FLORA LIPITZ, et. al.
WILLIAM A. HURWITZ
Circuit Court for Baltimore County Case No. 03-C-10-007328
Barbera, C.J., Harrell, Battaglia, Greene, Adkins, McDonald, McAuliffe, John F. (Retired, Specially Assigned), JJ.
This case presents the question of whether a buyer of a property located within a homeowners association, who already owns other lots within the association, is considered a "member of the public" required to receive mandatory disclosures pursuant to the Maryland Homeowners Association Act ("The Act"). We are also asked to decide the related question of whether a buyer otherwise entitled to those disclosures may be estopped from relying on the protection of the Act if he declines attempts by the seller to provide the required information, stating that he already has that information.
William A. Hurwitz (the buyer) entered into a contract on August 6, 2009, with Flora E. and Roger C. Lipitz, as trustees of the revocable property trust of Flora E. and Roger C. Lipitz (the sellers), to purchase a home in the Caves Valley Golf Club Development in Owings Mills, Maryland. The buyer, who was represented in the sale by Krauss Real Property Brokerage, owned two other houses within the Caves Valley Golf Club Development and resided in one of them. The parties agreed to a sale price of approximately $4 million.
The written offer submitted by the buyer included two form addenda, the Maryland Homeowners Association Act Notice to Buyer and the Maryland Homeowners Association Act Disclosures to Buyer and Transmittal of Documents. After negotiations between the parties, they agreed to strike those documents from the contract, apparently because each party believed they were not applicable or could be waived. The bottom of the first page of the contract contains a handwritten note, which states "Subject to Caves Valley Club declaration of covenants, easements, charges and liens." According to the sellers' complaint, they "made attempts to provide [the buyer] with information required by the Act, " but "Mr. Hurwitz declined such information stating that he already had those materials." The sellers claim that both parties, although represented by licensed real estate brokers, believed that the Maryland Homeowners Association Act did not apply to the sale.
Both parties signed the contract on August 6, 2009, and set the date of settlement for November 2, 2009. Based on this agreement, the sellers no longer sought alternative buyers for the property. The sellers contend that prior to the closing date the buyer was given access to the property to "take measurements and consult with interior designers"; that the sellers also provided Mr. Hurwitz with a demonstration of the "electronic amenities" in the house; and that the buyer "repeatedly conveyed his enthusiasm" about the property, describing the uses to which he might put various rooms in the house and discussing how he might decorate them.
On November 1, 2009, the day before closing, the buyer's agent orally informed the sellers that the buyer would not be closing on the property. No reason was given at that time. The buyer's attorney later contacted the sellers on November 12, 2009, to inform them that, because the buyer had not received the disclosures required under the Maryland Homeowners Association Act, he was canceling the contract. The sellers also received a letter from the buyer, dated November 11, 2009, relaying the same information.
The sellers filed a complaint in the Circuit Court for Baltimore County on June 10, 2010, alleging breach of contract and seeking specific performance. They filed an amended complaint on November 9, 2010. The buyer filed a motion to dismiss the amended complaint on November 19, 2010, and the sellers filed a cross-motion for summary judgment.
The Circuit Court held a hearing on the motions on March 29, 2011. At the hearing, the buyer argued that the sellers were required to provide the disclosures to him under § 11B-106(b), and that the failure to provide those disclosures rendered the contract unenforceable and gave the buyer the right to cancel. He further argued that under the statute any attempted waiver of the right to receive the disclosures was void, thereby making any representations by him that he did not need the documents irrelevant.
During the hearing, the sellers conceded that they had not delivered to the buyer the disclosures specified by the Maryland Homeowners Association Act. The Act requires that notice be given to "a member of the public who intends to occupy or rent the lot for residential purposes." § 11B-106(a). The sellers agreed that the buyer qualified as someone who intended to occupy the lot, but disagreed that he was a "member of the public" under the statute. The sellers maintained that the General Assembly's intent in requiring disclosures was to ensure that people buying into a homeowners association were aware of the relevant applicable rules and policies. Based on this interpretation, the sellers argued that the General Assembly's use of the phrase "member of the public" was designed to differentiate "insiders, " i.e., those who already own property in a development and have access to the homeowners association policies, from "outsiders, " who are buying into the development for the first time and require protection. Thus, the sellers argued that this buyer, an insider, should not be considered a "member of the public."
As a fallback argument, the sellers contended that even if the buyer is properly considered a member of the public within the meaning of the Act, and therefore ordinarily entitled to the right to cancel the contract, he was in this case precluded from doing so by application of the doctrine of equitable estoppel because he affirmatively refused to receive the required documents and information proffered to him by the sellers.
The Circuit Court ruled orally on the motions, stating
Looking at the statute, I find it is clear and unambiguous. Starting with § 11B-106(a), it says the contract is not enforceable unless the disclosures are given within 20 days of entering the contract, as provided in B.
Section 11B-108(a) provides that a person who has not received all of the disclosures required is entitled to cancel the contract.
Section 11B-108(d) provides that, for the right to cancel, which may not be waived, an attempted waiver is void. Section 11B-103 provides that the provisions of the Act may not be varied by agreement and again says that the rights may not be waived.
So the statute in two different sections says that the rights may not be waived under the Act.
With respect to the meaning of the term "members of the public, " I don't find that to be ambiguous at all. I think it means members of the public. Members of the public means members of the public.
And, again, applying the rule of statutory construction, to apply the ordinary and plain meaning of the language, I don't think it is all that complicated.
I find it does include Mr. Hurwitz. He's a member of the public. I think in this context or my interpretation is it refers to a human being, an individual, as opposed to a corporation.
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And with respect to the equitable estoppel argument, I don't find any facts alleged in this case that would give rise to the application of the equitable estoppel argument. I think it boils down to the fact that the [sellers] don't like the statute and if somebody exercises their rights, it doesn't seem fair. That may be, but that's what the statute says.
The Circuit Court granted the buyer's motion to dismiss and denied the sellers' motion for summary judgment. The Court of Special Appeals affirmed the judgment of the Circuit ...