2011 Amendments to the Maine Condominium Act

PM&H Partner Bruce McGlauflin testified before the Maine Legislature in favor of L.D. 1332, an Act to Amend the Maine Condominium Act. L.D. 1332 was drafted by the Maine Legislative Action Committee of the Community Associations Institute. Most of the provisions in L.D. 1332 were enacted as drafted with minor revisions, but one key provision was not enacted. That provision would have given condominium associations a lien priority over first mortgages for up to six months of monthly assessments to help protect associations from foreclosures where the bank holds a mortgage that exceeds the value of the foreclosed unit. This article discusses the provisions that were enacted. The enacted provisions are found in Public Law, Chapter 268 . The Condominium Act itself will not be re-codified and reprinted to incorporate the amendments until sometime this Fall.åÊ The amendments will not become effective until 90 days after the adjournment of the Legislative session, which finally occurred on June 29, 2011, making the effective date September 27, 2011. The following is a summary of the amended sections (in the order they appear in the Public Law). All Maine condominium associations should carefully review their governing documents (declaration, bylaws, and rules and regulations) to determine whether they should be revised to conform to the new law. Section 1603-102(a)(14). Assignment of income. This provision allows an Association to assign its right to receive income, such as assessments, when authorized by a majority vote of unit owners. Previously, the right to assign income had to be stated in the Declaration. The purpose of such an assignment of income would be to obtain a bank loan with the loan secured by the future income received from assessments, which is usually the only source of association income. The authority granted by this provision can be overridden by a contrary provision in the Declaration. Section 1603-102(a)(18).åÊ Suspension of Privileges. To enhance the ability to collect delinquent assessments, the statute was amended to grant associations the power to suspend any right or privilege of a unit owner who fails to pay assessments, so long as the suspension does not deny a unit owner or other occupant access to the unit, or withhold services needed for health, safety or protection of property. The authority granted by this provision can be overridden by a contrary provision in the Declaration. Section 1603-108. Meetings. This section has been amended to state that an association’s board must give timely notice to unit owners of the date, time and place of, and topics to be discussed at, meetings of the board. The notice must be “reasonably calculated to inform unit owners,” which may include posting a notice in a prominent place, by e-mail, or by other means. Actual notice by delivery to each unit owner is not necessary, so long as the board makes the reasonable judgment that some other method is “reasonably calculated to inform unit owners.” If some of the unit owners are seldom on the common property, a posting in a prominent place may not be “reasonably calculated to inform unit owners.” The amendment also states that unit owners have the right to attend board meetings, subject to reasonable rules established by the board. It also allows the board to hold executive sessions under limited circumstances involving litigation, consultation with an attorney, personnel matters, confidential matters, etc. If the board holds an executive session, any final vote or action taken on the matter discussed in the executive session must be taken in a reconvened regular session. These provisions apply whether or not they are set forth in an association’s governing documents, and will control over inconsistent provisions in an association’s governing documents. Associations may wish to incorporate these provisions into their bylaws, if only to ensure that unit owners and board members will be more aware of these requirements — more people read the bylaws than the State statute. Section 1603-116(e).åÊ Duration of Lien. This provision extends the duration of the Association’s lien on a unit for unpaid assessments from three years to five years. Section 1603-116(j). Assessments After Foreclosure. This provision designates the time when assessments begin to accrue against the purchaser of a unit that is sold at foreclosure. The assessments against the new owner begin on the date of the “sale” of the unit. L.D. 1332 stated that the assessments would accrue on the date of the foreclosure auction. The Legislature changed the wording to “the date of the sale,” without defining the word “sale.” By doings so, the Legislature may have created an ambiguity about whether it means the date of the auction or the date the sale is completed. Section 1603-118. Association Records. This amendment provides a detailed list of the types of records that the Association must maintain and make available to unit owners for review and copying. There are exceptions to a unit owner’s right of access, including certain confidential records, records of executive sessions, and individual unit files, except those of the requesting unit owner. Unit owners may not use information obtained from association records for commercial purposes or other purposes not reasonably related to the association or its management. Associations should carefully review the list of required records and adopt procedures for ensuring that all such records are being properly maintained and kept in a safe place. Contact Bruce McGlauflin if your condominium association needs help interpreting or complying with the new law, or if you have other questions about Maine condominium law.