing
documents), the Commission usually respects and upholds the association's decision and will not
substitute its own judgment. Further, the Commission has no jurisdiction over a board's decision
about whether a person violated a rule or not, if the decision was made in good faith.
12
§ 5-6B-30.
8
Md. Business Occupations and Professions Code Ann. § 1O-206(b)(6).
9
Office ofthe Commission on Common Ownership Communities, "The Staff s Guide to Procedures and Decisions
of the Montgomery County Commission on Common Ownership Communities," (2014), pp. 84-91.
10
Ibid.
11
Ibid.
12
Ibid.
7
OLD Report 2015-8
10
March 10,2015
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An Evaluation ofthe Commission on Common Ownership Communities
B.
Montgomery County Code and Regulations
The County Code sets forth oversight activities and enhances State law in the governance of common
ownership communities. This chapter examines the most relevant sections of the County Code and
Executive Regulations as they relate to the Commission on Common Ownership Communities.
1.
County Code Chapter
lOB:
Common Ownership Communities
County Code Chapter lOB applies to developments subject to enforcement by homeowner associations,
condominium associations, and cooperative housing corporationsY Through enactment, the County
Council recognized the need for a County Commission to provide advice on a range of issues facing
common ownership communities including:
• Ensuring proper establishment and organization of the associations and corporations;
• Promoting education, public awareness, and association membership awareness ofthe rights and
obligations of living in a common ownership community;
• Reducing the number of disputes by encouraging informal dispute resolution;
• Assisting with and overseeing the development of coordinated community and government
policies and programs to support these groups; and
• Preventing potential public financial liability for repair or replacement of common ownership
community facilities.
14
The Code lays out three articles pertaining to common ownership communities, including the
Commission on Common Ownership Communities (Commission or CCOC); dispute resolution, and open
conduct. The dispute resolution section will be discussed in tandem with a description of the process in
Chapter Four.
.
Commission on Common Ownership Communities.
The Commission consists of 15 appointed
members, including property or unit owners in common ownership communities and professionals
associated with common ownership communities (i.e. attorneys, developers, property managers). The
Code delineates the responsibilities of the Commission as follows:
Adopt rules and procedures to carry out provisions written in Code;
Keep a public record of all meetings and minutes;
Cooperate with the Executive Branch on matters within the jurisdiction of the Commission;
Examine conditions of common ownership communities resulting in unmet needs through
meetings, conferences, and public hearings; and
• Advise the county government and state and federal issues on matters involving common
ownership communities and recommend programs and legislation.
IS
The Commission is to be supported by the Office of Consumer Protection. The Office is required to
provide the Commission with staff, offices, and supplies and to consider the recommendations of the
Commission when selecting staff. The Code delineates the responsibilities ofthe Office to include:
13
§
lOB-2.
§ lOB-I.
§
10B-6.
14
15
OLD Report 2015-8
11
March 10, 2015
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An Evaluation ofthe Commission on Common Ownership Communities
• Assemble, analyze, and disseminate data and education materials to assist the Commission;
• Plan and conduct educational programs to promote operations of the Commission;
• Maintain a master roster of homeowner associations, condominiums, and cooperatives and their
leadership;
• Develop an information and referral system for all County services related to the Commission;
• Maintain and collect association documents to use as a model and reference;
• Provide technical assistance to governing bodies on elections, transition management, etc.;
• Develop and maintain a reference manual;
• Develop and maintain an operations manual;
• Advise the Commission and property managers on the changes in the law that effect their
communities;
• Operate a dispute resolution process that includes mediation and administrative hearings; and
• Assist the Commission in carrying out its duties and implementing decisions under Article 2
Administrative Procedures ACt.
16
Open Conduct. This Article of the Code outlines voting procedures and budget document requirements
for an association's governing body. Voting procedures include designated time frames for holding
elections, election notification and materials, absentee and proxy voting requirements, vote tabulation,
and office terms.17 Budget requirements outline the time frame for informing association members of the
proposed budget and the introduction of budget amendments which increase/decrease the budget by more
than 15%.18 This article grants relief via the Commission hearing process, injunctive reliefto enforce this
article or correct any violation of it, and recovery of damages for a loss sustained as a result of the
violation.
19
2.
Administrative Procedures Act
The Administrative Procedures Act (APA) only applies to a hearing held under Chapter lOB, not
mediation.
20
Although not one of the enumerated administrative proceedings outlined by the APA, the
County Executive, through law or regulation, is authorized to add or delete additional quasi-judicial
authoritiesY One differing application ofthe APA is that under Section lOB-13, ifthe Commission finds
that an expedited hearing is necessary, parties may receive only a 15 day notice, not the minimum of30
days granted by the APA.
22
APA procedures and the applicable executive regulations related to the
dispute resolution process are discussed in Chapter Four ofthis report.
3.
Homeowner Associations
This provision of the Code establishes a program to assist homeowner associations with the maintenance
of roadways that are continuously open to the public as if they were public roadways. The association
signs an easement agreement with the County permitting public use of private roadways and the County
assists with funding road maintenance. The easement is terminated when it is no longer in the public
interest or the homeowner's association fails to comply with the agreement.
23
In 2010, the County
terminated funding ofthis law.
§
lOB-5.
17
§
lOB-17.
18
§ lOB-IS.
19
§ 10B-19.
20
§
1OB-l3(b).
21
Montgomery County Code, Administrative Procedures Act, Chapter 2A,
§
2A-2.
22
§
1OB-l3(b).
23
§§ 24B-1 - 24B-S.
16
OLO Report 2015-8
12
March 10,2015
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OFFICE OF THE COUNTY EXECUTIVE
ROCKVILLE. MARYLAND 20850
Isiah Leggett
County Executive
,
;
MEMORANDUM
October 30,2015
TO:
FROM:
SUBJECT:
Nancy Floreen, Chair, Planning, Housing and Economic Development Committee
Marc
E1ric~
Chair, Public Safety Committee
Isiah Leggett, County Executive
Commission on Common Ownership Communities (CCOC) Amendments to
Chapter lOB
"j
This purpose ofthis memorandum is to transmit my recommendations to amend
Chapter lOB, Common Ownership Communities, ofthe Montgomery County Code in
an
effort to
enhance the Commission's ability to address the purposes for which it was established twenty-five
years ago.
Several factors contribute to the timeliness of these proposed changes. Over one­
third ofMontgomery County's residents now live in common ownership communities, and the
Commission
has
gathered experience regarding a multitude of issues. The Office of Legislative
Oversight (OLO) recently submitted a report evaluating the CCOC and offered several
recommendations. Montgomery County's Ethics Commission has identified a conflict of interest
regarding the manner in which CCOC hearing panels are convened. A review ofthe nature ofthe
.complaints filed, as compared to the mechanisms used to process complaints, indicates that the
CCOC dispute resolution program has strayed from its original intent to function as an alternative to
court litigation.
In
order to systematically address all ofthe above factors, and to ensure that the
.!
,
"
CCOC
will
continue to contribute to the quality of life in Montgomery County, I propose the
following changes.
Dispute Resolution
Mediation of
all
complaints, which
is
currently optional,
will
be
made
mandatory.
Although the parties need not reach an agreement at a mediation session, they must attend and
www.DlOntgomerycountymd.gov
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Nancy Floreen, Chair, Planning, Housing and Economic Development Committee
October 30, 2015
Page 2
participate in good faith. This will facilitate the prompt resolution ofcomplaints without the
fonnalities and costs associated wi1h a quasi-judicial administrative hearing. ne majority of
CCOC complaints involve conflicts between neighbors in which one party is a resident and the
other party
is
a resident serving as a volunteer on 1he
board
ofdirectors ofthe common ownership
community. Because
the
parties typically will continue to live together in the same community,
these types of complaints are best resolved through a mediation process in which the parties agree
to a settlement, rather than being resolved through an adversarial administrative hearing in which
there
is
a
"winner"
and
a "loser." Focusing the complaint resolution process on mediated resolutions
will
ensure that the CCOC functions as an inexpensive and speedy mechanism for resolving
complaints.
In
the event
that
a complaint
is
not successfully resolved
through
mediation, the
complaint can be scheduled for an administrative hearing with the CCOC. In addition, the parties
retain the option of filing complaints in court.
Commission Composition
The Commission
is
currently composed offifteen commissioners, appointed by the
County Executive and confinned by the County Council, ofwhich eight commissioners are
owners/residents and seven commissioners are professionals/managers.
In
addition, Chapter 10B
currently requires
that
CCOC administrative hearings
be
conducted by a three-person panel
comprised of one owner/resident commissioner, one professional/manager commissioner, and one
volunteer panel chair. These volunteer panel chairs are attorneys who practice common ownership
community law
and
are not CCOC commissioners. The Ethics Commission
has
identified a conflict
of
interest
with
this
procedure. These volunteer panel chairs may currently have the dual role of
serving on a CCOC hearing panel in one case, while representing a party before a CCOC hearing
panel in another case.
In
addition, the volunteer panel chairs are neither appointed by the County
Executive nor confinned by the County Council. Under my proposal, there still would be :fifteen
commissioners; however, the composition ofthe CCOC would be amended to include five
owners/residents, five professionals/managers, and five public
at
large individuals. CCOC hearing
panels would then be comprised of one commissioner from each ofthe three categories so that there
would not
be
any need to use volunteer panel chairs. The proposed changes to the composition of
the CCOC and the administrative hearing panel would eliminate this potential conflict of interest,
while still enabling the CCOC to conduct administrative hearings when needed. Additionally, the
changes closely mirror the composition ofthe Department of Housing and Community
Affairs'
(DHCA) Commission on Landlord-TeriantAffairs (COLTA), which
was
a recommendation
in
the
1989 Task
For~
Report - the report
that
guided the formulation ofthe Commission.
,
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DHCA would serve as the staffing agency to the CCOC, rather
than
the Office of
Consumer Protection (OCP). When the CCOC
was
first created,
it
was
staffed by Montgomery
County's housing department. Currently, staffing for the CCOC is bifurcated. DHCA is responsible
for registering common ownership communities and collecting registration fees, while OCP
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Nancy Floreen, Chair, Planning, Housing
and
Economic Development Committee
October
30, 2015
Page 3
administers the complaint resolution process. The CCOC is tasked with providing advice to the
County Executive
and
County Council regarding issues and polices
that
affect common ownership
communities. Many ofthe challenges faced by common ownership communities are more closely
related to housing issues in which DHCA has expertise. Since DHCA administers an established
rental mediation program, oversees the COLTA., delivers housing outreach through a variety of
avenues, and provides financing solutions for single family and multifamily properties, staffing the
program at DHCA allows for greater synergy between the CCOC and these existing housing
programs and adds value to impacted residents and communities.
Funding
The numbers
and
needs of common ownership communities continue
to
grow in
Montgomery County. The purpose
and
.functio~
as articulated by the 1989 Task Force Report
continues to necessitate that there are sufficient resources for the program.
In
order to address these
growing needs, I am recommending an increase to the CCOC annual fee of $2.00 per unit - from
$3.00 to $5.00 - which would generate approximately $266,000 in new revenue. These additional
resources
will
enable DHCA and the Commission to address this growing need and deliver a
10w~
cost, easy, and accessible dispute resolution solution while providing the increased training,
technical assistance, and outreach needed to build stronger common ownership communities. The
program
has
long been
in
need of additional resources and this
will
ensure
that
there is a dedicated
and adequate level of funding for DHCA
to
administer an appropriately staffed program refocused
on serving the needs of common ownership communities.
Improvements are already underway. OCP, DHCA, and the Deparbnent of
Technology Services collaborated with the CCOC to develop an online
training
program
to
educate
all
residents serving on boards ofdirectors on key CCOC challenges and issues. We
will
launch
this
program on January 1, 2016.
In
addition, DHCA will launch a new"program to ensure that
the
owners of rental housing
in
common ownership communities are paying dues to their common
ownership communities as well as upgrading its current licensing and registration system
to
streamline reporting and increase customer responsiveness.
Draft Legislation
Amendments to Chapter
lOB
are needed to accomplish the above recommendations.
In
the near
future,
I
will
forward such legislation to the Council for its consideration.
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Nancy Floreen, Chair, Planning, Housing
and
Economic Development Committee
October 30, 2015
Page
4
As
you know.
I
was
a
member ofthe County Council when the CCOC was
established, and
I
remember well the intent and the need for creating this first-of-its-kind
Commission.
After
twenty-five years, changes are needed,
and
I
look forward to working with the
Council and the Commission to accomplish these goals. We
will
meet with the entire Commission
soon to provide
a:
detailed briefing on these proposed changes.
[
,
IL:wd
cc: George Leventhal, Council President
Timothy L. Firestine, Chief Administrative Officer
Eric Friedman, Director, Office of Consumer Protection
Marc
Hansen, County Attorney
Jennifer Hughes, Director, Office ofManagement and Budget
Fariba Kassiri, Assistant Chief Administrative Officer
Bonnie Kirkland, Assistant Chief Administrative Officer
Connie
La.tb.mn,
Special Assistant to the County Executive
Sonny Segal, Director, Department ofTechnology Services
Clarence Snuggs, Director, Deparbnent ofHousing and Community Affairs
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Commission on
Common Ownership Communities
Rm. 330, 100 Maryland Avenue, Rockville, Maryland 20850
To:
The Honorable Isiah Leggett, Montgomery County Executive
The Honorable Councilmembers, Montgomery County Council
From: Rand H. Fishbein, Ph.D., Chair
Aimee Winegar, CMCA, LSM, PCAM, Vice-Chair
Richard Brandes, Commissioner
The Hon. Jim Coyle, City of Rockville Mayor (Ret.), Commissioner
Terry Cromwell, Commissioner
Marietta Ethier, Esq., Commissioner
Mark Fine, Commissioner
Bruce Fonoroff, Commissioner
David Weinstein, Commissioner
Donald Weinstein, Commissioner
Ken Zajic, Commissioner
Date: November 16, 2015
Re:
CCOC Response to the County Executive's October 30, 2015, Memorandum:
Proposed Amendments to Chapter 10B
On November 4, 2015, at its regular monthly session, the Commission on Common
Ownership Communities, meeting in open session and by a unanimous vote of the
members present, authorized the CCOC Chair and Vice Chair to respond to the County
Executive's October 30, 2015, memorandum:
"Commission on Common Ownership
Communities
(CCOC)
Amendments to Chapter
1
DB.»
The Commission also authorized the transmittal to the Council and the Executive its vision
of how the CCOC should be resourced and administered going forward so that it can
thoroughly and effectively carry out all of its statutory mandates. This document, entitled:
"Emergency Relief Request for Montgomery County Commission on Common Ownership
Communities,"
November 16, 2015, is being transmitted under separate cover.
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2
Executive Leggett's October, 2015. Recommendations
On October
3D,
2015, County Executive, Isiah Leggett, responded to a request by the
Council's PHED and PS Committees for recommendations on the future of the CCOC and
its resource needs.
1
While the Commission is gratified that Mr. Leggett desires to "enhance
the Commission's ability to address the purposes for which it was established twenty-five
years ago," it strongly questions the emphasis placed on dispute resolution to the exclusion
of other aspects of the CCOC's mandate such as education.
It might have been better jf the CCOC had been consulted prior to transmittal of the
recommendations to the Council. Its long years of service, combined with an intimate
knowledge of how the Commission operates, or should operate, could have provided
important "ground truth" as the Executive deliberated its recommendations. Still, we are
hopeful that the positive attention the Commission's work now is receiving from the County's
leadership, will serve as the catalyst for a serious dialogue on how the CCOC can be staffed
to better serve the nearly 340,000 residents (36% of the housing stock of Montgomery
County), that reside in common ownership communities.
Dispute Resolution:
It is the Commission's considered opinion that several of the Executive's recommendations
are based on a false premise, namely, that " ... (the) CCOC dispute resolution program has
strayed from its original intent to function as an alternative to court litigation." The Executive
may not be aware that these allegations have been thoroughly discredited by the report of
the Office of Legislative Oversight (OLD) and the Commission's own statistics.
Additionally, we believe that it is a mistake to place total reliance on formal mediation to
resol.ve disputes. Experience teaches that a one-size-fits-all solution to conflict resolution
does not work and that that the number and intensity of disputes will diminish with education
and training. Conflicts, in any sphere, fall along a continuum. Disputes start small and grow
in intensity with time and inattention. If and when conflicts do arise they should be
addressed at the earliest possible moment. As every medical practitioner knows, early
intervention often is the key to minimizing risk and improving outcomes.
The CCOC's Process and Procedures Committee has spent many months examining ways
to streamline the present case management system. Several recommendations under
evaluation include the use of an investigator to meet the parties on site for "informal"
mediation discussions. Mediation is a broad concept, defined as "an act or process of
Isiah Leggett, County Executive, to Nancy Floreen, Chair, Planning, Housing and Economic Development
Committee, and Marc Eirich, Chair, Public Safety Committee, Memorandum, Subject: Commission on
Common Ownership Communities (CCOC) Amends to Chapter 10B, October 30, 2015. The request for
recommendations from the County Executive came during a work session of the PHED and PS Committees,
meeting in jOint session, on June 18, 2015. The request from chairs Floreen and Eirich were made to OCP
Director, Eric Friedman, and DHCA Director, Clarence Snuggs, testifying on behalf of County Executive
Leggett on the subject of the resource needs of the CCOC.
1
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3
... intervention between conflicting parties to promote reconciliation, settlement, or
compromise." We do not want to deny the importance of "formal" mediation, but this avenue
often comes too late in the process. Experience shows that when the parties to a dispute
are presented with the facts and options at the earliest possible stage of a disagreement
they are much more willing to compromise.
Disputes involving common ownership communities are no different than disputes in any
other field. Even with the best of intentions, some simply cannot be resolved through early
intervention or mediation.
They may involve issues of first impression or basic
disagreement on the law, its application and interpretation. Who, then, is best equipped to
hear and decide these complaints? Is it a court of law with a crowded calendar, a
requirement that attorneys must represent the parties and where the trier of facts has limited
understanding of this specialized area of the law, or the CCOC whose members know the
law, are familiar with the factual situations of most complaints and are volunteers thereby
saving the County considerable expense.
RECOMMENDATION #1
That consideration of the Executive's recommendations on this issue be postponed until the
Committee on
Process
and Procedures has had time to meet with representatives of the
Executive's Office and the Council. All parties share the
same
objectives and the
Commission is reasonably certain that all parties can reach
a
policy
consensus.
Composition of the CCOC: The Executive has recommended that the CCOC's charter be
amended to include five public at-large individuals as members of the Commission along
with five owner/residents, and five professionals/managers.
This is a baffling suggestion since it would mean that instead of striving to enhance its talent
pool with ever more qualified and experienced experts in common ownership law, the
Commission, is being asked to lower its standards and accept individuals bereft of such
specialized knowledge. The Commission understands that the new "at-large" commissioners
would not, by definition, be attorneys. How this approach would enhance the delivery of
justice, and ensure that the rights of all parties to a dispute are protected, is a question that
the proposal leaves unanswered.
While this proposed change in the Commission's compOSition might work for the Office of
Landlord-Tenant Affairs, it is unsuited to the CCOC. The issues addressed by the Office of
Landlord-Tenant Affairs primarily involve leasing contracts and security deposits, two
relatively narrow areas of the law. By contrast, common ownership disputes involve
knowledge of several different areas of the law as well as the ability to understand lengthy
and complex governing documents. Today, it has come into its own as a legal specialty,
requiring unique training and years of experience to develop the required proficiency in its
application.
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4
The Commission believes strongly that there are significant public benefits from having
experienced attorneys fully engaged in the hearing process. That their decisions are based
upon a nuanced knowledge of the law, often is what is responsible for the fact that CCOC
rulings being upheld on appeal well in excess of ninety-five percent of the time.
Lastly, the Executive's comments are based on a misunderstanding. Not all panel chairs
are subject to the alleged conflict of interest identified by the Ethics Commission. The Ethics
Commission only focused on the use of lawyers as chairpersons of the CCOC's hearing
panels when those same lawyers might represent private parties in other, unrelated disputes
that might come before the CCOC at another time. Only half of the CCOC's sitting panel
chairs practice before the CCOC; the others do not.
Like all licensed attorneys in the State, Commission attorneys are subject to the
Rules of
Professional Conduct?
and the sanctions that attend proven misconduct. Attorneys who
practice common ownership law are no different than attorneys in any other legal niche with
respect to their susceptibility to conflicts of interest. The fact that no CCOC attorney panel
chair in the twenty-five year history of the Commission ever has been found "guilty" of a
conflict of interest speaks for itself.
That said, the Commission stands committed to the highest level of professional conduct in
all of its dealings. We always will strive to eliminate not only the potential for an actual
conflict of interest among our volunteer attorneys and non-attorneys, but the perception of a
conflict of interest as well. The CCOC will comply fully with the opinions of the Ethics
Commission.
RECOMMENDATION #2
That the question of changes to the composition of the CCOC be tabled and that the
Executive engage the Commission in dialogue on how the operation of hearing panels might
be improved and the poliCies designed to strengthen judicial faimess and due process
strengthened.
Transfer of CCOC to DHCA
The Commission believes that neither the Office of Consumer Protection nor the
Department of Housing and Community Affairs is the right home for the Commission. Each
has its own well-defined mission and a budget and trained staff tailored to carry out very
specific responsibilities.
2
http://www.courts.state.md.us/attygrievance/rules.html
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5
By contrast, common ownership communities have their own set of unique challenges. They
operate under specialized statutory authorities and are subject to rules and regulations
applicable to the needs of legally distinct constituencies. COC's operate under corporate
law. The conflicts that arise with COCs are between neighbors, each of whom is an equal
shareholder in their community. The residents of COCs are not consumers or businesses
regulated by OCP, nor are they landlords or tenants as regulated by the Office of Landlord­
Tenant Affairs within DHCA. To place the CCOC within either OCP or DHCA is simply to
mix apples and oranges and to unnecessarily complicate the management responsibilities of
those in charge of overseeing these large and complex operations.
Fortunately, the CCOC is composed of a dedicated, knowledgeable and skilled group of
volunteers.
Its leadership is intensely and paSSionately interested in making the
Commission the model resource for COCs that will be the envy of all jurisdictions. We know
we can do it. What the Commission needs is strong support and advocacy at all levels of
the County government.
RECOMMENDATION #3
That representatives
of
the Council and the Executive, in close consultation with the
Commission on Common Ownership Communities, consider where the
CCOC
ultimately
should reside and under what conditions (e.g. where it would report on the organization
chart
of
the agency chosen), mindful that the Commission must be appropriately funded,
staffed, and equipped to carry-out its statutory mandate to the best
of
its ability. Moreover,
the responsibility for the Commission's budget and policy must be aligned under
a
single
authority; the Commission must have
a
strong advocate at the helm and be allowed to
continue to provide advice directly to the Executive, the Council and other entities
as
currently provided for under Chapter
1
DB. The Commission has provided both the Executive
and the Council with four alternative options for
a
future home and respectfully asks for their
consideration.
Increased Staffing and Funding:
There appears to be broad agreement between the Executive, the Council, the Commission
and the constituency it serves, that the CCOC needs additional resources to function as the
law intends. However, an issue hangs over the Commission that first must be addressed.
Why are over 60 percent of the fees collected to support the Commission used to support
indirect administrative expenses with little or no measurable direct benefit accruing to CCOC
operations?
The Executive has proposed increasing financial support for the CCOC support by raising
the fees charged to communities. But what first must be asked is whether any of these new
funds will be subject to a 60 percent administrative charge as well? If so the increase in
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6
fees will not have little appreciable impact on the CCOC's urgent need for additional staffing,
office IT modernization, the new online training mandate or general program support. At
some point common ownership communities will question how their money is being spent.
It bears reminding that currently the CCOC has no authority over its own budget. It does not
control its own funds. It lacks the technology to track its own expenses. It has no oversight
over the collection or disbursement of its funds or their allocation to the indirect costs
assumed by other government entities that act on its behalf. It submits no annual budget
presentation to the Executive or the Council and is not authorized to make any independent
budget decisions.
The Commission operates solely on the basis of the fees collected annually from the
residents of common ownership communities at the rate of $3.00 per unit. According to a
recent OLO report, that amounts to $408,000 in FY 2014. Since the Commission never has
been provided a full accounting of how its operating funds, it is impossible to estimate with
any precision how all but about $160,000 is allocated. To the best of our knowledge, the
CCOC receives no direct operating funds from the County's general revenue.
Poorer communities may oppose an increase in fees since a number of COCs have serious
fiscal issues and are having difficulty paying the current fees. There also is the question of
timing. Most COCs already have approved budgets for the next fiscal year. Any funding
plan may require that the County pay for staffing out of general funds for a period of time to
allow communities to adjust to this additional expense.
On September 15, 2015, three commissioners met with DHCA staff to discuss how DHCA
collects fees and administers data collection. Serious fault lines were identified which must
be addressed since association numbers may be much greater than previously thought.
There seems to be no system to collect fees from delinquent COCs, data is imputed
manually and basic data essential for the implementation of the training of association
directors in missing. The Commission has sent DHCA staff a letter suggesting
improvements. We are hopeful that DHCA is working to resolve the issues we have raised.
However, we believe DHCA would agree that it is essential that these shortcomings be
addressed simultaneously with the discussion on funding and staffing.
Finally, the Commission has a pressing need which cannot be ignored and must be factored
into the discussion of staffing and funding. At the beginning of 2015 the County enacted a
bill that requires the training of an estimated five thousand directors who serve on the
boards of over one thousand associations across the County. A provision of the new law
requires that the compliance be monitored and enforced. This means that a system will
have to be devised to track not only the 5,000 active directors, but the thousands more who
have taken the test at some time, but who are not currently sitting as directors. At present,
the CCOC has no IT infrastructure or staff that to carry out this important function.
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7
RECOMMENDATION #4
That the County develop
a
reliable data base listing al/ pertinent information about
COCs
in
the county and that
a
system be instituted
as
soon
as
possible for collection and
enforcement
of
delinquent fees. Additionally, the Commission will provide the Executive and
the Council with
a
plan for addressing its immediate and long-term staffing, IT and funding
needs
as
soon
as
reasonably possible. This will give the Commission an opportunity to
engage Executive and the Council in
a
meaningful and comprehensive dialog on how best
to support the
CCOC
on
a
sustainable basis.
Conclusion
The citizens of Montgomery County who live in common ownership communities are grateful
for the central role played by the County Executive in the establishment of the CCOC. His
was an inspired vision that has brought rising home values, jobs and an enviable lifestyle to
a sizeable portion of the region.
As the Homeowners' Association Task Force that gave rise to the CCOC noted in its
landmark 1989 study:
"Members
of
common ownership communities are in effect citizens
of
quasi­
governments, which provide services in lieu
of
government services, levy
taxes (assessments), and otherwise have significant impact on the lives
of
residents and their most significant financial investment
-
their homes.
Accordingly, al/ residents
of
such communities deserve the protection
of
democratic governance. To the extent that owners are satisfied with living in
common ownership communities, and problems are minimized, potential
purchasers will be more likely to buy into such communities, their values will
increase, and the County property tax base will expand.
,,3
3
Final report or the
Homeowners Association Task Force, established by the Montgomery County Council in
1989 to study the problems and make recommendations regarding homeowners' associations, condominiums
and cooperatives.
@
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Commission on
Common Ownership Communities
Rm. 330, 100 Maryland Avenue, Rockville, Maryland 20850
To:
Francene Hill, Chief of the Office of Licensing and Registration, DHCA
Gael Le Guellec, IT Manager, DHCA
Marsha Carter, Management and Budget Specialist, OCP
Lorena Bailey, Investigator, OCP
Peter Drymalski, Esq., Professional Staff
Cc:
From: Rand H. Fishbein, Ph.D.,
Aimee Winegar, CMCA, LSM, PCAI'VI, Vice-Chair
Marietta Ethier, Esq., Commissioner
Jim Coyle, City of Rockville Mayor (Ret.), Commissioner
Date: September 24, 2015
Re:
Request for: Real-Time Data, IT Database Connectivity, DHCA-CCOC-OCP Policy
and Procedure Reform, Fee Collection Tracking and Compliance Enforcement,
and Related Matters
Chajr~
This purpose of this memorandum is to serve as a formal request to the Department of
Housing and Community Affairs (DHCA) for specific services, data sets and policy changes
that the representitives of the Commission on Common Ownership Communities (CCOC)
believe are urgently needed to carry out the duties of the CCOC under Chapter 10B of the
County Code.
On September 15, 2015, a meeting was held in Suite 330, 100 Maryland Avenue, Rockville,
Maryland, between representatives of the DHCA. the CCOC, and the Office of Consumer
Protection (OCP). The purpose of the meeting was to discuss the needs of the CCOC in
three principal areas:
Database development, access and analysis,
Fee tracking, collection, and enforcement, and
Inter-office database connectivity, procedures and reporting.
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2
Applicable Authorities
Under Chapter 10B-4, OCP is tasked to provide administrative support to the CCOC. As part
of this responsibility, it is understood that the OCP has entered into an agreement with DHCA
to perform ce'rtain services for which it has a resident capability not found at OCP. The
following are the statutory authorities that define the responsibilities of OCP in supporting the
CCOC.
Sec. 108-5. Duties of the Office of Consumer Protection
The Office, in consultation with the Commission, must:
• "maintain a master roster of homeowners' associations, condominiums, and
cooperatives, their leadership, and their professional management companies if
applicable," Sec. 1OB-5(b);
• "maintain a collection of common ownership community association documents for use
as a model and for reference," Sec. 10B-5(b);
• "assist the Commission in carrying out its duities and in implemneting Commission
decisions under Article 2. (1990 L.M.C., ch. 33, §1; 1994 L.M.C., ch.9, §1 ;1996 LM.C.,
ch. 13, § 1; 2005 L.M.C., ch.26, § 1.)," Sec. 10B-5(J);
• "Each common ownership community must register with the Commission annually, and
identify its elected leadership and managing agents, on a form provided by the
Commission," Sec. 10B-7 (a)(1).
Request for Data Sharing
1
The
ecoc
respectfully requests that DHCA:
1. Report to the Commission. upon its request and not less than quarterly, on the number
of COCs in the county, the status of registrations for them (billing schedule, etc.), and
accounts received and payable.
2. Provide quarterly financial statements from DHCA showing how fees collected on
behalf of the CCOC and used by DHCA,2 are a,llocated. This document should be
accompanied by a report of the tasks and the staff hours spent to support the CCOC
mission.
3. Provide to the CCOC a functioning and upMto-date electronic email list to assist
Commission staff in communicating with all community leaders and property managers
Unless otherwise communicated
by
DHCA
to
the CCOC, we assume that the requests for data and changes to
policies and procedures by DHCA can be carried out within the amount of funding currently being provided to
DHCA from fees collected on behalf of the CCOC.
2
In
its
FY 20115 report, the OLO
noted
that DHCA charges the CCOC approximately $67,000 for the services it
provides to the Commission.
1
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3
and acquiring. as necessary, information as it deems appropriate for its wOrk.
3
list may also be used to track compliance with the directors' training mandate.
This
4. Report on the disposition of all COC governing documents collected from associations
over the last five years to the present as required under Chapter 1
DB.
5. Provide access to standardized DHCA accounting reports that show how service fees
paid to the Department are allocated across personnel and activities used in support of
CCOC requirements.
Request for Changes in Policy and Procedures
The CCOC respectfully requests that DHCA:
1. Develop a robust process for the identification of all existing and new COCs in the
county, with a deSignated point of contact for this purpose. This list should be cross­
checked and updated annually. There are various sources of information where the
DHCA can obtain such information: HOA registrations in Park and Planning, Land
Court, State Department of Corporations, Department of Taxation, etc.
2. Develop a fee collection policy, such as is required of associations, for tracking billing
and payments. This should include a procedure for reporting and follow-up with
associations that do not pay.
3. Introduce, no later than December 1, 2015, a new CDC registration form prepared by
the Commission and requesting of associations information essential to Commission
work as provided for in Chapter 10B. (See attachment entitled:
Registration for
Communities with No Unit Changes)
4. Implement a database access agreement between DHCA and the CCOC that will
provide
24f1
electronic connectivity for the access of DHCA-held data collected on
behalf of the CCOC. This data should be made available in a format easily readable
and manipulated by CCOC staff and Commissioners. Provision should be made for
the security protection of this data.
5. Upgrade the CCOC database to include basic data about each common ownership
community in the County (HOA, Condominium and Cooperative), with the data to be
identified in the attached form. Specifically, we are seeking the following:
a. Points of contact for all levels of leadership - this is essential to disseminate
information about county laws, educational information, etc.,
3
This presumes that there is also an email system capable of handling a mailing list of managers and board
members that will presumably number in the thousands.
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4
b. Financial infonnation so that we can begin to perfonn some rudimentary
analysis of COC financial conditions - this would help us direct our educational
efforts,
c. Information about the members of boards of directors so that the Commission
can ensure compliance with the council's education mandate. This data will
need to be tracked in perpetuity, as volunteers come and go over decades of
voluntary service, and the mandate requires training only once, and
d. Information about management companies and managers.
6. Develop a protocol to ensure that data collected for the CCOC is being keyed in and
updated in a timely manner. We were told by DHCA staff at our meeting on September
15
th
that clerical staff is available for this purpose.
As
the commission has not seen
any reports or data to date, we have not developed specific requests for reporting. At a
minimum, we would request the following:
a. a monthly report on CDC re.gistration and payments,
b. the number of vacant board seats county-wide,
c. the number of board members who are due for training,
d. the number of board members who have been trained,
e. the number of board members who are overdue for training, and
f. the number of board members who have accessed the on-line training course
and any feedback that they have provided.
7. After we have gathered financial data for the COGs, we would like to receive reporting
on their financial condition, to include, but not limited to:
a. total assets under management,
h. total delinquencies,
c. delinquency rates, and
d. total reserve funds invested.
8. The Commission requests a copy of the guidance document that provides
instructions/procedures to DHGA staff on how to go about collecting information to
better serve the County's needs and provide the CCOC with basic information that is
essential for fulfillment of its mandate.
Conclusion
The Commission looks forward to working with DHCA to improve not only the quality and
timeliness of the information collected annually from common ownership communities. but
also the manner in which it is communicated to the CCOC for analysis and the subsequent
enhancement of
ceoc
services. Thank you for your cooperation and willingness to be of
assistance.
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5
ATTACHMENT
MONTGOMERY COUNTY COMMISSION ON COMMON OWNERSHIP COMMUNITIES
Common Ownership Community Registration
100 Maryland
Avenue~
2
nd
Floor
Rockville,
MD
20850
Registration for Communities with No Unit Changes
Please note that pursuant to Montgomery County Code Section 10B, all common ownership
communities are required to annually notify their members of the existence and role of the
CCOC. A sample notice form may be found at the CCOC web site at www.XXXXXXX.
Please note that pursuant to Montgomery County Code Section 10B, as of January 1, 2016,
all members of the governing body of a common ownership communities must successfully
complete the educational curriculum developed by the CCOC or a similar educational
curriculum administered by another organization that is approved by the CCOC within 90 days
after being elected or appointed to the governing body for the first time after January 1, 2016.
Please see the CCOC web site for more infonnation.
To complete this form:
• Please print clearly.
• This form must be completed and emailed to XXXX
per unit, payable by check or money order to
• The annual fee is
$
Montgomery County, MD.
• Master associations are required to complete the form but do not pay the
registration fee.
If you have any questions about how to complete this form, please call XXXX and leave a
message. Your call will be answered in a timely manner. You may also send inquiries by
email to XXXX.
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6
COMMUNITY INFORMATION
Name of Common Ownership Community
Please write the fuU legal name of the entity as it appears in the Declaration.
Corporate Address (include city, state, zip) _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
Preferred Phone Number
- - - - - - -
Preferred Email ___________
Primary Contact Name / Title _______________________
This should be the Board President or professional community manager, if any.
Is this community part of an umbrella/master organization? If yes, name:
Is this community: an umbrella/master organization? 0
o
cooperative? 0
Date incorporated
Total number of residential units of all types
condominium?
Date of turnover to members
Dollar amount of
ecoe
fee paid
FINANCIAL INFORMATION
Total projected annual budget income from assessments for the current fiscal year
Projected reserve contribution for the current fiscal year
Reserve fund balance as of December 31 of the previous year
Total dollar amount of accounts receivable as of December 31 of the previous year__
Total number of units that are more than one year in arrears
Total number of units that are in foreclosure
andlor
bank owned
ADMINISTRATIVE INFORMATION
Date of current year's annual meeting
Number of seats on the board of directors required by the governing documents _ _
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7
Number of vacant board seats as of current date
Length in years of board member terms
BOARD OF DIRECTORS INFORMATION
Director
Name
OfficelTitle
Date of
Date of
election/appointment training as
required by
to the board
. county code
EmaillTelephone
I
I
i
I
,
i
I
~
i
i
I
i
I
I
I
MANAGEMENT INFORMATION
Is this community "self-managed"? Yes 0
If self-managed, please provide the name and email for a point of contact _ _ _ __
If managed
by
a
manager
or
management company, please complete the information
below.
Name of Management Company ________________________________________________
Name of Manager ____________________________________________________
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8
Phone
Number _ _ _ _ _ _ _ _ _ __
Mailing Address
FEEDBACK
Please provide any comments you may have for the CCOC on services provided by the
CCOC
and/or
needs that you believe should be filled.
Email
_ _ _ _ _ _ _ _ _ _ _ _ __
SIGNATURE
This form must be signed by the Board President An agent signature is not
acceptable.
I
affirm under penalty of perjury that the information provided is true to the best of my
knowledge and belief. I also understand that if there are any changes in information,
the community must notify the Commission on Common Ownership'Communities
within
10
days
of the
change.
Board President Signature
Print or Type Name
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
Date
Notice
All condominium, cooperative and homeowner associations within Montgomery County Government jurisdiction
are required by Chapter 1
DB
of the Montgomery County Code to register with
Commission on Common
OWnership Communities through the Department of Housing and Community Affairs. Registration requirements
as outlined in Chapter 10B of the Montgomery County Code do not apply to properties within the incorporated
municipalities of Chevy Chase Village, Town of Chevy Chase, City of Gaithersburg, Town of Garrett Park, Town
of KenSington, Town of Laytonsville, Town of Poolesville, town of Somerset. and town of Washington Grove.
Contact local municipalities for further information or requirements.
the
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An Evaluation ofthe Commission on Common Ownership Communities
4.
COMCOR Code
of Montgomery
County Regulations
COMCOR also outlines regulations for common ownership communities in three subject areas: dispute
resolution, establishment of a dispute filing fee, and the establishment of an annual registration fee. The
remaining regulations relating to the dispute resolution process are included in Chapter Four. These
executive regulations also outline the payment of fees associated with common ownership communities:
• The cost to file a case with the CCOC is $50 for each dispute and assists to fund the dispute
resolution process and provision oftechnical assistance.
24
• Regulations require an annual $3.00 per unit registration fee. If an association fails to pay the fee
and register, it is a Class A violation and renders the community ineligible to file a complaint
under Chapter 1OB.
25
--7
C.
Ethics Commission Advisory Opinions
The Montgomery County Ethics Commission may issue either an advisory opinion or waiver on an issue
relating to Section 19A-7 of the County Ethics Law. Advisory opinions may be requested by any person
subject to the Ethics law, the Code ofEthics for the County Appeals Board, or County Procurement law.
The Ethics Commission may grant a waiver ofthe prohibitions of the Ethics law and Procurement law, if
in the Commission's opinion, certain statutory provisions are met. The Commission can also issue a
Letter of Guidance in regards to the law and specific questions.
The Commission on Common Ownership Communities is considered a County administrative agency and
Commission members are considered public employees. Due to this designation, Section 19A-12 of the
County Ethics law states that a public employee must not be employed by any business that:
• Is regulated by the County agency with which the public employee is affiliated; or
• Negotiates or contracts with the agency with which the public employee is affiliated; or
• Hold any employment relationship that would impair the impartiality and independence of
judgment ofthe public employee.
26